CAMBRIDGE, Mass. -- The economic impact of universities in the Boston area is measured in the billions of dollars, according to analyses released by Harvard yesterday and by MIT two years ago.
The studies, although different in nature, combine to show the direct and indirect benefit to the regional economy of these two leading universities. These figures do not include the significant role played by the many other colleges and universities in the Boston area who enroll more than 200,000 students each year.
The 1997 MIT report showed that its graduates and faculty had founded more than 1,000 firms in Massachusetts which provided 125,000 jobs in the state and nearly $17 billion in sales in Massachusetts in 1994. Worldwide, the report found that 4,000 MIT-related firms employed 1.1 million people and generated $232 billion in sales, roughly equal to the 24th largest economy in the world.
That BankBoston Economics Department report was entitled MIT: The Impact of Innovation. The report said the MIT-related firms in Massachusetts, concentrated in the Cambridge and Boston area, account for 25 percent of the state's manufacturing sales and one-third of the state's software sales. Each job supports a little more than one other job in the state's domestic sector, said the report, which credited the MIT-related firms with indirect employment of an additional 125,000 persons. The 250,000 jobs represent 10 percent of the total state employment.
Below is the MIT news release on the 1997 report:
CAMBRIDGE, Mass. -- More than 1,000 firms founded by MIT graduates and faculty provided 353,000 jobs world-wide, including 125,000 jobs in Massachusetts, and generated 1994 sales totaling $53.2 billion, including more than $16.7 billion in the Commonwealth, according to a BankBoston study entitled MIT: The Impact of Innovation.
While MIT graduates located their 1,065 businesses in communities across the state, the most popular location by far was Cambridge, home to about 150 of the companies, virtually all of them with their headquarters in the city. Boston was second with 65 and Waltham was third with 36. Woburn has 19 MIT-founded companies and Lexington 13.
The 150 companies in Cambridge employ about 14,000 persons in the city and generate $700 million in sales in Massachusetts. Their worldwide sales are $3.8 billion.
Among others, Arthur D. Little, Abt Associates, Bolt, Beranek and Newman, Biogen, Genzyme, Lotus and Millenium Pharmaceuticals maintain their headquarters in Cambridge. Gillette, Cabot Corp., Teradyne, Sonesta International Hotels and Charles T. Main are in Boston.
Virtually all of the 125,000 jobs are in manufacturing, financial services, software and other industries catering to international markets. The report estimates that MIT-related companies account for 25 percent of the manufacturing sales by Massachusetts-based companies. MIT-related firms generate $4 billion a year in software sales, one-third of the state's total.
Each job supports a little more than one other job in the state's domestic sector, says the report, which credits the MIT-related firms with indirect employment of an additional 125,000 persons. The 250,000 jobs are 10 percent of the total state employment.
The MIT-related companies are in the forefront of a wide variety of industries. For instance, Raytheon is a leader in missile and guidance systems; Thermo Electron in instruments and environmental technology; Lotus Development in software; Analog Devices and Analogic in integrated systems and electronic devices; Cabot Corp. and American Superconductor in advanced materials; Molten Metal in environmental technology; Teradyne in testing equipment for electronic components; M/A Com in microwave technology; BBN in electronics and networking; Genzyme, Biogen and Alpha-Beta in biotechnology; Bose in speaker systems, and PictureTel in video conferencing.
"One of the reasons MIT is so important to the Massachusetts economy is that most of the MIT-related companies never would have been located in Massachusetts absent MIT," the report says. "Only 8.7 percent of MIT undergraduates grew up in the state, but some 26 percent of all [4,000 nationwide] MIT-related companies are located in Massachusetts."
Unlike firms in other regions of the country, Massachusetts-based companies ranked proximity to MIT and other universities ahead of cost in choosing to set up business in the state. Business cost was the primary consideration in the rest of the country. Once the firms locate here, they tend to thrive and expand within the Commonwealth. Of the companies surveyed, 57 percent planned expansions in Massachusetts more than in any other region.
Many of the founders came to Massachusetts to attend MIT and decided to remain in the area after graduation. For example, the report notes that Alexander V. d'Arbeloff, a native of Paris, went to work in New York after graduating from MIT in 1949 but returned 11 years later to start Teradyne Inc. with Nick DeWolfe, also an MIT graduate. Mr. d'Arbeloff will succeed former MIT President Paul E. Gray as chairman of the MIT Corporation in July.
About half the firms in the survey maintain contact with MIT. The study cites Analog Devices Inc., which participates in the Center for Quality Management. Analog's founder, Ray Stata, is also a member of the Corporation. MIT-founded companies with headquarters in other states make a substantial contribution to the Massachusetts economy. Among them are Hewlett-Packard of California with 6,750 jobs in the Commonwealth, Texas Instruments with 4,000, Stone and Webster Engineering of New York with 1,200 and 3Com Inc. of California with 1,100.