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Entrepreneurial Impact: The Role of MIT

This study demonstrates the critical role universities play not only in fostering innovation and entrepreneurial growth, but in stimulating the much-needed recovery in regional and global economies.

According to the study Entrepreneurial Impact: The Role of MIT, which analyzes the economic effect of MIT alumni-founded companies and its entrepreneurial ecosystem, if the active companies founded by MIT graduates formed an independent nation, their revenues would make that nation at least the seventeenth-largest economy in the world. Within the U.S., these companies currently generate hundreds of billions of dollars and hundreds of thousands of jobs to regional economies, particularly those in Massachusetts and California. Globally, a less conservative estimate of their annual world sales would equal $2 trillion, producing the equivalent of the eleventh-largest economy in the world.

“Entrepreneurial Impact” was conducted by Edward B. Roberts and Charles Eesley of the MIT Sloan School of Management, and is based on a 2003 survey of all living MIT alumni, with additional detailed analyses, including recent verification and updating to 2006 of revenue and employment figures.

The overall MIT entrepreneurial environment, consisting of multiple education, research and social network institutions, contributes to this outstanding and growing entrepreneurial output. Highlights of the findings include:

  • An estimated 6,900 MIT alumni companies with worldwide sales of approximately $164 billion are located in Massachusetts alone and represent 26 percent of the sales of all Massachusetts companies.
  • 4,100 MIT alumni-founded firms are based in California, and generate an estimated $134 billion in worldwide sales.
  • States currently benefiting most from jobs created by MIT alumni companies are Massachusetts (estimated at just under one million jobs worldwide); California (estimated at 526,000 jobs), New York (estimated at 231,000 jobs), Texas (estimated at 184,000) and Virginia (estimated at 136,000).

Another reason MIT is so important to the Massachusetts economy, the study reports, is that without MIT, most of these companies never would have been located in Massachusetts. Most of the MIT alumni companies in Massachusetts were founded by former students who came to the state to attend MIT, liked what they saw, and eventually started their companies there. Less than 10 percent of MIT undergraduates grew up in the state, but approximately 31 percent of all MIT alumni companies are located in Massachusetts

Not only do MIT alumni, drawn from all over the world, remain heavily in Massachusetts, but their entrepreneurial offshoots benefit the state and country significantly. More than 38 percent of the software, biotech and electronics companies founded by MIT graduates are located in Massachusetts, while less than 10 percent of arriving MIT freshmen are from the state. More than half of the companies started by MIT’s foreign-student alumni are located in the U.S., creating their primary employment and economic impacts here.

About the Massachusetts Institute of Technology
Launched in 1996, the MIT Entrepreneurship Center provides content, context, and contacts that enable entrepreneurs to design and launch successful new ventures based on innovative technologies. The center does this by giving MIT students, alumni, and colleagues access to an array of educational programs, networking opportunities, technologies, and resources, both at MIT and around the world.