Does the existing approach to corporate governance help or hinder innovation?

There is no easy answer, but current thinking suggests that governance practices may have to be tweaked to allow companies to be more flexible and risk-taking

WHEN the Committee on the Future Economy issued its recommendations in 2017, it identified innovation as key to ensuring that local companies are able to compete in today’s digital economy where industries are being disrupted by rapid advances in technology.

The government has since established several initiatives and alliances to help companies in their efforts to innovate, come up with new business ideas, and move into new markets. For example, measures were announced in Budget 2025 to aid local companies to innovate, including a S$3 billion top-up to the National Productivity Fund and S$1 billion for enhancing research and development infrastructure.

There is no disputing the need for companies to be innovative in the face of disruption. However, an important issue to consider is whether current corporate governance, with its emphasis on shareholder protection and oversight of company behaviour, can play an effective role in nurturing innovation.

The issue appears straightforward at first glance, but it is complex and challenging.

Value preservation versus value creation

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