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Published on: 10/26/2004
Last Visited: 8/24/2009
Professor Feldman's presentation
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Professor Maryann Feldman
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Drawing on theories of corporate competitive strategy, Professor Maryann Feldman outlined a new approach to local economic development based on a community's unique characteristics-arguing that jurisdictional advantage is established through a strategy of differentiation rather than low costs.
Professor Feldman is the Jeffery S. Skoll Chair in Technical Innovation and Entrepreneurship and Professor of Business Economics at the Rotman School of Management, University of Toronto.
Prior to joining Rotman, she held the position of Policy Director for Johns Hopkins Whiting School of Engineering.
She was also a research scientist at the Institute on Policy Studies at the University.
Her research focuses on the areas of innovation, the commercialization of academic research, and the factors that promote technological change and economic growth.
A large part of her work concerns the geography of innovation - investigating the reasons why innovation clusters spatially and the mechanisms that support and sustain industrial clusters.
Professor Feldman was introduced by Dr. Kent Hughes, Director of the Project on America and the Global Economy at the Woodrow Wilson Center.
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In her presentation, Professor Feldman focused on the need of cities and economic regions to construct a jurisdictional advantage, a deliberate and unique construction of social, economic, and political assets that help the city gain competitive and innovative advantages.
If she had been running in a political race her campaign slogan probably would have been "it's the location, stupid."
Professor Feldman noted how companies built a competitive advantage by either developing a unique product or service or by using a low cost approach to providing a product and service.
By low cost, she stressed that she did not mean cutting prices and hence profit margins.
For example, she pointed to Southwest Airlines' business strategy that built an entire, complex system to create their low cost advantage.
To meet their price, a company essentially had to master and either duplicate or improve on their total system.
In Professor Feldman's view, cities and regions needed to learn from the strategies of successful companies.
She recognized that corporate strategies were relatively simple - their principal goal was profit maximization.
Cities have broader goals that included quality of life, security, and protecting the environment, as well as fostering economic growth and job creation.
It was in terms of generating growth that she felt the cities had most to learn from the business approach.
Just as she did not see a future for companies that simply cut prices and profits, she did not see long-term success for cities or regions that relied on low wages or luring industry with tax breaks and other incentives.
When economic conditions change, the lured company is often the first to leave.
In terms of a strategy for growth, Professor Feldman rejected both the laissez faire approach of passively waiting for the magic of the market place and the kind of active industrial targeting that attracted attention in the United States in the early 1980s.
In her view, technology simply changed too rapidly and unpredictably for industrial targeting to work.
Instead, she encouraged cities and regions to focus on constructing a jurisdictional advantage, a unique system that would allow them to capitalize on new innovations while staying flexible to market changes.
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In New York, Professor Feldman pointed to N.M. Rantisi's work on the fashion industry where a series of complementary industries, services and educational institutions developed that helped the garment industry to move to high value added production.
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Professor Feldman argued that by the time it was clear that an innovation was going to be a market force that a city or region might desire it is already embedded in a supportive cluster elsewhere.
She again stressed the importance of building on existing strengths and, where necessary, focusing on attracting the missing industries to complete a cluster.
To continue to build on their existing strengths, city and regional governments must communicate effectively and regularly with their business stakeholders to ensure that regulatory requirements are not constraining further growth.
Professor Feldman closed by noting that she will be going to India in the near future to add an international dimension to her work.
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During the discussion, a number of participants noted other studies and research that parallels Professor Feldman's work.
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Professor Feldman noted that one of the most important aspects of the work may be a greater understanding of what not to do.
Finally, participants raised the issue of states versus local regions.
It was noted that while states may be the controlling political jurisdictions, the loci of economy activity is the local region - which may span state boundaries, as does the Washington DC metropolitan region.
Professor Feldman stressed the importance of a regional strategy for competitive advantage.
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