MIT Faculty Newsletter  
Vol. XVII No. 2
November / December 2004
Comment on the FPC Suggestions
on Faculty Governance
A University Residential Community at MIT
Institutional Level International Engagements: Points for Discussion
Professors of the Practice:
Bringing the Real World to MIT
The Industrial Performance Center
President Appoints Medical Care
Task Force
Assessment of Teaching Facilities Continues
Watching the One-Eyed Hawk
A Beer with J. R. R. Tolkien
Not Another Survey!
The role of the Faculty Newsletter
Faculty Mentor Program –
Faculty & Athletes: A Winning Combination
Percentage of Faculty with
Highest Degree from MIT
Awarding Institution of Highest Degree: Tenured and Tenure Track Faculty
Printable Version

Research at MIT

The Industrial Performance Center

Richard K. Lester

What's in a name? To some, the name of the Industrial Performance Center may conjure up images of black-clad dancers, gliding among rusting girders strewn across an old factory floor. There is no performance art at the IPC, at least not most of the time. But the image of the abandoned factory is not entirely misplaced. For our subject is industrial transformation: how it happens, why it happens, and what it means for firms, for the people who work in them, and for the communities in which they operate.

Good research almost always begins with a good question. At the IPC, the core question is one that preoccupies firms, governments, communities, and individuals throughout the world: What is needed in order to prosper or, if not that, at least to survive in a globalizing economy? What skills, what strategies, what technologies, and what new forms of organization are most likely to bring success in particular competitive situations? And how do technological changes now underway shape the options?

The Center's purpose is to bring together the intellectual resources of the Institute in interdisciplinary research collaborations designed to strengthen understanding of these issues and to help leaders in industry and government develop practical responses to them. Faculty and students from all five MIT Schools take part in our research projects, and through these projects the Center serves as a kind of listening post on industry, monitoring patterns of organizational and technological practice, interpreting them for our partners and sponsors, and feeding our observations back into the core disciplines and curricula of the Institute. (By industry we mean the whole chain of activities from thinking up a new product or service to delivering it to a customer. Today the old distinctions between manufacturing and services have largely evaporated.)

The Center's interdisciplinary character can be traced back to its progenitor, the MIT Commission on Industrial Productivity, which in 1989 produced the famous Made in America report.

At the heart of that project was a sometimes stormy but ultimately highly productive relationship between the engineers and the social scientists on the Commission. One of the recommendations of Made in America was to establish the Industrial Performance Center to carry on the interdisciplinary investigations begun by the Commission.

A second trait that the Center inherited from the Commission is the emphasis on close observation of industrial practices -- on developing a picture of what is happening in particular industries from the ground up. A top-down perspective has important advantages. It enables a focus on those factors that affect the behavior of economies in the large, especially the fiscal and monetary policies that influence overall levels of employment, income, savings, and investment. But to understand the direction of industrial change, and the opportunities and the risks that it presents, it is also necessary to know what is taking place on the ground - on the factory floors and in the offices, the laboratories and the classrooms. It is here, on the front lines of industry, that the struggle to improve competitive performance is won and lost. And so, in the dozen years since it was formed, the Center's faculty and student researchers have carried out nearly two thousand visits to firms on every continent, from clothing factories in China's far west to biological research laboratories in Cambridge, England to NASCAR race garages in North Carolina. The insights gained during these visits constitute an extraordinary record of the changing face of industry, and have shaped scores of theses, as well as many books and articles published by IPC researchers over the years.

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Current Research Projects

Three current projects suggest the reach, intellectual as well as geographical, of our research. The IPC's Globalization Project is examining the new challenges posed by globalization for productivity growth, innovation, the creation of good jobs, and broad political legitimacy in the nations it encompasses. 'Globalization' refers to the set of changes in the international economy that are tending towards the creation of a single world market for capital, goods, and services. The Globalization Project focuses on one aspect of these developments: the fragmentation of the production systems of firms in the advanced economies, and the relocation of parts of these enterprises to other societies. Exploiting the opportunities provided by new communication and transportation technologies, as well as the internationalization of capital markets, many firms are breaking off parts of their productive activities and relocating them to foreign countries. What is relocated may range from the low-skilled, high labor-cost parts of the business to the most technologically-advanced research and development laboratories. Why firms choose to move - and what they choose to move - is influenced by factors such as the search for lower labor and land costs, the desire to move closer to valuable assets like the research institutions and consumers of another country, and the requirements imposed by host governments for selling and operating in their societies.

While the basic process of globalization has been much studied, its effects on individual firms and on their home societies have not. To investigate these questions, the IPC research team is studying the strategies, plants and laboratories of leading firms in several industries, including electronics, automobiles, software, and textiles and apparel, with home bases in the United States, Europe, Japan, and Taiwan. What choices are managers in these industries making about how to structure their firms, about what to produce and with whom, and about where to produce it? By comparing the different ways in which firms and industries are addressing these questions, the Globalization Project is shedding new light on the space for choice and how alternative globalization strategies will affect future innovation, growth, job content, and societal learning.

Another component of globalization research at the IPC focuses on the impact on developing countries: competitiveness, yes, but at what cost and for whose benefit?

This project so far has two central elements: labor standards and migration. IPC researchers are working with private firms in the apparel and shoe industries to assess their efforts to respond to public pressures over the working conditions of their subcontractors in Asia and Latin America. A second focus is on the regulatory mechanisms already in place in Latin America, particularly in Mexico, the way in which they have been misunderstood and distorted by attempting to fit them into U.S. models of regulation and government organization, and the potential they offer as an alternative model for generating and enforcing international labor standards. In migration we are focusing on the movement of people between developing and developed countries, the public policies surrounding the remittances which the migrants send back home, and the ways in which the migrants themselves use these policies to affect economic development both positively and negatively.

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In a third project, IPC researchers are investigating the role of innovations in products, services, and processes in promoting productivity growth and competitive advantage at the local and regional levels. National and local governments around the world, as well as other institutions with an interest in economic development, are greatly interested in creating and sustaining local environments that are attractive for innovation. The policy debate has been dominated by a few outstandingly successful centers of technological entrepreneurship, notably including the Boston area. But most locales do not have clusters of high-technology ventures of this scale, nor are they home to research and educational institutions with world-class strengths across a broad range of disciplines. Many, on the other hand, do have distinctive industrial capabilities and vibrant higher educational institutions, and some of these locales have been quite successful in harnessing new technology to revitalize their economies or even to reinvent themselves as centers of innovation and competitive advantage. The Local Innovation Systems Project, an international research partnership based at the IPC, is investigating cases of actual and attempted industrial transformation in more than twenty locales in the United States, Europe, and Asia. At each location, teams of researchers from the IPC and its partner institutions are studying innovation trajectories and patterns of growth and diversification in specific industries. There is a special focus on the roles of universities and other public research institutions as creators, receptors, and interpreters of innovation and ideas; as sources of human capital; as problem-solvers for industry; and as providers of public space for open-ended explorations of new technological and market opportunities.

These are just three of the research projects currently underway at the IPC. Others include long-term studies of the impact of technology on income and occupational distributions and on education and skill requirements in the U.S. labor market; research on the organization of design and new product development activities; and a now nearly decade-long study of China's emerging industrial and technological capabilities. But an intellectually vigorous research center amounts to more than the sum of its projects. Over the past decade, the IPC has made a series of ongoing investments to help build the community of scholars with a commitment to research and education on the uses of technology in industry and the consequences for productivity and society. (In this we have been greatly aided by the continuing financial support of the Alfred P. Sloan Foundation and its program on Industry Studies.) For example, we have periodically organized campus-wide faculty seminars intended to facilitate serious, sustained discussion of important developments in the industrial economy. The most recent of these was a year-long examination of the technological, economic, and demographic factors that are reshaping the research universities and the strategic implications of these changes for our own institution.

Similarly, the IPC's Doctoral Fellowship Program provides a limited number of opportunities each year for advanced doctoral students to pursue independent thesis research in fields related to the Center's mission and objectives. Candidates are selected on a competitive basis and are drawn from across the Institute. There are no restrictions on the disciplinary background of the Fellows. We particularly encourage applications in areas related to the primary research themes of the Center, although creative proposals outside the thematic guidelines are sometimes funded. Applicants must demonstrate their intention to conduct significant field research in industry, and must show how the field research is to be integrated into their overall intellectual program. The Fellows reside at the Center for the term of their award (and sometimes for longer), and make many important contributions to the intellectual life of the Center. They in turn are granted entry into a research community comprised of faculty and students with interests similar to theirs but who come from departments with disciplinary orientations that they would not normally encounter. Many of them say that their sense of connection to this interdisciplinary community is one of the highlights of their MIT education.

At a conservative count, scores of faculty members and more than a hundred graduate students from seventeen MIT departments have taken part in the IPC's activities since its inception in 1992. The Center's programs are guided by a faculty steering committee currently consisting of Suzanne Berger (Political Science), Richard Lester (Nuclear Engineering), Frank Levy (Urban Studies and Planning), and Michael Piore (Economics). For further information about the Industrial Performance Center, please visit our website at

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