Dr. William A. Reinke, treasurer of University Associates and professor of International Health at the Hopkins School of Public Health, said that when the company was incorporated a year and a half ago, its organizers believed they were entering a promising field. "We had a $100,000 contract and thought that the business would be taking off. But the organizational problems were too much--no work has been done so far."
"Consulting is a Harvard phenomenon," says ZviGriliches, Professor of Economics. "At the University of Chicago we were paid a good salary and expected to devote time to teaching--academics was always number one. But implicit in the offer of a Harvard professorship is the fact that one can take a $10,000 cut in salary because the money can be made up on the outside." At Harvard, Griliches concludes, with the strip of technological firms along Route 128, the more than 100 consulting companies in the Boston area, and the east coast network of law firms, "there is a whole panacea of opportunities for outside work."
"Where there are universities, there are consulting firms," says Peter Merrill, vice president of operations for Abt Associates, a Cambridge-based social research firm, "and here in Cambridge it is a huge industry." Merrill says that Abt, which grossed over $16 million last year, has employed "a high number" of Harvard professors since it was started ten years ago. Abt currently pays Harvard professors between $300 and $500 a day, Merrill said.
Net income after taxes for Abt rose from $149,000 in 1970 to $527,000 in 1974--an increase of just under 30 per cent every year since 1970. Revenues have skyrocketed from under $7 million in 1972 to $16.5 million in 1974. Merrill says that Abt's financial success is paralleled by all the other Cambridge firms that have gone into consulting.
The Cambridge consulting business has proven so successful that in 1972 two sophomores majoring in Economics started their own firm, which has been tripling in growth rate ever since. The president and vice president of the firm do not want to be identified for fear that competitors will hold their youth against them, and because prospective clients may not entrust them with projects.
The vice president says that she and the president "promote, manage and run the firm," adding that they must rely "100 per cent on the consultants to provide the technical know how." "So far we have employed only six Harvard professors at a rate of $100 an hour," the president says, "but you can be sure that many others are working at our competitors' firms."
Professors at this firm usually work on a project as top level consultants, but at times some Faculty have been involved in all aspects of a particular project. The young entrepreneurs have also hired nearly 40 Harvard graduate students and about 20 undergraduates who do research for between $4 and $25 an hour.
"Competition is pretty intense in Cambridge," the president says, "but there is a true resource of academic talent just waiting to be used. Professors at Harvard are smart. They know where the money is."