HBS Survey Reveals Wide Agreement on Paths Forward to Restore U.S. Competitiveness

  HBS Survey Reveals Wide Agreement on Paths Forward to Restore U.S.
  Competitiveness

 Message from Business and Academia: Post-Election Period is Defining Moment
                           for U.S. Competitiveness

Business Wire

BOSTON -- November 14, 2012

A new Harvard Business School (HBS) survey reveals serious concern about
America’s competitiveness trajectory, but wide agreement between liberals and
conservatives on the policy imperatives that Congress and President Obama
should advance following the election.

The survey, conducted in September 2012, polled 6,836 HBS alumni, many in top
management positions, and 1,025 members of the general public. This is the
second annual survey on U.S. competitiveness, following a similar poll in
2011.

The research is part of the HBSU.S. Competitiveness Project, a multi-year
project started in 2010 to assess structural challenges to the U.S. economy
and identify ways that leaders in business, labor, government, and academia
can work together to address those challenges. The Project is co-chaired by
ProfessorsMichael PorterandJan Rivkin.

“All sides agree that the United States faces existential competitiveness
challenges. All sides agree on the basic direction that federal policies need
to take. Yet, until now, no progress has been made in Washington. This failure
to act is severely damaging America’s competitiveness,” saidProfessor Michael
Porter. “With the election behind us, the President and the new Congress must
act now to restore the United States as a highly productive and efficient
business location for firms and workers.”

Survey Shows Continuing Pessimism about America’s Competitiveness Trajectory

58% of alumni business leader respondents expect a decline in U.S.
competitiveness over the next three years, with firms in the U.S. less able to
compete in the global economy, less able to pay workers good wages and
benefits, or both.

Pessimism about the trajectory of U.S. competitiveness eased somewhat from the
2011 survey, though opinions diverged along ideological lines: pessimism among
strongly liberal business leaders who responded in both years declined from
72% in 2011 to 53% in 2012, while it fell only slightly among strongly
conservative business leaders, from 71% in 2011 to 65% in 2012.

“It’s important to note that the 2012 results show a reduction in pessimism,
not optimism in an absolute sense,” saidProfessor Jan Rivkin. “Even among the
strongly liberal respondents in 2012, the majority (53%) expect U.S.
competitiveness to be worse in three years. They see the boat as sinking more
slowly, but still sinking.”

Wide Agreement on Problems

The survey showed wide agreement across ideological lines about America’s
strengths and weaknesses, as well as agreement between business leaders and
the general public.

Respondents in both 2011 and 2012 were asked to assess the state and
trajectory of 17 elements that drive national competitiveness. Key findings
included:

  *Business leaders and the general public identified America’s political
    system, tax code, K-12 education system, macroeconomic policy, regulatory
    environment, and legal framework as weaknesses that were continuing to
    deteriorate relative to other economies.
  *Business leaders saw entrepreneurship, quality of management, property
    rights protection, innovation, capital markets, and depth of regional
    industry clusters as American strengths that were improving. Members of
    the general public also saw these elements as strengths, but mostly on the
    decline.
  *Between 2011 and 2012, business leaders remained stubbornly pessimistic
    about the complexity of the tax code, the K-12 education system, and the
    regulatory environment even as their views of most elements of the
    business environment brightened somewhat.

Paths Forward

The 2012 survey provides a consensus roadmap for lawmakers to restore
competitiveness, with business leaders across the political spectrum showing
robust support for seven policy directions:

  *A compromise for a sustainable federal budget, corporate tax reform and
    easing of high-skill immigration gotverystrong support from both
    strongly liberal and strongly conservative business leaders. Approval
    percentages were in the high 80s or low 90s.
  *Responsible extraction of newly-accessible energy supplies and more
    aggressive pursuit of a level playing field in the international trading
    system received strong and comparable support from business leaders at
    both ends of the political spectrum, with approval percentages in the high
    70s.
  *Greater infrastructure investment and selective streamlining of
    regulations got strong support from business leaders, but the strength of
    support differed somewhat between liberals and conservatives. Greater
    infrastructure investment received stronger support from liberal business
    leaders, while selective streamlining of regulations saw stronger approval
    from conservatives.
  *Of these seven policy directions, all but high-skill immigration were
    supported by the majority of the general public.

More than 70% of the general public approved of corporate tax reform. “Our
corporate tax code clearly needs to be modernized,” saidProfessor Mihir
Desai. “Restructuring the corporate tax toward a broader base, a lower
statutory rate, and a more competitive system of taxing foreign profits can
benefit both American workers and shareholders.”

The survey also found wide support among business leaders and the general
public for a federal budget compromise involving both revenue increases and
spending cuts. “We need both if we want to get the budget on a sustainable
path while preserving the investments in basic R&D, infrastructure, and
education that underpin competitiveness,” saidProfessor Matt Weinzierl.

Business Taking Initiative on Competitiveness and Willing to Do More

The survey of business leaders revealed thousands of firms engaged in actions
that improve the U.S. business environment, with more willing to consider such
actions. Particularly widespread steps by business today were internal
training programs, regional initiatives to boost competitiveness, and research
collaboratives. When asked about future steps, respondents expressed interest
especially in partnerships with community colleges and vocational schools as
well as apprenticeships to help train a new generation of workers.

“American institutions have tended to operate in silos,” saidProfessor
Rosabeth Moss Kanter. “But to build business ecosystems that can compete in
today’s global economy, America needs strong linkages across businesses,
educational institutions, nonprofits, and the public sector.”

Nitin Nohria, Dean of Harvard Business School, summed up his interpretation of
the survey findings: “Historically, the United States has always risen to face
the nation’s greatest challenges. Economically, we face such a challenge
today. The message from business and labor to our political leaders is clear:
we must make the word ‘compromise’ an honored word in American politics again.
As we’ve found through our work on the U.S. Competitiveness Project, a diverse
group of leaders stands ready to support Washington in this effort.”

The 2012 survey was conducted in collaboration with Abt SRBI and GfK.

For more information about the U.S. Competitiveness Project or to schedule an
interview with an HBS professor, please contactCalley.Means@edelman.com

About Harvard Business School

For more than a century, our faculty have drawn on their passion for teaching,
their experience in working with organizations worldwide, and the insights
gained from their research to educate generations of leaders who have shaped
the practice of business in every industry and in every country around the
world. For more information visit Harvard Business School’swebsite.

About Abt SRBI

Abt SRBI, a leading public policy and market research organization, is a
subsidiary of Abt Associates, a mission-driven, global leader in research and
program implementation in the fields of health, social and environmental
policy, and international development. Abt SRBI is headquartered in New York
City, with offices in the Washington, D.C. area, Chicago, IL, Cambridge, MA,
Fort Myers, FL, Durham, NC and other cities.

About GfK

GfK is one of the world’s largest research companies. 11,500 GfK experts are
working to discover new insights about the way people live, think and shop, in
over 100 markets, every day. GfK is constantly innovating to use the latest
technologies and the smartest methodologies to give its clients the clearest
understanding of the most important people in the world: their customers. That
knowledge empowers GfK’s clients to make the right decisions, and position
their businesses for the future.

Contact:

HBS
Jim Aisner, 617-495-6157
jaisner@hbs.edu
or
Edelman
Calley Means, 202-200-8009
calley.means@edelman.com