In 2011, two business school professors put numbers to an idea that many assumed true: that a vibrant research university can drive an economy. They studied companies started by alumni of the Massachusetts Institute of Technology and found that those businesses had provided 1.7 million jobs and generated $1 trillion in revenue annually.
As more countries try to compete in the global economy, the pressure is on policy makers and university leaders to imitate the way MIT spurs innovation and economic growth. Unfortunately, many universities struggle to match the speed and success of MIT’s model.
Knowledge and innovation generated at universities can lead to the creation of high-impact spin-off businesses. Whether it is through the licensing of intellectual property, partnerships or other informal arrangements, the tech transfer process can play a critical role in shaping new industries and regional economic development.
Research by Eesley and Miller and Eesley and Roberts has demonstrated the role Stanford University has played in shaping the development of Silicon Valley and MIT’s contribution to building a world-class innovation hub in the Kendall Square district of Cambridge, Massachusetts.
While those are examples of successful academic-industry-government ecosystems, the technology transfer system at many universities in the US and Europe is in need of a major overhaul. Its focus is historically rooted in revenue generation rather than in helping innovation. Technology transfer offices in many universities can act as bottlenecks rather than partners in knowledge transfer for economic and societal good.
Thomas J. Allen is the Howard W. Johnson Professor of Management, Emeritus and Professor of Organizations Studies at the MIT Sloan School of Management.
Dr Rory O’Shea is a Visiting Assistant Professor in Innovation and Entrepreneurship at the MIT Sloan School of Management. He also serves as a faculty member at the Smurfit Graduate School of Business, UCD.
As we continue to recover from a global recession and look to the future, it’s imperative that we build more entrepreneurial-driven academic institutions. Not only will this provide the foundation for much-needed innovation, it also will strengthen economies by providing jobs and fostering sustainable growth in enterprises.
Lessons can be learned from universities around the world about accelerating entrepreneurship. They can provide the model for how to create clusters of commercially successful startups around research-driven institutions. However, the success of that model largely depends on the role of the business school within that university setting.
For many “born-on-the-Internet” companies, slow growth isn’t an option. These are companies that started on the Web with a global marketplace in mind, and many are finding that it’s either scale or be irrelevant. They work hard to achieve market leadership, to realize economies of scale and economies of scope, and to be recognized as the brand leader. A few examples of these ventures include Dropbox, Evernote, Fab, Etsy,GrouponGRPN +4.15%, LinkedInLNKD +0.84%, Pinterest, Stripe and Square.
These types of businesses often start fast and never let up, which stresses a startup financially and can leave its owners emotionally drained. To maintain advantage, they need to have the proper building blocks in place in order to go full speed ahead with the best chances for success.