Publications
Publications
- September–October 2023
- Harvard Business Review
The New Era of Industrial Policy Is Here
By: Willy C. Shih
Abstract
Governments around the world are increasingly intervening in the private sector through industrial policies designed to help domestic sectors reach goals that markets alone are unlikely to achieve. Companies in targeted sectors—such as automakers, energy companies, and semiconductor manufacturers—may experience dramatic changes in their operating environments.
The policies could create new costs or deliver significant financial incentives to shift R&D or manufacturing investments. They might also incent firms to alter their supplier networks or change their trading partners. Managers who have grown up in markets without such interventions are now facing an unfamiliar environment.
In this article, I outline some of the policy approaches and offer a framework for responding to them. Business leaders need to understand the competing interests shaping the policies, engage and educate political leaders and their staffs, collaborate with upstream and downstream partners, and weigh the pros and cons of accepting government incentives.
The policies could create new costs or deliver significant financial incentives to shift R&D or manufacturing investments. They might also incent firms to alter their supplier networks or change their trading partners. Managers who have grown up in markets without such interventions are now facing an unfamiliar environment.
In this article, I outline some of the policy approaches and offer a framework for responding to them. Business leaders need to understand the competing interests shaping the policies, engage and educate political leaders and their staffs, collaborate with upstream and downstream partners, and weigh the pros and cons of accepting government incentives.
Keywords
Policy; Government and Politics; Business and Government Relations; Research and Development; Economic Sectors
Citation
Shih, Willy C. "The New Era of Industrial Policy Is Here." Harvard Business Review 101, no. 5 (September–October 2023): 66–75.