MIT: The Nexus of Innovation in America's Frontier State

225 years after Harvard's founding, the genesis & impact of the Massachusetts Institute of Technology is a story of innovation & entrepreneurship

MIT: The Nexus of Innovation in America's Frontier State

In our exploration of 'Frontier States' throughout history, we've examined how cities like Florence and Istanbul became crucibles of innovation and progress. Now, we turn our attention to a modern institution that has, in many ways, become a cornerstone of innovation in America's own Frontier State of Massachusetts: the Massachusetts Institute of Technology (MIT).

Daniel Patrick Moynihan once famously offered a straightforward formula for building a great city: "If you want to build a great city, create a great university ... and wait 200 years." While Moynihan was a professor at Harvard, which was founded in 1636, he may have been better describing the great university two miles down the road on Massachusetts Avenue. Founded two centuries after Harvard, in 1861, MIT has arguably had a greater economic impact on Boston and Cambridge than even Harvard. In terms of its economic impact on Boston and Cambridge, perhaps no other educational institution in the world has had a more profound impact in a shorter period of time or left as indelible an imprint on the economic ecology of a great city.

This profound impact was first quantified in a groundbreaking study commissioned by BankBoston in 1995 (full disclosure: Ira was the Executive Vice President of BankBoston and the Economic Department, which commissioned the study, reported to him). The study, apparently the first national study of the economic impact of a research university, revealed astounding findings about MIT's influence. It concluded that while only 9% of MIT students came from Massachusetts, 26% of the firms started by MIT graduates were based in Massachusetts. MIT graduates had founded 4,000 firms which in 1994 alone employed 1.1 million people and generated $232 billion in global sales. If MIT graduate companies were a country, the study concluded, they would be the 24th largest economy in the world (Ayres, 1995).

These findings sent shockwaves across the nation and led to a renewed emphasis on understanding and harnessing research universities as vital and instrumental engines of innovation and job creation. Subsequent studies have only reinforced and expanded upon these initial findings. A 2015 survey conducted by MIT itself estimated that MIT's 104,000 alumni have started 30,200 companies, employing 4.6 million people and generating roughly $1.9 trillion in annual revenues. They concluded that if MIT graduate companies were a country, they would be the 9th largest economy in the world -- about the size of Russia or India at the time (Roberts & Murray, 2015).  (Similar studies have documented an equivalent economic impact of Stanford University. See Eesley and Miller, 2012).

The significance of MIT's role as an engine for innovation cannot be overstated. Consider some additional contributions and inventions that this one university has made: 104 Nobel Prize winners (10% of all Nobel Prizes ever awarded), including three Nobel Prizes just this month (1 recipient of the Nobel Prize in Chemistry and 2 recipients of the Nobel Memorial Prize in Economics); the World Wide Web (Tim Berners-Lee), the computer mouse, the solid-state transistor, core memory, modern meteorology. An MIT graduate co-founded Biogen (Philip Sharp), which sparked the biotech revolution that has helped the region attract 18 of the top 20 biopharmaceutical companies locating their R&D in the region; another (Vannevar Bush) founded the National Science Foundation, which has funded so many of the basic research that shapes our modern economy and so many aspects of life on earth (MIT News, 2021).

As BankBoston's economist Wayne Ayres remarked when the findings were first published back in 1995: "In a national economy that is increasingly emphasizing innovation ... MIT-related companies tend to be knowledge-based 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" (Ayres, 1995).

MIT's motto in Latin is "mens et manus" -- mind and hand. With its beginnings as a land grant institution founded during the Civil War, it has helped to shape the region's economy by combining breakthrough knowledge with commercial application, and set a standard for how research universities everywhere can convert intellectual discovery into practical inventions and new companies and become engines of innovation. This approach has not gone unnoticed, with other universities, including Harvard, now deeply engaged in reimagining and transforming their role as incubators of progress (Etzkowitz, 2002).

Beyond the role of MIT graduates and faculty starting innovative enterprises that make a difference, MIT itself has spawned a breathtaking and comprehensive culture of entrepreneurship and risk-taking among its students and co-curricular offerings. Any single one of MIT’s various resources online would allow you to see how it is home to some 89 entrepreneurial, technology, and innovation platforms that permeate its innovation culture, from robotics to meeting the needs of those at the bottom of the pyramid. And these don’t include spin-off accelerators and innovation labs, such as The Engine and MassChallenge.  MIT offers a template for the catalytic and transformational role that a research university can play in other regions around the world.

The MIT model offers valuable lessons for modern 'Frontier States':

1. The importance of fostering a culture that embraces both theoretical knowledge and practical application

2. The power of creating an ecosystem that supports entrepreneurship and risk-taking

3. The value of interdisciplinary collaboration and cross-pollination of ideas

4. The impact of focusing on knowledge-based industries and advanced technologies

As we continue to explore the concept of 'Frontier States' in our series, MIT stands as a shining example of how institutions can become engines of innovation, shaping not just their immediate surroundings, but the entire world. Its success story is intrinsically linked to the broader narrative of Massachusetts as a frontier state of innovation, a symbiosis that has propelled both the institution and the region to the forefront of global innovation.

References:

1. Ayres, W. (1995). MIT: The Impact of Innovation. BankBoston.

2. Roberts, E. B., & Murray, F. (2015). Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact. MIT Sloan School of Management.

3.  Eesley, Charles & Miller, William (2012). Stanford University’s Economic Impact via Innovation and Entrepreneurship. SSRN Electronic Journal.

4. MIT News. (2021). A brief history of MIT. Retrieved from https://news.mit.edu/mit-history

5. Etzkowitz, H. (2002). MIT and the Rise of Entrepreneurial Science. Routledge.