On October 13, 2025, the Royal Swedish Academy of Sciences awarded the Nobel Prize in Economic Sciences to Joel Mokyr, Philippe Aghion, and Peter Howitt for their insights into technological progress and sustained growth. Their work emphasizes how innovation at the firm level powers economies, even through competitive disruptions.
Aghion and Howitt’s 1992 paper tackles a central question: how disruptive firm-level competition—entries, exits, and resource shifts—supports stable macroeconomic growth in advanced economies since World War II. In the U.S., over 10% of firms enter or exit yearly, with job churn highlighting reallocations within industries (Davis and Haltiwanger, 1992). Their "creative destruction" model shows innovations at the firm level, displacing incumbents and driving productivity, yielding balanced expansion beneficial for society.
Mokyr adds historical depth, linking the Industrial Revolution’s success to "useful knowledge"—scientific and applied—that broke pre-modern limits. The laureates collectively illustrate innovation’s role at the firm level in efficient resource use and long-term prosperity.
Yet the Nobel Committee paper also highlights an unsolved challenge: a productivity slowdown in OECD countries since the 2000s, with labor growth dropping from post-WWII levels (OECD Compendium, 2025). Falling entry/exit rates suggest diminished dynamism (Decker et al., 2016). The Committee explores over-innovation by leaders as one possible factor.
An additional consideration is the short-term profit focus in many firms, which may curb R&D. The Business Roundtable’s 2019 stakeholder pivot against maximizing shareholder value has had limited effect. As Lucian Bebchuk notes, it was "mostly for show" without operational changes (Bebchuk and Tallarita, 2020). A McKinsey study (2017)shows only 27% of U.S. firms prioritize long-term returns.
The Nobel Committee paper aligns with this focus by using "consumer" in models (e.g., utility maximization via prices), abstracting demand without emphasizing relational aspects. The term "customer" is absent, potentially highlighting mechanical exchanges over co-creation, though this fits neoclassical frameworks.
A complementary approach: value-creating principles prioritizing customer value, autonomous networks, and adaptive mindsets. These principles echo Peter Drucker’s view: "There is only one valid definition of business purpose: to create a customer" (The Practice of Management, 1954, p.37;). Many leading firms. like Microsoft and ASML, achieve strong 10-year TSR today through this focus.
TSR measures sustained performance: factual, audited, and stakeholder-aligned. Mapping TSR against principles for 32 European and 30 U.S. firms shows striking patterns. High scorers (9.0-11.5/15) exceed averages, with correlations (Europe r≈0.57, p=0.0009; U.S. r≈0.55, p=0.002) suggesting meaningful associations (see maps of European firms; and U.S.firms in the Dow Jones Industrial Average); Denning, 2025).. Hermès and Nvidia exemplify adaptive excellence.
The value-creating principles foster trust and agility, addressing short-term pressures while assuring long-term profitability. As the Nobel Committee advances macro understanding, exploring customer-centric models could complement it, potentially sparking a productivity renascence.