HBR IdeaCast How Companies Can Adapt to More Government Intervention
Aug 1, 2023
Willy Shih, a Harvard Business School professor and author, dives into the evolving landscape of industrial policy and government intervention. He discusses how crises like the pandemic and climate change have shifted the balance toward more government involvement in businesses. Shih highlights new challenges and opportunities for companies, including adapting to subsidies and localized strategies. He emphasizes the importance of CEOs engaging with policymakers to effectively navigate these changes and improve communication between sectors.
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Increased Government Intervention
- Governments are increasingly intervening in markets, trying to shape outcomes rather than letting market forces decide.
- This shift marks a departure from the previous emphasis on free markets and globalization.
Global Trend of Industrial Policy
- The rise of industrial policy is a global trend, driven by factors like the pandemic, climate change, and geopolitical tensions.
- Countries are responding to perceived market failures and imbalances caused by other nations' subsidies.
US and European Competition
- The US Inflation Reduction Act, with its subsidies for renewable energy, prompted a response from European leaders.
- They feared losing investment and jobs to the US, leading to a competitive race in industrial policy.