Stylistic Advice regarding the two types of possessives before a gerund

I know that, in terms of formal grammar, either a possessive pronoun or genitive form should precede a gerund. So, for example, 'his being', etc.

I am, however, far more comfortable with the former than the latter: I have read it more. Moreover, some writers - thinking mostly of academics, who are likely to know (and apply) the possessive/gerund rule - will apply the former rule while neglecting the latter rule. Why is this?

To take the example with which I am struggling:

Despite Smith borrowing from Brown, he innovated in his political thought where necessary.

Now, according to the rule, this phrase should be rewritten as: 'Despite Smith's borrowing from Brown, he innovated in his political thought where necessary.'

This is for a final-year dissertation at university, so it is obviously for a formal piece of work. Is is ttherefore advisable that I use the possessive/gerund rule? And, related to that, why does the possessive pronoun (his borrowing) sound correct (if a little stilted), but the genitive (Smith's borrowing) sounds as if the writer or speaker is not a native speaker and has an incomplete grasp of the language.

In formal, traditional grammar, you would indeed want to use the possessive before a gerund:

Despite Smith's borrowing from Brown, he innovated in his political thought where necessary.

But now you have another problem (at least according to some grammarians): the possessive as antecedent. In the above sentence, Smith's is an adjective modifying the gerund borrowing, yet he refers to Smith, who's nowhere to be found here.

One might think that he = Smith is obvious. In fact many other grammarians find the structure acceptable.

Since you never know which grammarian your paper will come up against, let's write your worries away:

Despite borrowing from Brown, Smith innovated in his political thought where necessary.

What I think you might actually be trying to say is:

Although Smith borrowed from Brown, he innovated in his political thought where necessary.

And since innovated in a bit dodgy in form, perhaps:

Although Smith borrowed from Brown, he was innovative in his political thought when necessary.

For more discussion of possessive antecedents, see Possessive antecedent and The Nation: Parts of Speech; The Bloody Crossroads of Grammar and Politics.