Cisco Systems and the virtues and vices of the new economy business model

Marie Carpenter (), Bob Bell, Henrik Glimstedt and William Lazonick
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Marie Carpenter: IMT-BS - MMS - Département Management, Marketing et Stratégie - TEM - Télécom Ecole de Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - EESC-GEM Grenoble Ecole de Management - UEVE - Université d'Évry-Val-d'Essonne - TEM - Télécom Ecole de Management
Bob Bell: UC Berkeley - University of California [Berkeley] - UC - University of California
Henrik Glimstedt: SSE - Stockholm School of Economics
William Lazonick: UMass Lowell - University of Massachusetts [Lowell] - UMASS - University of Massachusetts System

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Abstract: For some, Cisco Systems is an exemplary new economy firm from Silicon Valley that is poised to reinvent itself in the face of ongoing market transformations. For others, however, both Cisco's financial choices and its technological trajectories over the past decade are perceived as undermining the company's previously-dominant position in a converging landscape at the same time as existing and new competitors are making significant investments in building competencies that Cisco does not possess. Certain commentators argue that the problem is one of financial engineering that serves, above all, the interests of top management. The purpose of our analysis is to examine the extent to which Cisco's technological choices and investment decisions have or have not been fortuitous and, at the same time, to consider whether such choices have been influenced by the firm's growing financialization and increasing dependency on buying back its own shares. We thus link the question of innovation and that of financialization by examining the development of Cisco Systems Inc and by focusing on a number of technological transformations that the company has attempted in the past.

Date: 2014-03-13
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Published in 2014 BHC Meeting : The Business History Conference, Mar 2014, Frankfurt Am Main, Germany

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