Financial dimensions of transnational corporations: global value chain and technological innovation

Abstract

Transnational corporations (TNC) are defined by their size and international scope, but they constitute their own category, given that they act as financial centers with industrial activities, or as an “organizational modality of finance capital”. These TNC had developed financial activities for decades, but were given new opportunities in recent years with the deregulation and innovation in the financial markets, as well as the growing ideology of shareholder value maximization. In this article, the way in which intangible assets has added a new layer to financial exuberance is analyzed. Intangible assets generally are identified as non-monetary assets without physical substance that can offer benefits in the form of greater income, reduced costs and other benefits. The value of intangible assets are decided in large part by stock markets, their relevance is not limited to financial markets. TNC search for maximum share value, along with rent-seeking activities of financial and non-financial actors has created profound effects on innovation. The first part of the article analyzes the effects of financialization on TNC and their global value chains; the increase in the appropriation of value; and the decline in productive activities. In the second part, the extraordinary rise in intangible assets is examined from an empirical and theoretical perspective. Finally, we analyze the impacts of these tendencies on innovative activities, underlining the emphasis on activities that generate rents and the influence of financial activities on I&D.