Unsustainable Economic Divergence: Large Firms Thrive While Living Standards Stagnate Among Most Americans

Michael E. Porter and Jan W. Rivkin of Harvard Business School (HBS) recently released the results of their survey of 1,947 HBS alumni about the state and trajectory of U.S. competitiveness, as well as the education system through high school, the skills base of the workforce, and the nation's transportation infrastructure.  This is the third iteration of the survey, previously conducted in 2011 and 2012.


The findings show that:

  • Although pessimism about the state and trajectory of U.S. competitiveness has abated compared to 2011 and 2012 surveys, respondents who expect U.S. competitiveness to deteriorate still outnumber those who think it will improve (47 to 33 percent).  Respondents working in small firms tend to be more pessimistic about the trajectory of U.S. competitiveness than those from large firms.
  • "Workers are captives of the weakest aspects of the U.S. business environment, while firms are the beneficiaries of America's greatest strengths: respondents saw weaknesses in those aspects of the business environment that drive the prospects of middle- and working-class citizens--for instance, the education system, the quality of workplace skills, and the effectiveness of the political system.  And they saw strengths in aspects that influence company success, such as the quality of management, the vibrancy of capital markets, and firm access to innovation."
  • U.S. competitiveness is hampered by an education system that's failing to deliver a strong education and produce competitive workers; skills shortages (managerial approaches that discourage skills development and exacerbate the shortage of talent with highly demanded skills; poor information flow: employers can't find the skilled workers they need, but a growing number of workers are overqualified for their jobs); and an aging physical infrastructure.


The authors argue that this situation is unsustainable:
"shortsighted executives may be satisfied with an American economy whose firms win in global markets without lifting U.S. living standards.  But any leader with a long view understands that business has a profound stake in the prosperity of the average American.  Thriving citizens become more productive employees, more willing consumers, and stronger supporters of pro-business policies.  Struggling citizens are disgruntled at work, frugal at the cash register, and anti-business at the ballot box.  We agree strongly with this view: businesses cannot succeed for long while their communities languish."
Read more:
http://www.huffingtonpost.com/2014/09/08/wealth-gap_n_5783550.html
http://www.hbs.edu/competitiveness/pdf/an-economy-doing-half-its-job.pdf

TeachingwithData.org resources:
Global Business Strategies (http://www.teachingwithdata.org/resource/3190)
Business and Economics (http://www.teachingwithdata.org/resource/2928)
GlobalEDGE Academy (http://www.teachingwithdata.org/resource/3230)
Frederique Laubepin

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