Session 1: Financialization of Apple

Question 1

What are ‘positive externalities’ in the context of the knowledge economy? (ex: knowledge spillover)

Answer 1

The idea that being clustered and close together creates knowledge sharing, which generates innovation and contributes to furthering knowledge

Question 2

What role does the entrepreneurial state play in producing innovation geographies?

Answer 2

Funding research and development in ICT, lowering corporate income tax, free trade policies, protecting intellectual property rights, funding higher education in innovation agglomerations

Question 3

What are the main features of Apple’s hardware outsourcing scheme? What are the consequences?

Answer 3

Exerting power over suppliers in order to maximize profit. Apple takes advantage of Chinese regime of working control, and are able to mobilize workers easily because of their restricted movements and leisure time. This results in decreased production costs, lower profit for suppliers (i.e. Foxxconn), and the ability to mass-produce products in short notice

Question 4

What are the main features of Apple’s software outsourcing scheme?

Answer 4

Apple effectively crowdsources software development, since it is much less expensive than directly hiring app developers. This results in power asymmetries, where Apple controls the market, and takes 30% of profits from successful software developers.

Question 5

What is crowdsourcing?

Answer 5

When a company allows for external, independent workers to do the work that could be done by internal employees. This results in an uneven distribution of risks and rewards, because the Apple does not have to spend much in developing the apps, but still makes money off selling apps

Question 6

What are the characteristics of Apple’s retail geographies?

Answer 6

Apple uses an ‘own the consumer’ strategy, in which they essentially force consumers to continue buying apple products by only selling apple content (software) on their devices (hardware). In addition, Apple has power over retail stores that wish to sell their products, and own a chain of their own high-end retail stores in selective locations

Question 7

What are the 4 strategies of corporate financialization?

Answer 7

1. Redefining the firm’s boundaries of financial optimization –> outsourcing to reduce costs, meaning more profit
2. Changes in corporate governance –> linking of executives salaries to stock market performance. Profits are not used to further productive ability, but rather is distributed to shareholders
3. Boosting shares through dividends and stock buyback –> focus on increasing the share price and attracting new investors
4. Avoiding and evading taxes –> exploiting low tax jurisdictions and dividing the company in order to keep tax duties as low as possible