The Role of the University in an Entrepreneurial Economy
Jonathan Ortmans, President, Public Forum Institute
Have you ever thought about the contribution that universities can make to an economy? Here’s a fact: Around 6,900 MIT-alumni companies with worldwide sales of approximately $164 billion are located in Massachusetts, representing 26 percent of the sales of that state’s companies. MIT’s impact extends to the national level with, for example, 4,100 alumni-founded firms based in California generating an estimated $134 billion in worldwide sales. Edward B. Roberts and Charles Eesley reveal these and other facts in their soon-to-be-launched report “Entrepreneurial Impact: The Role of MIT.”
Universities can be global leaders in nurturing a strong entrepreneurial economy through their several roles. For instance, universities advance our understanding of the determinants and impact of entrepreneurship. As more professors and students are researching the many topics related to entrepreneurship and collecting the necessary data, we are better able to inform policy.
Universities also disseminate this knowledge to students, fostering a culture of entrepreneurship among them. Students learn to think and act entrepreneurially. Many schools also support extra-curricular activities (e.g., business plan competitions, celebrations like Global Entrepreneurship Week, etc.) that engage students in all sorts of entrepreneurial projects.
In the broader innovation ecosystem, universities and their faculty are key agents. Entrepreneurship and innovation need each other to go far. Scientists and engineers at universities are constantly developing new scientific understandings and technologies which can translate into innovations that meet a need in a market. For example, university research benefited society through the nearly 700 new products reaching the marketplace in 2007 and the 555 new startup companies launched in 2006. In cumulative terms, university licensing offices introduced more than 4,350 new products since 1998, the equivalent of about nine new products every week. It is no wonder that many firms choose to locate near universities.
Yet, universities can and should yield more – especially in this economy. For this to happen, the relationship between universities, the government and industry needs some rethinking. For example, how can these agents organize to support early-stage innovative ideas from students and faculty? Advice from industry experts can be crucial at that stage, so strong networks are necessary to connect these “worlds.” The government, as a major funder of basic research at universities can foster such networks. The Future of the Research University offers some interesting approaches from around the world.
In the midst of a crisis, it is important to support all contributors to an entrepreneurial economy. Universities, as centers for knowledge creation and diffusion, can be leveraged to generate future growth. This is why we are hosting a Hill Briefing on Feb 17th on the economic impact of entrepreneurial universities. It is important that universities operate under policies that encourage entrepreneurship and innovation. The MIT model is one of the many, but it is a clear example that with the right programs and policies in place universities can be catalysts of innovation, job creation and growth.