Entrepreneurship And Innovation At MIT
DECEMBER 2015Entrepreneurship and Innovation at MITContinuing Global Growth and ImpactEdward B. Roberts, Fiona Murray, and J. Daniel KimMIT Sloan School of Management
Entrepreneurship andInnovation at MITContinuing GlobalGrowth and ImpactEdward B. Roberts, Fiona Murray and J. Daniel Kim
Edward B. Roberts and Fiona Murray
iiiContentsABOUT THE AUTHORS.ivACKNOWLEDGMENTS.ivINTRODUCTION.5ECONOMIC IMPACT OF MIT ALUMNI ENTREPRENEURS.6Geographic Impact.6Survival Statistics.8Impact on Employment and Revenues.8Company Funding and Outcomes. 10Serial Entrepreneurship. 11TRENDS IN MIT ALUMNI ENTREPRENEURSHIP . 13Growth Rate of New Company Formation. 13Declining Age of Founders. 15Industry Shifts in MIT Entrepreneurship. 15Gender Differences. 16International Students. 22OTHER CONTRIBUTIONS TO MIT ENTREPRENEURSHIP AND INNOVATION. 22CONTINUING DEVELOPMENT OF THE MIT ENTREPRENEURSHIP ECOSYSTEM. 23Entrepreneurship Education at MIT. 24Internal Entrepreneurship Development Programs. 25MIT’s Global Entrepreneurial Outreach. 25Other Key MIT Organizations. 26ENTREPRENEURSHIP AND INNOVATION AT MIT: CONCLUSIONS AND IMPLICATIONS. 28Implications of our Research. 28APPENDIX. SURVEY ANALYSIS AND EXTRAPOLATION. 32Main Approach. 32Robustness Checks. 33
Entrepreneurship and Innovation at MIT: Continuing Global Growth and ImpactABOUT THE AUTHORSEdward B. Roberts is the David Sarnoff Professor of Management of Technology at the MITSloan School of Management, and the Founder and Chair of the Martin Trust Center for MITEntrepreneurship.Fiona Murray is Associate Dean for Innovation at the MIT Sloan School of Management; William Porter(1967) Distinguished Professor of Entrepreneurship; Co-Director of the MIT Innovation Initiative;Faculty Director, Trust Center for MIT Entrepreneurship; and Faculty Director, MIT Legatum Centerfor Development & Entrepreneurship.J. Daniel Kim is a PhD candidate at the MIT Sloan School of Management.ACKNOWLEDGMENTSWe thank the MIT Office of Institutional Research and MIT Alumni Association for their cooperationin developing and implementing the underlying MIT alumni survey upon which this work is based.Jon Daries was especially helpful in carrying out the follow-up telephone survey. We also thank theLord Foundation of Massachusetts and Deans Ian Waitz of the MIT School of Engineering and DavidSchmittlein of the MIT Sloan School of Management for providing the financial resources to undertakethis work. We appreciate the assistance of MIT Sloan PhD student Joshua Krieger. Finally, we deeplyappreciate the assistance of the MIT Reference Publications Office for their contributions to the editingand production of the report, in particular Kimberly Mancino, who led that effort. iv
5INTRODUCTIONLeading research-based universities play a significant role in stimulating and sustaining U.S. economicgrowth. These institutions educate not only productive workers who create value as employees of largeestablished firms but also entrepreneurs who commercialize ideas—often research-based—and buildinnovation-driven enterprises. These company founders (and their early employees) exert a majorripple effect in both local and global economies, as new companies have the potential to scale rapidlyand thus create jobs. This is especially true for companies based on emerging science, technology, orother sources of innovative concepts, whether in manufacturing process, distribution approaches,or newly defined markets.1 U.S. economic data demonstrate that start-up businesses are the primarydriver of job growth and are responsible for a disproportionately high share of job creation, with newand high-growth young firms accounting for roughly 70% of gross job creation.2In 2003, in the first study of its kind, Professor Edward Roberts along with then PhD student CharlesEesley developed a survey to explore the entrepreneurial activities of MIT alumni, in particular therate, location, and success of their new enterprises.3,4 Since then, other universities, including Stanford,Tsinghua (China), the Technion (Israel), and University of Virginia, have conducted similar studiesof their own alumni entrepreneurs. Several studies limited to the entrepreneurial alumni of businessschools have been carried out as well.The findings from the initial MIT survey indicated that MIT alumni were significantly engaged in newenterprise formation. Over 20% of respondents had started one or more for-profit ventures that werestill in business in 2006, the year of final data collection. More than 26% of those firms were locatedin Massachusetts, with the next largest concentration (22%) in California. Nearly 40% of those whoreported founding a company were “serial” entrepreneurs (i.e., had started more than one company),with an average of 3.25 start-ups per person.In 2014—a decade later—we updated the survey to explore the continuing contribution of MIT alumnito innovation and entrepreneurship in the United States and worldwide.5 This update is particularlysalient given the burgeoning interest in the role of universities in economic growth and the fact thatstudents who graduated between 2004 and 2014 faced a more difficult economic climate. On the onehand, fund raising and capital access became more challenging as the U.S. economy entered a periodof deep recession starting at the end of 2007, and venture capital assets and investments declined. Onthe other hand, entrepreneurship concurrently became a potentially more appealing career choice dueboth to structural and perceptual changes in traditional employment and occupations, as well as toan apparent groundswell in young people’s interests in entrepreneurial endeavors. For instance, theproportion of MIT undergraduates selecting employment in venture capital–backed start-ups upongraduation increased from less than 2% in 2006 to 15% in d-job-creation.pdf2Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier Miranda, “The Role of Entrepreneurship in U.S. Job Creation andEconomic Dynamism,” Journal of Economic Perspectives 2014 28(3):3–24. doi: 10.1257/jep.28.3.33Edward Roberts and Charles Eesley, “Entrepreneurial Impact: The Role of MIT.” Kauffman Foundation, Kansas City,MO; 2009.4Edward Roberts and Charles Eesley, “Entrepreneurial Impact: The Role of MIT—An Updated Report,” Foundations andTrends in Entrepreneurship 2011 7(1–2):1–149. doi: 10.1561/03000000305The survey was sent to all MIT alumni in February 2014, resulting in 104,169 survey invitations and 19,730 responses (19%response rate). A follow-up telephone survey of the initial non-respondents was carried out in October–November 2015 to checkfor response bias in business formation response statistics; 1,650 U.S. alumni were randomly selected and called, and 254 (15.4%)of them responded to the brief telephone questionnaire.6J. Daniel Kim. “Early Employees of Venture-Backed Startups: Selection and Wage Differentials,” Working Paper.Cambridge, MA; 2015.
Entrepreneurship and Innovation at MIT: Continuing Global Growth and ImpactOverall, our new findings indicate that MIT alumni are engaged in entrepreneurship and innovation(E&I) at ever increasing rates, and at earlier and earlier stages in their lives.The MIT Admissions Office informs us that this trend continues: the dominant percentage ofundergraduate applicants to the Institute want to contribute significantly to important globalchallenges at all stages of the idea-to-impact process—from invention and patenting to venturecreation projects within large corporations to launching their own start-ups. Our results confirm thatmany act on these aspirations once they leave MIT. The following findings have particularly importantimplications for how we educate the coming generation of global innovators: Of our alumni survey respondents, 31% have filed patents and 34% consider themselvesinventors.7,8 Twenty-five percent of the online survey respondents have engaged in new company formation.(Thirty-five percent of alumni who responded to a follow-up telephone survey had started oneor more businesses.) The proportion of respondents who founded a venture within five years of graduation rose from4% among those who graduated in the 1960s to 8% among those who graduated in the 1990s.The study also revealed another growth trend in MIT entrepreneurship over time: The numberof companies founded per 100 active alumni increased from 6 among those who graduated inthe 1970s to 12 among those who graduated in the 1990s. Twenty-two percent of our alumni respondents have worked as employees of early-stageventures, indicating their engagement not only in the formation but also in the growth of newfirms; 38% of these early employees later went on to start their own company. Our alumni have increasingly engaged in funding innovation projects: 16% of respondentshave invested in new companies (that they did not found). Seventeen percent have participatedin crowdfunding to support the invention of a new product or service, a new phenomenon inwhich graduates from the 2000s in particular have engaged. Of the alumni surveyed, 17% serve as board members of for-profit companies; and 11% serve ona firm’s scientific advisory board.ECONOMIC IMPACT OF MIT ALUMNI ENTREPRENEURSOur new study reveals that MIT alumni contribute greatly to the global innovation economy and toparticular regional innovation ecosystems. While MIT innovators contribute to companies large andsmall, as well as to and through governments, universities, and other public sector organizations, weare best able to measure the impact of those alumni who start and build for-profit firms.Geographic ImpactExtrapolating from our survey results (see Appendix for methods and information about the followup survey of non-respondents), we estimate that MIT alumni of both undergraduate and graduateprograms have been among the founders of at least 30,000 currently active companies. We estimate7This can be compared to a 2012 study by Shu that found that 16% of MIT undergraduate alumni produce at least onepatent. Pian Shu, “The Long-Term Impact of Business Cycles on Innovation: Evidence from the Massachusetts Institute ofTechnology,” July12, 2012. http://economics.mit.edu/files/73638We found a 24% patenting rate among undergraduate alumni during the same time frame as the Shu study [1980–2005]Our finding of a higher patenting rate is most likely attributable to response bias in favor of innovators, as well as thepotential of Type I Error in Shu’s approximate name-matching process (i.e., respondents identified as non-inventor if theyare ambiguously matched to inventors). 6
Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impactthat these enterprises employ 4.6 million individuals and generate annual global revenues of 1.9trillion, which is roughly equivalent to the GDP of the world’s 10th largest economy as of 2014. Thesefigures are based upon an extrapolation method that scales according to the entrepreneurship activitiesby MIT School, gender, and decade of graduation. This is similar to the scaling approach used in therecent Stanford alumni survey,9 but different from our 2009 and 2011 assessments of MIT alumnientrepreneurial impact, which scaled only the totals rather than estimating by specific cohorts.10Entrepreneurship is a strong marker of MIT’s global impact: 23% of MIT alumni’s new firms arefounded outside the United States. This in part reflects the international nature of the alumnithemselves (some 30% of our current undergraduate and graduate students were born outside theUnited States), as well as our students’ global aspirations.Though many alumni are engaged in international entrepreneurial activity, our survey results echo theglobal movement toward the agglomeration of innovation-driven economic activity (Figure 1): Whileonly 8% of undergraduates were admitted to MIT from Massachusetts, roughly half of U.S.-based MITalumni–founded companies represented in our survey have located in the Northeast.Figure 1. Location of US-based MIT alumni-founded companies.Figure 1. Location of U.S.-based MIT alumni–founded companies.California21%Massachusetts31%New York7%Florida4%Texas3%Other28%28%Virginia3%New Jersey3%Note: Repondents reported current company location or last location if no longer operating; includescompanies founded between the 1940s and April 2014.Massachusetts accounts for the highest portion of MIT alumni companies at 31% (1,691 companiesamong the survey responses), which translates into an estimate of roughly 7,000 companies using ourextrapolation method.11 California comes in second at 21%, in large part reflecting the return of thoseat MIT who had come originally from the West Coast (17% of undergraduates surveyed were admittedfrom California). At the city level, although San Francisco typically attracts the highest number of9Charles Eesley and William Miller, “Impact: Stanford University’s Economic Impact via Innovation andEntrepreneurship.” Stanford University, Stanford, CA; 2012.10Our estimates published in 2009 were of approximately 3.3 million employees worldwide and revenues of nearly 2 trillion for the year 2006. The estimated 25,800 living MIT-alumni-founded companies in that survey ranged acrosssectors with the most highly represented industries being software, electronics and telecommunications. Using the earliermethodology on our 2014 survey data produces well over 30,000 living companies and considerably higher employmentand revenue statistics. The limited data from the telephone survey suggest even higher numbers. (See Appendix foradditional detail.)11Estimates are derived using the same extrapolation method mentioned earlier and with the additional assumption that77% of all MIT-related companies are based in the U.S. 7
Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impacttechnology start-ups in the United States,12 our results show that Cambridge boasts the highest shareof MIT alumni companies at 8%. These companies have a direct impact on the local and regionaleconomies, and their presence has been influential in attracting the significant biotechnology andinformation technology (IT) industry clusters that have emerged in the greater Kendall Square area inCambridge. These trends are consistent with results from the 2009 survey.Survival StatisticsOf course, the formation of new enterprises does not necessarily indicate or ensure their contributionsto economic growth. Measurable impact depends on the companies’ abilities to serve customers andbuild products and services that solve important problems, as well as their capacity to scale and groweffectively and efficiently. Our data show that, as a whole, MIT alumni–founded companies exhibitstrong performance in comparison with baseline U.S. statistics. One common metric that sheds lighton start-up performance is their survival rate over time. Survival is a major challenge for nascent firmsbecause of the risks inherent in entrepreneurship.The MIT alumni–founded companies represented in our survey results exhibit superior performancein terms of survival relative to new U.S. firms as a whole. While roughly 50% of U.S. newly formedbusinesses survive for five years or more and 35% last for 10 years, approximately 80% of newcompanies founded by MIT alumni survive for five years or more and 70% last for 10 years accordingto our results. As shown in Figure 2, the survival rate for the MIT-alumni companies is higher at everystage of the company life cycle. Overall, the survey results suggest that about two-thirds of all MITalumni–founded companies—from those that started as far back as 1945 to those recently founded—continue to exist today. This is consistent with the follow-up telephone survey, which found that 72%of all companies founded are still active.Impact on Employment and RevenuesOther salient metrics of entrepreneurial success include employment and revenues. As mentionedearlier, MIT alumni–founded companies have a substantial impact on our economy throughemployment and revenues. Nonetheless, it is worth highlighting that MIT alumni companies aresignificantly heterogeneous in firm size as well as the magnitude of their economic impact. Table 1aindicates that roughly half of MIT companies represented in this survey employ fewer than 10 people.Contrary to high-growth entrepreneurship, many are probably lifestyle businesses that generate steadystreams of income, such as personal consulting companies.Like the economy as a whole, a small fraction of entrepreneurial ventures is responsible for adisproportionately high share of employment and revenues. (Most small business in the United Statesnever intend to grow or innovate in any major way.13) For instance, while companies with more than1,000 employees make up only 2.3% of total MIT alumni–founded companies in our survey data,they account for 68% of total employment as well as 42% of total revenues. This is comparable to ourfindings in our earlier report of concentrated sources of entrepreneurial economic impact.12“Top 20 US Cities for Tech Startup Funding,” Inc.com, October 23, 2014. Accessed March 30, 2015, http://www.inc.com/associated-pr
Entrepreneurship and Innovation at MIT Continuing lobal rowth and Impact iv. ABOUT THE AUTHORS. Edward B. Roberts is the David Sarnoff Professor of Management of Technology at the MIT Sloan School of Management, and the Founder and Chair of the Martin Trust Center for MIT Entrepreneurship.
To define the entrepreneurship. To explain the significance of Entrepreneurship. To explain the Entrepreneurship Development. To describe the Dynamics of Entrepreneurship Development. 1.1 Need and significance of Entrepreneurship Development in Global contexts It is said that an economy is an effect for which entrepreneurship is the cause.
CHAPTER 2: ENTREPRENEURSHIP THEORY AND CREATIVITY ctives. epreneurs. reneurship. 3:49). thought on the meaning of entrepreneurship. One group focused on the characteris-tics of entrepreneurship (e.g. innovation, growth, uniqueness) while a second group focused on the outcomes of entrepreneurship (e.g. the creation of value).
Global Entrepreneurship Education II- FRAMEWORK TABLE 1: CASES BY LEARNER CATEGORY III- ENTREPRENEURSHIP EDUCATION IN CHINA The Maker Space of Tsinghua University High School: Extreme Learning Process (XLP) For Entrepreneurship Education Tsinghua x-lab: a University-based Platform For Creativity, Innovation and Entrepreneurship Education
while exploring a concentration in fields related to corporate innovation. Core Curriculum (12 credits) The core curriculum delivers a solid foundation in the principles of corporate innovation, entrepreneurship, and new ventur e creation. Completion of the four courses leads to the Graduate Certificate in Corporate Innovation and Entrepreneurship.
identify and describe characterizations of technology entrepreneurship, digital techno-logy entrepreneurship, and digital entrepreneurship. With this new delineation of terms, we would like to foster discussion between researchers, entrepreneurs, and policy makers on the impact of digitization on entrepreneurship, and set a future research agenda.
This is "Global Entrepreneurship and Intrapreneurship", chapter 11 from the bookChallenges and Opportunities in International Business(index.html)(v. 1.0). . Who is an entrepreneur, and what is entrepreneurship? 2. What do entrepreneurs do? 3. What is entrepreneurship across borders? 4. How does entrepreneurship lead to global start-ups?
What is entrepreneurship? Students will be able to: a. Define and give examples of entrepreneurship. b. Draw conclusions as to what they can expect to learn in a course called "Entrepreneurship and Business". c. Explain why entrepreneurship is so important to the United States economy. Readings G pp. 4-7, 15, 17-21, SW pp. 3-6
Solutions: AMC Prep for ACHS: Counting and Probability ACHS Math Competition Team 5 Jan 2009. Problem 1 What is the probability that a randomly drawn positive factor of 60 is less than 7? Problem 1 What is the probability that a randomly drawn positive factor of 60 is less than 7? The factors of 60 are 1,2,3,4,5,6,10,12,15,20,30, and 60. Six of the twelve factors are less than 7, so the .
