I am grateful to Danny Stern for the head’s up about a survey that Michael E. Porter, Jan W. Rivkin, and Rosabeth Moss Kanter conducted under the sponsorship of Harvard Business School. Here’s the Executive Summary of the survey, “Competition at a Crossroads.” To read the complete report on the survey results and download a pdf, please click here.

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In recent months, many business and policy leaders have been preoccupied by the dramatic budget negotiations in Washington. Yet the federal government’s fiscal situation is one symptom of a far more serious problem: long- term structural challenges to U.S. competitiveness are sapping America’s growth and driving a wedge between the nation’s aspirations and its means.

Nearly two years ago, Harvard Business School launched a major project to help U.S. leaders understand, assess, and improve U.S. competitiveness. The School’s first survey on the topic, unveiled in January 2012, provided sobering evidence of a deepening U.S. competitiveness problem. Business leaders reported that the U.S. fared poorly when competing to attract business activities, and they pointed to important weaknesses in America’s business environment.

This year’s survey provides an updated view of the U.S. business environment. But it also examines specific actions that policymakers and business leaders can take to improve U.S. competitiveness. The survey findings reflect the perspectives of nearly 7,000 HBS alumni from all 50 U.S. states and 115 other countries as well as the views of more than 1,000 members of the U.S. general public.

In this year’s survey, business leaders continued to be pessimistic about the future of U.S. competitiveness. Those foreseeing a decline in competitiveness outnumbered those predicting an improvement by more than two to one, a lower ratio than in the previous survey but still a wide margin. Members of the general public were more optimistic than business leaders about future competitiveness, but they saw eye-to-eye with business when identifying the greatest weaknesses in the U.S. business environment: America’s tax code, political system, K–12 education system, macroeconomic policies, legal framework, and regulations.

America’s competitiveness problem requires concerted action by policymakers and business leaders. On policy, the survey revealed a general consensus about what Washington must do. Across the political spectrum, business leaders and the general public strongly called on the President and Congress to:

o Put the federal budget on a sustainable path by increasing revenue and controlling spending;
o Reform the corporate tax code, reducing statutory rates and eliminating loopholes;
o Enact a multiyear program to improve America’s infrastructure;
o Address distortions of the international trading system that disadvantage the U.S.; and
o Craft a responsible framework for developing newly accessible gas and oil reserves.

Both liberal and conservative business leaders strongly supported moves by Washington to:

o Streamline regulations; and
o Ease immigration for high-skill workers.

Streamlined regulations won majority support among the general public but not across the political spectrum. High-skill immigration won a majority among liberal members of the general public but not among all members.

The survey also assessed what business itself is doing, and is willing to do, to improve U.S. competitiveness. Many respondents reported that their firms are already acting to build a skilled workforce, upgrade U.S. supply networks, foster innovation and entrepreneurship, and bolster regional and cluster strength. Firms varied widely in how deeply they were engaged, from Competitiveness Leaders, that are taking many steps to make their communities more competitive, to Bystanders, that do almost nothing. Manufacturers were the most likely to act to improve competitiveness, followed by organizations in education and healthcare. Firms in financial services were the least active in taking steps that enhance U.S. competitiveness. On average, respondents thought their employers would consider many of the competitiveness-enhancing actions they were not already adopting.

The competitiveness of the United States is indeed at a crossroads. We know many of the steps that government and business must take to allow firms in the U.S. to win in the global marketplace while lifting the living standards of the average American. The question is, can we muster the will, the foresight, and the unity to take those steps? If U.S. competitiveness continues to wane, we will have only ourselves to blame.

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To read the complete report on the survey results, please click here.

Michael E. Porter is the Bishop William Lawrence University Professor, based at Harvard Business School. Jan W. Rivkin is the Bruce V. Rauner Professor at Harvard Business School. Rosabeth Moss Kanter is the Ernest L. Arbuckle Professor at Harvard Business School.

The authors extend a special thanks to the HBS alumni and the members of the general public who completed the U.S. competitiveness survey.

The authors would like to acknowledge the crucial contributions of HBS researchers Manjari Raman, Chase Harrison, and Dan Quan, as well as Abt SRBI vice president Benjamin Phillips and GfK project director Daniel Faulkner. The authors are also grateful to faculty colleagues who helped to shape the survey instrument, including Mihir Desai, Robin Greenwood, Thomas Kochan, Josh Lerner, David Moss, Nitin Nohria, Gary Pisano, William Sahlman, David Scharfstein, Willy Shih, Richard Vietor, and Matthew Weinzierl. Harvard Business School’s Division of Research and Faculty Development provided generous funding.

Please direct inquiries to Manjari Raman. For more information on Harvard Business School’s U.S. Competitiveness Project, please visit: http://www.hbs.edu/competitiveness/.

© 2013 President and Fellows of Harvard College