American companies will find the avenues to success in the global economy both wider and less dependent on cheap labor than media reports suggest, according to a new book based on an MIT study of 500 international companies.
The book, "How We Compete: What Companies Around the World Are Doing to Make It In Today's Global Economy," summarizes five years of international research by 13 social scientists and engineers at the MIT Industrial Performance Center.
Suzanne Berger, who is the Raphael Dorman and Helen Starbuck Professor of Political Science and director of the MIT International Science and Technology Initiatives (MISTI), is the lead author of "How We Compete."
Berger and the MIT team examined businesses where technology changes rapidly, such as electronics, and more traditional sectors, such as automobiles and textiles. Their global sample of company strategies came from Apple, Cisco, Dell, Liz Claiborne, the Gap, Benetton, Sony and many others; the team visited countries throughout the world.
"We wanted to understand how globalization is changing our society and economy and what we can do about it," Berger writes in a preview of the five-year MIT Globalization Study -- a study that took the 13-member team on a journey through the United States, Mexico, France, Germany, Romania, China, Taiwan, Japan and elsewhere to conduct 700 interviews.
"As far as I know, this is the first large-scale analysis of globalization that starts with a view from the trenches -- the people under great pressure to respond to new challenges in hundreds of companies around the world. Using this bottom-up approach, we have tried to figure out how much choice remains in a world under globalization," Berger writes.
As for competition through ever-decreasing wages, the team found that to be a counterproductive choice, one that ends in "competitive jungles where victories are vanishingly thin," the book states. "The activities that succeed over time are those that build on continuous learning and innovation."
Other MIT faculty on the MIT Industrial Performance Research Team include Akintunde (Tayo) Akinwande, professor of electrical engineering and computer science; Richard K. Lester, professor of nuclear engineering and director of the Industrial Performance Center; Charles Sodini, professor of electrical engineering and computer science; and Edward S. Steinfeld, associate professor of political science.
The MIT Commission on Industrial Productivity produced the "Made In America" study in 1989.
A version of this article appeared in MIT Tech Talk on February 8, 2006 (download PDF).
