Harvard Business School Survey Reveals Deepening U.S. Competitiveness Problem
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Washington, D.C.—Harvard Business School (HBS) today revealed the results of its first Survey on U.S. Competitiveness, which examines the position and trajectory of the United States as a competitive location in the global marketplace. The survey reveals that, while 57 percent see the current U.S. business environment as somewhat or much better than the average advanced economy, respondents are much less optimistic about the trajectory of the U.S. as a competitive location. When asked to assess how the trajectory of the U.S. business environment compares with emerging markets, 66 percent see the U.S. falling behind, while just 8 percent see it pulling ahead. Along with HBS Dean Nitin Nohria, Professors Michael E. Porter and Jan W. Rivkin presented the findings at the National Press Club in Washington, D.C. Porter and Rivkin designed and conducted the survey in partnership with Abt SRBI, a leading research firm. Full results are available at hbs.edu/competitiveness/survey. The survey also examines the desirability of the U.S. as a business location and decisions by firms to relocate existing activities or establish new ones. Of 1,767 cases where respondents had been personally involved in U.S.-related location decisions within the past year, 57 percent considered the possibility of moving existing activity out of the U.S., while only 9 percent considered moving existing activities into the U.S. The remaining 34 percent weighed decisions to set up new activities. Of those offshoring decisions that had been resolved by the time of the survey, the U.S. lost the activity 84 percent of the time. While the country fared better in potential onshoring or new activity decisions (75 percent and 51 percent win-rates, respectively), its overall win record totals just 32 percent. "The U.S. is losing out on business location decisions at an alarming rate, and those activities being offshored are more job-rich than those coming in," said Porter, the Bishop William Lawrence University Professor at Harvard and head of the Institute for Strategy and Competitiveness at HBS. "However, the U.S. retains its core strengths in a number of important areas such as university education, innovation, and entrepreneurship, which means that we have the resources to reverse this trend. The vast amount of data from this survey highlights the need for business leaders, policymakers, and academics to collaborate on practical ways to make progress." The survey is part of the School's ongoing U.S. Competitiveness Project, which defines competitiveness as "the ability of companies in the U.S. to compete successfully in the global economy while supporting high and rising living standards for Americans." "When we were first laying the groundwork for this Project and this survey, we thought long and hard about how competitiveness should be defined, and why it was such an important goal for the nation's future," said Dean Nohria. "We made sure not to focus on job growth or inequality alone, because that ignores the need for healthy wages that will support America's middle class. Adopting a broader definition was paramount in this effort." Other major findings include:
The survey also asked respondents about the greatest impediments their firms faced in investing in and creating jobs in the United States. Policy-related factors like regulation and taxes are cited as major factors, along with talent-related issues like personnel cost and immigration issues. "One of the most important aspects of this survey was its effort to pinpoint the roots of the country's competitiveness problem," said Rivkin, the School's Bruce V. Rauner Professor of Business Administration. "The findings allow us to assess whether individual elements of the U.S. business environment, such as the complexity of our tax code or our K-12 education system, each strengthens or weakens U.S. competitiveness. This provides important insight for leaders who are seeking ways to boost America's long-run prosperity." Since the Project seeks to inspire action among leaders – especially business leaders – to change the trajectory of U.S. competitiveness, research by HBS faculty and other scholars will continue to focus on key dimensions of U.S. competitiveness, including innovation, manufacturing, entrepreneurship, company location choices, firm governance, local business ecosystems, human capital, K-12 education, fiscal policy, tax policy, capital markets, environmental sustainability, democracy, and international trade. These findings will be presented in a special March 2012 issue of the Harvard Business Review. Scholars and practitioners contributing to research efforts include Steve Charnovitz, George Washington University; Stacey M. Childress, Bill & Melinda Gates Foundation; Mihir A. Desai, HBS; Daniel C. Esty, Connecticut Department of Energy and Environmental Protection and Yale Law School; Robin Greenwood, HBS; Rosabeth Moss Kanter, HBS; Thomas A. Kochan, MIT Sloan School of Management; Robert Z. Lawrence, Harvard Kennedy School; Josh Lerner, HBS; David A. Moss, HBS; Gary P. Pisano, HBS; Jan W. Rivkin, HBS; Michael E. Porter, HBS; William A. Sahlman, HBS; David S. Scharfstein, HBS; Willy C. Shih, HBS; Richard H.K. Vietor, HBS; and Matthew C. Weinzierl, HBS. Professors' profiles and abstracts of their research are available at www.hbs.edu/competitiveness. About Abt SRBI |
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Founded in 1908 as part of Harvard University, Harvard Business School is located on a 40-acre campus in Boston. Its faculty of more than 250 offers full-time programs leading to the MBA and PhD degrees, as well as more than 175 Executive Education programs, and Harvard Business School Online, the School’s digital learning platform. For more than a century, faculty have drawn on their research, their experience in working with organizations worldwide, and their passion for teaching, to educate leaders who make a difference in the world. The School and its curriculum attract the boldest thinkers and the most collaborative learners who will go on to shape the practice of business and entrepreneurship around the globe.