30/03/2001ITT – Lecture 91 Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S. Author: Michael Oden, Ph.D. Presentation by: João Letras Rodrigo Rodrigues Engineering and Technology Management

30/03/2001ITT – Lecture 92 Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S. Topics to be Addressed: 1.Introduction 2. Inter-Firm Copperation and Collective Efficiencies 3. Case Studies a) Furniture Industry b) Aerospace Manufacturing c) Advanced IT technology in Rural Region 4. Conclusions

30/03/2001ITT – Lecture 93 Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S. 1. Introduction Evolution of economic development theory prior 1980s: how the relationships between local assets and firms influenced location and investment decisions after 1980: how inter-firm relationships influence firm location and investment decisions

30/03/2001ITT – Lecture 94 Factors for this change in the way of thinking: decline and restructuring in U.S. mass production prominence of regional cases disintegration of large firms Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture 95 U.S. Firm Characterisation Heavy on Competition / Light on Cooperation “Arms Length” transactions / Rigid Hierarchies Weak Ties between Firms and Suppliers Legal Conflicts with Competitors and Suppliers Poor Coordination by Business Associations, Unions, Gov. Support Structures Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture 96 Goals of national and state programs for industrial policy in U.S.: stimulate technology adoption and process improvement improve access to capital stimulate and share research and development improve relationships/logistics between suppliers and producers Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture 97 Key Factors For Aiding Competitiveness: State, Federal and Local Government Funding Government Intervention Creation of Inter-Firm Intermediaries Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture Inter-firm Cooperation and Collective Efficiencies Geographical Clustering Joint Projects Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture 99 Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture 910 Types of Collective Action and Collective Efficiencies Influencing Government Policies+ Market Coordination- Market Development+ Improving Labor and Mngt. Skills+- Improving Quality through Organizational or Technical Change+- R&D+ Improving Labor Standards+Norms- Strategic Planning and Markt. For Industry+- Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture Case Studies a) Furniture Industry b) Aerospace Manufacturing c) Use of Advanced IT in Rural Region Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture a. Furniture Industry Employs Nationally Concentrated in NC, L.A., Mississippi, N.Y., MI 70% of Establishments have less than 20 employees Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture a. Furniture Industry – Intermediary Inst. Concentration in NC AFMA, IHRFA, NHFA. Services Provided - Import/Export Contacts - Lobbying Activities - Training Centres (Operational+Mngt Skills) - R&D (Industrial Extension) - Strategic Planning on Retail Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture a. Furniture Industry – Problem and Solution National Associations Create Geographical Asymmetries (NC Cluster) Little attention given to skills upgrading SOLUTION:. Creation of Local Institutions (TMFA). Encourages Use of Local Suppliers. 38% regional employment growth (national = 2%) Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture b. Aerospace Manufacturing Heavily Dependent on Gov. Investment (80’s) 2,2 million workers in 1988 / 1,7 million in 1998 L.A. (CA), Seattle (WA), St. Louis (MO), Boston (MA), Long Island (NY) Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture b. Aerospace Manufacturing Deep Relation Between Companies and Suppliers Intense collaboration with Suppliers Limited to Specific Projects Associations (Gov. Lobbying and Promote Exports): Aerospace Industries Association American Electronics Association National Machine Tool Association Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture b. Aerospace Manufacturing – Problem and Solution Long Island most affected by cutbacks. Dramatic downsizing (> in 5 years). Profound Regional Restructuring. Not a Cyclical Phase SOLUTION:. Department of Economic Development. Agglomerated all Actors. Coordinate Applications for Fed. Assist.. Implement and Package Programs. Market Services to Clients Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture b. Aerospace Manufacturing – Solution New Programs Tailored to Defence Needs Firms Cover 50% Technical Assistance Costs Case by Case Analysis of Firms PROGRAMS: Industrial Effectiveness Program Econ. Development Skills Training Program Global Export Market Service Assistance for support on R&D Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture b. Aerospace Manufacturing – Results New Process, Market, Product, Capital Establish a Reward System for Meeting Goals Create a System to Monitor Performance Still, Recovery was not complete Abandon Defence Contract Dependency Despite no guarantee in data validity:. Reduction in Gov. Dependency. Increase in employment. Sales Growth and Diversification Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture c. Use of Advanced IT in Rural Region Telecommunications: a)Catalyses Economic Growth; b)Enhance Intra and Inter-Community Communication; c) Information Exchange. Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture c. Use of Advanced IT in Rural Region Problems in Rural Areas: a)Population Density and Income; b)High Connecting Costs (no economies of scale/scope). Results in negative feedback loop; Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture c. Use of Advanced IT in Rural Region - Solution ACEnet Ventures: Non-Profit Community Development Institution Serves 27 High Poverty+Unemployment Counties Low Median Income Attempt to Develop Industrial Structure and Culture Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture c. Use of Advanced IT in Rural Region - Solution ACEnet Goals: Improve Access Increase Technology Literacy New Internet Technology. Competitiveness. Market Reach ACEnet Technology Center Initiatives: High-Speed Portal / ISP Training in Basic Computer and Internet Skills Stimulus to Business Startups on E-Commerce Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.

30/03/2001ITT – Lecture Conclusions U.S. viewed as having weak Inst. of Collective Action Industry Associations focused on lobbying and marketing activities Government action fills gaps but does not substitute Relation to Case Studies: Government Action vs. Collective Action vs. Associations Increasing Collective Efficiencies: The Role of Regional Initiatives in Improving Firm Performance in the U.S.