The U.S. is NOT Losing Out to India and China

Last Updated Nov 21, 2008 10:17 AM EST

It's almost become accepted fact: America is losing its innovation lead to India and China as we fail to teach our students science and math, and as our investment in government-funded research dwindles.

Not so fast, argue experts in a fascinating article in economist.com, Innovation in America: A Gathering Storm?
Amar Bhide of Columbia Business School calls the idea that America is losing its innovation chops a serious misreading of trends.

His points:

  • Innovations are less about who dreams them up than who capitalizes on them with better business models. Just because China and India award more technical degrees doesn't translate into commercial success.
  • American business strengths in marketing, distribution, sales, and customer service provides U.S. firms a decided advantage over international rivals in diffusing innovation into markets.
  • The American consumer has an unquenchable thirst to try new things, which matches nicely with the country's entrepreneurial inclinations.
The article also quotes UC Berkeley professor Henry Chesbrough with the opinion that America's multinational firms are well positioned to both take advantage of global resources as well as to understand consumer needs in different regions.

Is Government Protection Needed?
A different perspective is advanced by Harvard Business School's Clay Christensen, the father of "disruptive innovation," who says India and China may in time disrupt established American companies, especially is our school system is not updated. But he also agrees with Bhide that skilled managers are more important to the economy than theoretical scientists.

There is also a consensus that as innovation becomes increasingly global in nature, U.S. policymakers should not be engaging in protectionism or creating financial incentives for American innovation.

Do you have a sense that the United States is losing its competitive edge to Asia? What should we do about it?

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.