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Despite their geographic proximity, a wide gap separates the Spanish-speaking neighborhoods of Dorchester from the lush lobbies and glass-walled offices of Boston's financial district. In early May, Michael Porter tried to bridge that gap. Speaking to some 200 executives assembled by the Greater Boston Chamber of Commerce, he pitched the advantages of the inner city and called on businesses to get involved in the city's resurrection.

"Too many efforts in the past to develop inner-city areas have tried to defy the laws of economic gravity," he said. "They tried to create artificial economic activity through subsidies or other interventions in the market process. Instead, we've got to have a strategy that reflects the reality of the modern international competitive marketplace and the regional economy."

Appealing to the enlightened self-interest of business owners, Porter again touted the market potential and locational advantages of urban areas, while trying to overcome false impressions-of high crime, of an unmotivated work force, of poor markets. "Problems of perception really permeate this issue," he said. "One of the major reasons we created the field-study program at Harvard Business School, in which the M.B.A.s go and work with inner-city companies, is that we knew the minute they walked in the door, their perception would be changed forever."

Barbara PaigePorter's enthusiasm is unbridled. Like any good salesman, he believes completely in his product. But some veterans of inner-city economic development work have criticized his theories and plans as wishful thinking that both understates the complexity of the problem and oversimplifies the solution.

After the Harvard Business Review published Porter's "The Competitive Advantage of the Inner City" in its May-June 1995 issue, the next issue carried 10 letters in response. Several praised Porter for tackling the issue but also faulted him on various points.

Andrea Silbert, executive director of the Center for Women and Enterprise in Boston, agreed that Porter's assessment of the competitive advantage of the city is accurate, but said his solutions fall short. "Private companies are eager to locate in the inner city," she wrote, "but the costs and risks of doing so are prohibitive compared with locating in the suburbs." For example, she cited real estate as the chief impediment to inner-city development. Many urban sites have been polluted by long-gone industry, she said; substantial public funds are needed for clean-up. Silbert noted that financing is another huge problem. Banks are reluctant to make loans to inner-city business, and most venture capital goes to high-technology, biotechnology, or communications companies. "Economic development in the inner city will not occur unless the issues of real estate and financing are addressed, and that will necessitate some form of government investment," Silbert said.

Porter has stressed that mid-sized or larger established companies are the key to inner-city growth. But that emphasis on helping large firms is wrong, according to Antoinette Malveaux, executive director of the National Black M.B.A. Association in Chicago. Small companies play a greater role in creating jobs, she wrote, citing Census Bureau statistics showing "micro-enterprises" creating close to 3 million new jobs from 1989 to 1991. "The top-down approach that Porter advocates is simplistic, paternalistic, and unworkable," Malveaux concluded.

Mark Willis, senior vice president for regional banking at Chase Manhattan, was also harsh in his critique: "Neither [Porter's] theory nor his specific recommendations fulfill his claim of presenting a radically different approach, and his generalization that 'past efforts have been guided by a social model' seems a cheap shot." Like other critics, Willis said Porter had downplayed the huge contributions made by "community-based organizations"-nonprofit development and housing groups that stuck with city neighborhoods while business abandoned them.

The friction between the professor and the nonprofit community groups-some of whom view Porter as promoting a laissez-faire solution that downplays pressing social needs-is intense at times. Porter admitted that the tension with these groups has been the most difficult part of launching ICIC. "We've had a very warm reception from mayors and officials in Washington," he said. "Actually, the most complicated set of problems has been around the community organizations, in trying to decide who should play what role and overcoming some of the fears and concerns about past private-sector efforts."

According to Porter, part of the problem is ideological: "There is a strongly rooted dose of socialism in the inner city-that business is bad, business is exploitive." In his 1995 paper, Porter said that while the community organizations have done a decent job in developing housing, "the vast majority of businesses owned or managed [by these groups] have been failures. Most community-based organizations lack the skills, attitudes, and incentives to advise, lend to, or operate substantial businesses."

But Porter said he is not advocating that social needs, such as housing, be overlooked. Community organizations have "done the Lord's work" in developing lower-cost housing and in some ways have laid the groundwork for the ICIC business-oriented approach. "It's not time to forget housing. It's not time to forget health care; it's not time to forget families´┐Ż. What we're saying is that in addition, we have to have an economic strategy that is based on a

hard-nosed view of what works in the marketplace."

Mossick Hacobian, executive director of Urban Edge, a community development corporation in Boston's Jamaica Plain neighborhood that has developed or preserved 600 units of housing, said during an interview that Porter's thinking on these issues has evolved. Hacobian recalled that early drafts of Porter's paper minimized the work done by organizations such as Urban Edge. But the drafts were rewritten and relations between the nonprofit groups and ICIC have substantially improved, he said. "Now there's a better understanding of what we're both doing and how we can be mutually supportive."

But Hacobian still challenged Porter's condemnation of government subsidies. He noted that state and federal governments provide huge tax breaks and subsidies to suburban communities, in the form of mortgage deductions for wealthy people owning expensive homes, or new highways leading to those communities or to industrial parks. "This is an outstanding question many of us have been asking for years," Hacobian explained. "There are a number of things in this country we think are subsidies that under a different name are considered okay. But when it comes to creating incentives for low-income people, they are somehow pooh-poohed as subsidies."

Whitney Tilson Porter maintains that government subsidies that are "pre-competitive"-that help with environmental improvement of an inner-city site, for example-are fine. "I think it's perfectly legitimate for us as a community to decide to put money into assembling land, cleaning it up, or tearing down a building or improving a road," he has said. "Then I think we ought to let the marketplace go from there. We shouldn't be giving a business zero rent or giving business a check for hiring somebody."

In an attempt to bridge the gap between community organizations and ICIC, Porter's staff have met with the Local Initiatives Support Corporation, a national nonprofit organization that provides technical and financial advice to community groups. The two organizations may collaborate on future work, according to Mat Thall, program director for LISC in Boston. "There was some amount of skepticism on both sides," he reported. "Some of it may be the perception on the part of ICIC that community development corporations are anti-business, and perhaps the continuing perception on the part of some community groups that ICIC is anti-community organization. Both of those allegations are old, stale, and probably not accurate."

The message of opportunity that Porter articulates-and the involvement by business that he is encouraging-could not be achieved by anyone else, Mossick Hacobian acknowledged. "He's got the research and the analytical expertise and the entr´┐Żes to other corporations and businesses. That's something I don't know if anybody else could do as well."

Porter's Initiative for a Competitive Inner City is at an organizational crossroads. It is trying to make the leap to being a truly national network of corporate advisers and participating business schools; it is raising funds and adding staff in other cities. All the while, it is treading on the turf of organizations that predate it by 30 years. And, with Porter as the main messenger, it must spread the gospel of the inner-city advantage to a jaded public and a sometimes skeptical business community. Porter, however, remains at full throttle, vowing to continue the work throughout his Harvard tenure.

"There's a tremendous debate. But I feel very strongly that we are more right than wrong," he said. "This is such a sharp break, if you will, from many of the past approaches that I think we can anticipate there will be a very active debate, a very active dialogue about it for some time to come. My hope is that we can persuade people by the force of our arguments and that we can continue to learn."


Reporter John Dillon, who lives in Vermont, just completed a year-long Knight Science Journalism Fellowship at the Massachusetts Institute of Technology.


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