Short-term performance pressures: is there a consensus view?

Abstract

The manufacturing sector in the UK has been performing rather badly in comparison with its major international competitors. This deterioration in performance can be seen in R&D spending patenting rates and in market shares and appears to centre on deficiencies in product innovation. There is general agreement that short-termismis one of the main factors responsible for such poor performance in Britain. Does short-termism arise from pressure in captial markets or is it generated within the firm? The stock market is often blamed for putting inappropriate short-term pressures on management by institutional investor intervention and hostile take-over activity leading to changes in management policy and ultimately to dismissal. On the other hand it is also argued that the problem of short-termism originates within management itself. The purpose of this paper is therefore to review the relevant literature surrounding the debate on short-termism to draw conclusions on its likely causes and to provide some sugges...