What can Americans—especially those in the business community—do to increase the ability of firms to compete successfully in the global economy while raising US living standards? This is one of the most important questions facing the nation and the subject of the School’s US Competitiveness Project. The project is chaired by Professors Michael Porter and Jan Rivkin, who are joined by a team of HBS faculty together with thought leaders from other institutions. It aims to inspire alumni, other business leaders, and policymakers to take actions to put the nation on a more competitive trajectory.

Initial research findings, including highlights from an unprecedented HBS alumni survey on competitiveness, are presented in a special March issue of the Harvard Business Review. “The extensive data we’ve reviewed show that US competitiveness is eroding, but its further decline is far from inevitable,” says Rivkin, the Bruce V. Rauner Professor of Business Administration.

Over the coming months, Porter, Rivkin, and a number of HBS faculty involved with the project will participate in a series of alumni events across the country designed to disseminate key findings and energize business leaders and local officials to take steps to enhance competitiveness. “While government policy sets the platform, companies have an essential role in improving the business environment in US communities,” says Porter, the Bishop William Lawrence University Professor. He and and Rivkin recently answered questions about the project.

Why did HBS launch the project?

Rivkin: Many of us at the School have come to believe that the ability of firms in the United States to be competitive in the world economy and to support living standards in America is in doubt. The School should be engaged in the most important issues facing society and the economy, and this is one of them. We feel we have an ability to make a positive difference, and an opportunity to learn in the process.

Porter: This really starts with the idea that the School has a unique platform and credibility, which allows us to play an important role in addressing many of the complex issues related to business and the economy. One of Dean Nohria’s core aspirations is for the School to step up and be more engaged in policy and influencing behavior in the business community. This project represents an opportunity for us to play that role much more forcefully than we have in the past.

The project has also given us the chance to engage more than a dozen of our faculty who don’t normally work together around a common agenda. It’s given us an opportunity as a group of scholars to stretch what we do, taking advantage of our ability to interact with our alumni. We hope we can contribute to America and the world through this project. And we think it’s going to have a positive influence on the School.

How are you tapping HBS alumni for ideas about competitiveness?

Rivkin: HBS has about 78,000 alumni around the world and email addresses for about 50,000 of them. The alumni have unique perspectives on the global economy and America’s position in it. Last fall, we asked them to complete a comprehensive survey to get their views on what’s really going on in the US economy. We received nearly 10,000 responses, an extraordinary response rate.

Porter: HBS alumni are in leadership positions all over the world, and they are making critical choices that determine the ultimate success of the US economy. The ability to get this in-depth information from our alumni and to have so many busy people respond really surprised the survey firm that partnered with us.

What do you mean by competitiveness?

Porter: There’s widespread confusion about what competitiveness actually means, so our definition is a vital component of our work. When we talk about US competitiveness, we mean the ability of firms operating in the United States to compete successfully in global markets while also supporting high and rising living standards for Americans.

America is not more competitive if businesses succeed by paying lower wages. Actually, the need to cut wages reflects a lack of productivity and competitiveness, and reduces prosperity for America.

We often hear that devaluing the US dollar would make America more competitive. But if we devalue the dollar, America’s standard of living goes down. We’ll have to pay more for all the goods that we import, and we’ll have to sell our products overseas at lower prices. The need to devalue is a sign that a country is not competitive.

Competitiveness has to do with being a productive location in which to do business, which allows companies to succeed globally while also supporting good wages. One without the other is unsustainable. If businesses win not through productivity but through relocating work and cutting wages, this will reduce the purchasing power of Americans, shrink the tax base, and eventually undermine the business environment in America. Conversely, if workers get higher pay while American-based companies are not able to compete successfully, wages and jobs will be unsustainable. If this definition could be understood and accepted, the debate on the issue would change dramatically, and the nation could make much greater progress.

In the survey, 71 percent of the respondents said they feared that American competitiveness is in decline. Did that figure surprise you?

Rivkin: I was not shocked by that figure, but its underlying components gave us a new perspective. Survey respondents were more pessimistic about the future of American living standards than about companies’ prospects. Alumni appear to believe that firms will be able to adapt to growing pressures in the global economy, presumably through offshoring and the like, but American workers have fewer and more challenging options.

Aren’t a lot of the problems that are damaging to US competitiveness, such as infrastructure and regulation, supposed to be addressed by government?

Porter: Government has a vital role in competitiveness because it must set the rules, regulations, and incentives that govern the nature of competition. Government also must invest in public assets on which all business depends: physical infrastructure, public education, and things like that. There is no doubt that government is failing to deliver on some of its critical roles.

Unfortunately, the federal government today is in a state of gridlock and is not addressing some important areas of national concern. But government is not the whole story. We believe strongly that the private sector also has a role and a fundamental responsibility in enhancing US competitiveness. When businesses build partnerships with community colleges to train workers, they are enhancing American competitiveness and improving the business environment. When a number of businesses in Charlotte, North Carolina, come together to develop an innovative energy conservation program, they are improving American competitiveness.

One of our major messages in this project is that business should not wait for government, but start taking action today that will directly contribute to improving the productivity of the United States.

Rivkin: Some of the work that our HBS colleagues have done illustrates this very well. Rosabeth Moss Kanter has written a piece for the project titled “Enriching the Ecosystem.” Her argument is that many of the untapped, rich opportunities for greater US competitiveness lie in getting various institutions to cooperate better across what historically have been silos. And she illustrates this in multiple settings, showing that when businesses work toward building more effective linkages, with other companies and other institutions, we can see important, positive results.

In addition, our colleague Bill George has written a series of case studies on Minneapolis–St. Paul, Charlotte, and Detroit that look at the initiatives business leaders in those regions have launched to improve competitiveness.

How do you plan to get alumni involved with the project?

Porter: We are gearing up for an outreach campaign that involves cities across America. Our alumni and our alumni clubs will be key partners in organizing and convening not just HBS alumni, but also other business, government, and labor leaders in each region. We want to identify local organizations that are already working on competitiveness initiatives. This outreach campaign is partly about disseminating our ideas and data, but we also want to inspire local action around competitiveness by more and more companies.

Rivkin: Many of our alumni have already been involved in efforts that have made a positive difference for their communities. We want to learn about their experiences and make others aware of them. There’s a surprising lack of knowledge about best practices and success stories in business efforts in regional competitiveness. One of the major purposes of this project is to surface those and trigger a wave of new activity.

So a call to action is a major goal?

Porter: Most of us are here at Harvard Business School not solely to write papers for the academic literature but also to engage with practice and influence action. Our alumni bring enormous capacity and willingness to act. Our job is to provide them with the settings, the ideas, and the motivation to act. I’m confident that this will not be a hard sell. HBS alumni are naturally inclined to be leaders in their communities. We hope to widen their range of options for being leaders.

Do you hope to influence the national debate over competitiveness during this election year?

Porter: Yes, in a nonpartisan way. We intend to be a place where you can get the objective facts about what’s going on in the American economy. We’re determined to be open, accessible, and nonpartisan. Although we will depend on HBS alumni to be the core of our outreach effort, we are open to collaborating with other business schools and other institutions. This is a national and global issue.

Rivkin: No one should get the impression that we think the sky is falling. The American economy retains great strengths. At the same time, America does face critical challenges. In many instances, there’s already a consensus in the country about how to tackle the challenges.

So America is at a crossroads. We can revitalize the economy, or we can sit back and wait. Waiting will only raise the cost and difficulty of addressing some of the key challenges.

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Stellar Lineup of Project Participants

The project’s research focuses on key dimensions of US 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. Scholars and practitioners contributing to initial research efforts include Steve Charnovitz, The George Washington University Law School; Stacey M. Childress (MBA 2000), the Bill & Melinda Gates Foundation; Mihir Desai, HBS; Daniel C. Esty, Connecticut Department of Energy and Environmental Protection and Yale Law School; Robin Greenwood, HBS; Rosabeth Moss Kanter, HBS; Thomas Kochan, MIT Sloan School of Management; Robert Z. Lawrence, Harvard Kennedy School; Josh Lerner, HBS; David Moss, HBS; Gary Pisano, HBS; Michael Porter, HBS; Jan Rivkin, HBS; William Sahlman, HBS; David Scharfstein, HBS; Willy Shih, HBS; Richard Vietor, HBS; and Matthew Weinzierl, HBS. Early financial support for the project came from the Citi Foundation.

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