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Study Examines Economic Impact of MIT-Related Companies

March 28, 1997

In what is touted as the first major national study of the economic impact of a research university, BankBoston recently reported on the economic impact of companies founded by graduates of the Massachusetts Institute of Technology (MIT). The report, MIT: The Impact of Innovation, "is a case study of the significant effect that research universities have on the economies of the nation and its 50 states."

Graduates of MIT have founded some 4,000 currently active companies, according to the report. Worldwide, these companies account for annual revenues of almost $232 billion. Compared with foreign countries, MIT-related companies would rank 24th largest in the world -- just behind South Africa and ahead of Thailand.

The total employment of the companies exceeds 1.1 million. Within the U.S., the MIT-related companies employed 733,000 people at more than 8,500 offices and plants in the 50 states. According to the report, the five states benefitting most from MIT-related jobs are California (162,000), Massachusetts (125,000), Texas (84,000), New Jersey (34,000), and Pennsylvania (21,000). Thirteen other states had more than 10,000 MIT-related jobs: Colorado, Connecticut, Florida, Georgia, Illinois, Iowa, Kansas, New York, Ohio, Oregon, Virginia, Washington, and Wisconsin.

In determining the location of a new business, the factors cited most frequently were the quality of life in the community, proximity to key markets, and access to skilled professionals, according to a survey of 1,300 MIT graduates that founded companies. Other significant factors in locating businesses were access to skilled labor, low business costs and access to universities.

The report was prepared by the BankBoston Economic Department based on data maintained by MIT and independent resources. MIT has maintained a database of companies founded by its graduates since 1990. To provide more information about these companies and to lay the basis for maintaining current information on sales, employment, industry category, and location, the MIT database was matched against the records of American Business Information, which include employment, sales, and other information on some 10 million U.S. companies.

To request a copy of MIT: The Impact of Innovation, contact the MIT news office at 617/253-2700 or send an e-mail to newsoffice @mit.edu The report is also available on the World Wide Web at http://web.mit.edu/ newsoffice/founders/