The Triumph of a Local Focus in Troubled Times

The emphasis on the contribution of local knowledge to economic growth is a key tenet of classical economic theory. The Hayekian worldview, for example, sees the dispersion of local pockets of knowledge across the economy as the primary reason why centralized planning fails to produce optimal results. In the realm of corporate finance, these considerations emphasize the importance of firms’ reliance on local CEOs with access to social networks where information flows in a subtle and nuanced way that highly depends on specific individuals rather than formal institutions. Focusing on the local, however, comes at a cost, as a rich … Read more