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MIT's Economic Impact Studied

By Frank Dabek
associate news editor

According to the first national study documenting the economic impact of a research university, MIT alumni have founded more than 4,000 firms which employed an estimated 1.1 million people and generated $232 billion in sales worldwide during 1994.

BankBoston and MIT conducted the study, which was entitled, "MIT: The Impact of Innovation." The study reported that 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," placing MITabove Thailand and below South Africa.

"The report demonstrates clearly part of the return to society on the investment that the federal government makes in our students and faculty through the sponsorship of research at universities," said President Charles M. Vest.

"The study demonstrates how entrepreneurial and creative our alumni have been,"said Lawrence S. Abeln, director of the masters program at the Sloan School of Management.

The news was also welcomed by Massachusetts politicians. "The people of Massachusetts have always known that MIT is a huge asset for our state and country - now we know just how big an asset it is," said Senator John Kerry, D-Mass.

MIT aids entrepreneurialism

MITofficials credit a number of factors for the Institute's large economic impact.

"MIT promotes entrepreneurship really in two major formsŠ education and research," said Lita Nelsen, director of the Technology Licensing Office.

The Technology Licensing Office aids the educational side by helping researchers learn "to identify areas of research that are potentially candidates for commercializationŠ [and by] protecting the intellectual property through patents, copyrights, etc.," and with licensing relating to company start-ups, Nelsen said.

In addition, the Sloan School has encouraged ingenuity. Ten to 15 percent of Sloan graduates go on to found their own businesses, Abeln said. "We are a breeding ground for entrepreneurialism," he said.

Sloan has been incorporating entrepreneurialism into its curriculum in the form of the "product and new venture" track, Abeln said.

Programs such as the $50K Business Plan Competition, Independent Activities Period courses given by the MIT Enterprise Forum, and lectures in engineering courses on patenting, licensing, and starting up new businesses were ways that Sloan reinforces "a climate of entrepreneurship," Nelsen said.

Research still focuses on discovery

Although the study focused on the economic impact of MIT innovation, many at MITfeel that it is not only entrepreneurialism that drives enterprising alumni.

"Learning is MIT's most important aspect. We learn through both formal education and through our research, which is woven together with education," Vest said.

Research without immediate commercial applications was also seen as a valuable. "What I believe should not be done is to encourage researchers to veer their efforts away from discovery research and into Œpractical research' for the sake of entrepreneurship," Nelsen said.

"Entrepreneurship is a pleasant and encouraged by-product, not the primary objective," said Vest.

MIT seems to strike a balance between research, education, and business, the report said. "The combinationŠ prepares our graduates to contribute to society, and one important way that many choose to do this is by developing companies that create jobs and wealth," Vest said.

EECS majors founded most firms

The study revealed that companies founded by MIT compare favorably to the rest of the economy. According to the study, 80 percent of the jobs in businesses associated with MIT are in manufacturing, compared with 16 percent nationally.

Electrical engineering and computer science majors founded the most firms, followed by mechanical engineering, management, civil engineering, and chemical engineering.

Some companies related to MITinclude Hewlett-Packard Co., founded by William R. Hewlett SM '36; Raytheon Co., founded by former Chairman of the Corporation Vannevar Bush '16; and Digital Equipment Corp., founded by Kenneth H. Olsen '50.

MIT-related firms have offices in all 50 states, concentrated in greater Boston and the Northeast.