A spike in activist investor campaigns over the past few years has company executives constantly looking over their shoulders. Typically run by hedge funds demanding higher profit margins, activist-investor campaigns quickly buy up large stakes in a company and threaten to unseat company board members if they don't cut costs, driving executives to forego long-term business strategies for short-term profits. The results cause abysmal problems for both the American workforce and research and development for the innovation of new products.

According to John C. Coffee, a professor at Columbia University Law School, Between a 20-month stretch in 2005 and 2006, just 52 activist campaigns existed. Between 2010 and 2014, there were 1,115 activist campaigns.

These campaigns are damaging to the long-term outlook of individual companies like DuPont and also to America’s economy more generally. They often result in big cuts to research and development, substantial reductions in the workforce, and a focus on outcomes—in particular short-term profit—that hurt a company’s ability to survive in the long-term. The threat of activism affects companies across the economy: Even public companies not targeted by activists often change their behavior and cut costs to avoid becoming a target. This may be one of the reasons why America is slipping in funding research and development projects when compared with other countries.

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