The Slow Decay of U.S. Competitiveness

Harvard Business School’s latest survey on U.S. competitiveness, “An Economy Doing Half Its Job,” reveals a troubling divergence in the U.S. economy: “Large and midsize firms have rallied strongly from the Great Recession, and highly-skilled individuals are prospering. But middle- and working-class citizens are struggling, as are small businesses.”

Fortune spoke with Michael Porter, professor and lead researcher on the competitiveness survey, about the survey’s findings.

Said Porter: “The big message here is that if the economy is going to grow and thrive in the long run, you have to be competitive. We define competitiveness as consisting of two things: You have to provide an environment in which firms operating in the U.S. can win in the marketplace, but at the same time we have to do that in a way that allows income and the standard of living of the average citizen to go up. Fundamentally, competitiveness depends on doing those things together. If you’re doing one but not the other, it’s unsustainable.”

“The big finding we’ve seen in our surveys in recent years, and which was reinforced in this report, is the divergence between the fate of businesses, particularly large businesses, and the average worker… Small business is declining as a force for job creation in America, and we’re seeing less new business formation in the economy. And I think the reason for this is that small businesses are disproportionately affected by high regulatory costs, legal costs, a deteriorating infrastructure, and high corporate taxes.”

The researchers interviewed Harvard Business School alumni. Click here for the survey questionnaire and methodology.