Reprint: R1203F
A location decision is, in many respects, a referendum on a nation’s competitiveness. When a company decides, say, to build a new plant in China rather than in the United States, it is effectively voting on the question of which country can best enable its success in the global marketplace.
Over the past three decades, business activities have become increasingly mobile, and more and more countries have become viable contenders for them. But new data—including the results of an unprecedented survey of 10,000 Harvard Business School alumni—suggest that the U.S. is not winning its appropriate share of location decisions, even for high-value business activities such as R&D that it has traditionally been able to attract.
In part, this is because U.S. policy makers are not addressing weaknesses in the national business environment. There are also problems at the corporate level: Many location decisions are incremental shifts of activities offshore; imagine a bucket with many small pinpricks. For instance, a software firm promotes American developers to high-end positions and hires workers from Eastern Europe to do lower-end work. As such, the decisions appear not to warrant exhaustive analysis. At the same time, managers ignore substantial hidden costs associated with non-U.S. locations and overlook the benefits they could reap were they to invest instead in local communities.
This article examines the strengths and weaknesses of U.S. locations, identifies the kinds of activities the U.S. must compete for, and outlines an agenda for action for government and business leaders.
