If the companies founded by MIT graduates and faculty formed an independent nation, the revenues produced by the companies would make that nation the 24th largest economy in the world [1]. The 4,000 MIT-related companies employ 1.1 million people and have annual world sales of $232 billion [2]. That is roughly equal to a gross domestic product of $116 billion, which is a little less than the GDP of South Africa and more than the GDP of Thailand.
This study is the first effort made to measure the national job creation impact of a single research university, and represents a case study of the significant effect that research universities have on the economies of the nation and its 50 states. Eighty percent of the jobs in the MIT-related firms are in manufacturing (a high percentage of products are exported. In determining the location of a new business, these entrepreneurs say the quality of life in their community, proximity to key markets, and access to skilled professionals were the critical factors, according to an MIT survey of 1,300 corporate founders which is incorporated into the study. Other significant factors in locating businesses were access to skilled labor, low business cost, and access to MIT and other universities. (Many of the MIT-related founders have degrees from other universities, and these entrepreneurs keep close ties with MIT and other research universities and colleges.) For these entrepreneurs, the traditional business location concerns of mature corporations regarding taxes and regulations played a lesser role in their location decision.esser role in their location decision.
The findings of the study also reveal:
The largest number of MIT-related companies are in Greater Boston, northern California and the Northeast, but significant numbers of companies can be found in the South, the Midwest, the Pacific Northwest, and in Europe. Jobs created by these companies are in all 50 states. California, Massachusetts and Texas lead the nation in MIT-related jobs, but 15 other states --Washington, Oregon, Colorado, Kansas, Iowa, Wisconsin, Illinois, Ohio, Pennsylvania, New Jersey, New York, Connecticut, Virginia, Georgia and Florida--have more than 10,000 jobs each as a result of MIT-related companies. {Map 1 shows all jobs located in each state, regardless of where corporate headquarters are located. Map 2 shows the headquarters location of U.S. firms; the shading also shows total sales of MIT-related companies by state. Map 2A shows the Northeast portion of the U.S. in greater detail.}
MIT-related companies are not typical of the economy as a whole; they tend to be knowledge-based companies in software, manufacturing (electronics, biotech, instruments, machinery) or consulting (architects, business consultants, engineers). These companies have a disproportionate importance to their local economies because they usually sell to out-of-state and world markets and because they so often represent advanced technologies.
Firms in software, electronics (including instruments, semi-conductors, and computers), and biotech form a special subset of MIT-related companies. They are at the cutting edge of what we think of as high technology. They are more likely to be planning expansion than companies in other industries. They tend to export a higher percentage of their products, hold one or more patents and spend more of their revenues on research and development. (Machinery and advanced materials firms share many of these same characteristics, but are nowhere near so numerous as the electronics, software and biotech companies.)
These companies are highly dependent on a workforce of skilled professionals. They rank product quality and reliability, customer service and innovation as the most important ingredients to their success and devote substantial time and attention to studying how to build a corporate culture which stresses innovation, cooperation and individual attention.
Approximately 150 new MIT-related companies are founded each year. A relatively few large companies account for the bulk of total MIT-generated employment, with 106 companies of 1,000 or more employees representing nearly 90 percent of the jobs. Not surprisingly, most of the larger companies have been in existence for some time, but many younger entrepreneurs have built sizable companies in a short period of time. One in eight of the companies founded by a graduate out of school 15 years or less already has 100 or more employees.
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