Abstract: The fundamental task for system integrators who control and upgrade the global value chain is to properly handle the relationship between manufacturing and services, and the institutional environment is a crucial power to shape this relationship. Here we take GE as an example to analyze the effect of financial capitalism on the capability evolution of the US-based system integrators in past three decades. It shows that financialization-oriented institutions not only abduct the values of corporations and “manufacturing-service/finance” relationship, but also lead to capability involution in system integrators. This explanation is useful for us to understand both the role of financial capitalism in industrial upgrading and the future of Re-industrilization in US. The final part gives further discussion based on the case.

Key words: financialization, system integration, general electric (GE), shareholder value maximization (SVM)