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Sunday, October 2, 1994

Investors invest. Executives manage

Published: New York Times, Business Section, page 4

Labour Secretary Robert Reich advocates a dangerous doctrine when he recommends that pension fund managers intervene in the management of the companies in wihih they invest ("A moral workout for Big Money," Viewpoints, Septmber 11). If there is one thing that we know from the management research of the last decade, it is that concerns that that diversify into unrelated industries do a lot worse than than those that focus on core businesses.
Pension fund manages are very good at managing money. They should stick to that and allow company managers get on with managing the businesses. If they don't like what is happening they should vote with their feet and sell the investment. They should not imagine that they have much to offer in terms of managing the range of busineses in which they invest. Too much power for the pension managers will merely return us to the years of the conglomerate. Those corporate dinosaurs that survived are now divesting rapidly to return to their core businesses.

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