Brave new world

The spate of sales of large local companies to out-of-state owners has been the topic of water cooler conversation for months now. Recent acquisitions of three prominent Boston-based companies are producing newfound concern about the loss of local identity. As the civic spotlight scans for new people and entities to take their place, one wonders, are we asking the right questions?

In this issue, CommonWealth editor Robert Keough has brought together a remarkable group to consider these questions (“Corporate Citizens,” page 78). The central messages that emerge from this wide-ranging discussion of the economic, philanthropic, and civic roles of business in a changing economy are these: Public company CEOs have many more masters than in previous generations, pushing local civic affairs further down the list of priorities; the “headquarters effect” of greater commitment to the city and region where a company is based is real, but so too is the inevitability of corporate restructuring in response to global pressures; as the pool of big corporate chieftains shrinks, it will be critical to engage a wider range of business leaders, including up-and-coming entrepreneurs and executives, in public issues; among those issues, none matters more than education and workforce development; and, finally, never forget that our core competitive advantages as a region are innovation and capital formation.

Harvard economist Ed Glaeser has argued that in our “reinvention economy” churn and innovation are hallmarks of Boston’s regional economy over its long history (“Mother of reinvention,” CW, Fall ’03). Creative destruction of corporate entities is inevitable, Glaeser says, so our community should focus not on companies but on people—their creativity, diversity, and capacity to stay at the cutting edge. This observation—and the roundtable’s emphasis on the importance of education and training—reinforce the message of MassINC’s New Skills for a New Economy: Our state needs to realign its training and educational resources to today’s world in order to close the “skills gap” and meet the challenge of competition from other states and nations.

The roundtable discussion also surfaces issues about the role of state government in economic development. MassINC’s report Lessons Learned: 25 Years of State Economic Policy grappled with these issues, picking the brains of a bipartisan group of former economic development secretaries. Their conclusion was straightforward: The state can—and should—do little to have a direct impact on private investment. Rather, the state should focus on laying the groundwork for economic growth: a sound infrastructure, an educated workforce—and consistent, transparent, and predictable regulation, including taxes and zoning.

But what about the civic leadership once provided by the heads of large local companies? One place to look for nominees is in the large nonprofit organizations—the universities and hospitals—that dominate the Boston-area landscape. Our recent study, The Massachusetts Nonprofit Sector: An Economic Profile, adds insight to this idea. We find that Massachusetts far outstrips the national average in nonprofit employment and that the sector as a whole —diverse as it is—has seen robust job growth at a time of overall employment decline in the Bay State.

Such a large and growing segment of the economy should be a natural source of leadership as well as jobs (and, in the case of medical and higher-education institutions, spinoffs in the form of new companies), but there is reason to wonder whether even the largest of these nonprofit entities will ever fill the shoes of a large corporation. As “charities” themselves, they are unlikely to perform the philanthropic role of large companies, doling out dollars for worthy causes. And their very rootedness in the community leaves them especially vulnerable to the vagaries of local politics. Unlike corporations, which can locate anywhere, hospitals and universities expand by spreading out; to do that, they need variances and approvals from local officials. Leaders of these institutions will never be as free to challenge the status quo as a corporate CEO.

As much as the sales of Fleet, Hancock, and Gillette have put the implications of mergers on everyone’s minds, it’s important not to overstate the upheaval in the local scene. Here at MassINC, in our own dealings with companies that have recently changed hands, we haven’t seen any wane in interest. Instead, we have seen sustained—in some cases deepened—engagement in local concerns.

But going forward, perhaps we will have to put our expectations about civic leadership in the context of our region’s constant reinvention. Venture capital, life sciences, and numerous other areas of invention are already producing the next wave of smart, entrepreneurial individuals, companies, and institutions. It’s up to us to engage them in the future of the Commonwealth as a whole.

Meet the Author

   Ian Bowles