February 2009

Research- and technology-intensive universities, especially via their entrepreneurial spinoffs, have a dramatic impact on the economies of the United States and its fifty states. A new report on the Massachusetts Institute of Technology, indicates conservatively that, 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. A less conservative direct extrapolation of the underlying survey data boosts the numbers to 25,800 currently active companies founded by MIT alumni that employ about 3.3 million people and generate annual world sales of $2 trillion, producing the equivalent of the eleventh-largest economy in the world.

These findings result from an analysis of MIT alumni-founded companies and the entrepreneurial environment that fosters this new-company creation. Conducted by Edward B. Roberts and Charles Eesley of the MIT Sloan School of Management, the report is based on a 2003 survey of all living MIT alumni, with additional detailed analyses, including verification and updating of revenue and employment figures to 2006 from records of Compustat (public companies) and Dun & Bradstreet (private companies).

The ultimate value of this study is to help us understand the entrepreneurial impact that universities can have. We know that universities play an important role in many economies, creating economic impact through their core education, research and development, and many other spillovers, but universities also can create a culture and programs that make entrepreneurship common. While MIT’s leadership in developing successful entrepreneurs has been evident anecdotally, this study–one of the largest surveys of entrepreneur alumni ever conducted–quantifies the impact of MIT’s entrepreneurship success. And, while MIT is more unique in the programs it offers and in its historical culture of entrepreneurship, it also provides a benchmark by which other institutions can gauge the economic impact of their alumni entrepreneurs. The report also provides numerous examples of programs and practices that might be adopted, intact or modified as needed, by other universities that seek enhanced entrepreneurial development.