mit_impact_full_report

The Role of MIT Alumni Companies in the U.S. Economy
Table 6
Proportion of Founders from Three Selected Academic Areas of MIT
(percent of all MIT alumni companies founded during the decade)
First Firm Founders
Decade of First Firm Founding
1950s 1960s 1970s 1980s 1990s
EE and CS degrees 20.4% 26.5% 18.7% 25.4% 22.7%
Life Sciences degrees 0.0% 2.7% 4.0% 4.9% 4.7%
Management degrees 16.7% 14.3% 13.5% 13.8% 15.8%
engineering graduates. Architecture alumni are, on a
proportional basis, perhaps surprisingly, the most
likely among graduates of all the MIT schools to strike
out on their own. But this no doubt reflects a
dominant “industry” structure of large numbers of
small architectural practices, with relatively frequent
changes in partnerships (i.e., new “firms”).
Table 6 provides further details on the trends in
three selected academic areas of MIT: electrical
engineering and computer science (EECS), biology/life
sciences, and management. EECS has, by tradition,
been the largest MIT department and the most
evident home of its entrepreneurial offshoots.
Biology/life sciences is an up-and-coming “technology
change area,” and we wish to portray its
entrepreneurial inclinations. Management appears to
have established itself as a common ground for
entrepreneurial interest development and we want to
examine how deeply rooted are these indicators.
The data show that the percentage of founders
graduating with degrees in biology/life sciences has
indeed increased over the years, but appears to have
leveled off in recent decades at around 5 percent.
The percentage of founders who are EECS majors
remains the highest at slightly more than 20 percent,
and those with management degrees hover around
15 percent. Both EECS and management appear to
be relatively stable in their proportionate supply of
entrepreneurs over the decades.
Industry Composition and Effects
Table 7 shows an estimated industry breakdown
of MIT alumni companies by number of firms, sales,
and employment. MIT alumni found companies in a
diverse array of industries, although they do tend to
cluster in certain sectors. About 3,300 companies,
employing an estimated total of 436,100 people, are
in electronics, which (as used here loosely) includes
computers, semiconductors, instruments,
telecommunications equipment, and electrical
machinery and appliances. These electronics firms
make up 13 percent of the MIT alumni companies.
All told, manufacturing firms make up 13 percent of
the MIT alumni companies, 21 percent of total
employment, and 6 percent of total sales. 5 In the
United States as a whole, manufacturing accounts for
less than 11 percent of total employment. Naturally,
company size varies according to industry. Although
5. Not all electronics firms are in manufacturing. Some, for example, are in IC design (computer companies and telecommunications also were
grouped with electronics). The estimate depends on how we calculate what is truly manufacturing. The Standard Industrial Classification (SIC) codes (which
are admittedly imperfect) of the companies indicate 13 percent with manufacturing codes. However, the entrepreneurs’ industry self-reports suggest that
manufacturing constitutes as much as 31 percent. The truth is probably between these two estimates at around 20 percent, much higher than for the
United States as a whole, as we would expect for graduates of a technical university.
ENTREPRENEURIAL IMPACT: THE ROLE OF MIT 17