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Although attitudes have changed slightly over the past decade, the widespread perception remains that inner cities have little to offer for-profit businesses. A closer look, however, proves otherwise. In fact, America's inner cities are home to more than 800,000 small and midsize businesses.
According to research conducted by the Initiative for a Competitive Inner City (ICIC), nearly 12,000 new businesses are started each year in the inner cities of the country's 100 largest cities, and New England cities are well represented.
Other fast-growing inner city companies cater to the underserved inner city population. Still others supply support services-printing, back-office functions, just-in-time supplies-to dominant industry clusters in the region, such as financial services, health care, and education.
Harvard Business School professor Michael E. Porter, who founded ICIC in 1994, believes that in generating jobs and economic opportunity, for-profit businesses do more to improve conditions in inner cities than short-term social programs with uncertain funding cycles. Such programs are valuable, but only the private sector has the resources to solve the intractable social problems that beset low-income urban neighborhoods.
Inner cities have inherent competitive advantages. If understood correctly, these advantages-location, available workforce, untapped consumer market, and opportunities to support major regional industrial clusters-can be leveraged to build profitable businesses. Companies will prosper if they pursue economic self-interest founded on genuine competitive advantages and do not rely on government subsidies and incentives.
A major barrier to business development in low-income urban neighborhoods is the perception that inner cities either have nothing to offer a business or that crime and isolation offset competitive advantages. But research shows that under the radar thousands of companies operate profitably in inner cities. Of course, among the many companies are mom-and-pop enterprises that appear and disappear. But the overwhelming majority of inner city companies are profitable businesses that...