Report: To Keep Its Strong Economy Growing,
November 15, 1998
Bentley College Grad School Dean Pat Flynn is Co-Chair of the MTC Index Advisory Committee
WESTBOROUGH, Mass., November 16, 1998- The thriving innovation economy in Massachusetts has created new ideas, new products and services, and most importantly, new jobs that pay well, according to a report released today by the Massachusetts Technology Collaborative (MTC). But, to keep the state's economy growing, the report indicates that Massachusetts must focus on the fundamentals that drive the innovation economy- a skilled workforce, a strong R&D base and a dynamic flow of venture funds.
The report, the second annual "Index of the Massachusetts Innovation Economy," tracks nine key "innovation" industry clusters, including financial services, healthcare technology, and software and communication services. Together, these industry clusters make up more than one-third of the state's private-sector payroll. The Index uses 31 indicators to track the performance of the state's innovation economy over time, comparing Massachusetts to other leading technology states, including California, Texas, Illinois, Minnesota, New York and Colorado.
"The findings in this year's Index confirm that Massachusetts has a recipe for innovation that can serve as a national model for economic growth," said Joseph D. Alviani, the president of the Massachusetts Technology Collaborative, which prepared the report.
The innovation economy can be credited with helping Massachusetts escape the boom-and-bust economic cycles created by dependence on defense- and computer hardware-related industries, according to Alviani. "The good news is that the innovation economy appears to have inoculated Massachusetts against some of the uncertainties of the global market," he said. "To ensure we maintain our competitive edge, Massachusetts needs to foster greater collaboration between businesses and research institutions. Both the public and private sectors have an important role to play."
At the same time, there are also some warning signs, according to Patricia M. Flynn, Dean of the Graduate School of Business at Bentley College and chair of the 25-member MTC Index Advisory Committee. "The 1998 Index shows that there are some cracks in the foundation, such as the need for more skilled workers and the decline in the number of undergraduate engineering and computer science degrees. Massachusetts must make education and training a priority to sustain economic growth."
The Index uses the healthcare technology industry cluster to showcase the dynamics of the innovation process and the links between new ideas, new products and services, and new jobs.
"In any given industry cluster, there may be volatility," Flynn said. "But, taken as a whole, the innovation economy is more diverse, and it makes the Massachusetts economy more resilient to short-term bumps. We recognize that the industry clusters will change over time; the Index enables us to map those changes."
The Index noted these areas of strength in the state's innovation economy: national leadership in the number of patents per capita; the rise in new business starts; the increase in fast-growth companies, or "gazelles"; and the flow of venture capital to Massachusetts, which rose to a total of $1.4 billion in 1997, an increase of 40 percent from 1996.
The Index also raised these areas of concern in addition to the workforce issues: the drop of initial public offerings (IPOs) in 1997; the slower growth in market value of Massachusetts-based companies listed on the NASDAQ stock exchange, which trails the national average; the need to speed federal Food and Drug Administration approval for new products; and the growing disparity in earnings between the top 40 percent of Massachusetts families and the bottom 20 percent.
"We must remember that it is not a specific industry, but the fundamental innovation process itself -- the continuous interaction among researchers, venture capitalists, entrepreneurs and demanding customers- that will propel Massachusetts toward long-term economic prosperity," Flynn said.
John Yochelson, the President of the national Council of Competitiveness, praised the 1998 Index of the Massachusetts Innovation Economy for "successfully and creatively" examining the dynamics of the innovation economy in Massachusetts. "It provides an easy-to-understand picture of the innovation economy and the fundamentals that drive it, while being comprehensive in scope and meeting the highest standard of analysis," Yochelson said. "In increasingly competitive and complex global markets, this type of policy-relevant economic information is essential for opinion leaders and decision-makers."
The Massachusetts Technology Collaborative is the operating entity of the Massachusetts Technology Park Corporation, a public instrumentality of the Commonwealth of Massachusetts. It is an economic development organization that focuses on strengthening the innovation economy in Massachusetts.
Copies of the 1998 Index of the Massachusetts Innovation Economy can be obtained for a nominal charge by calling 508-870-0312. The report can also be downloaded through MTC?s Web site at http://www.mtpc.org
BENTLEY UNIVERSITY is one of the nation’s leading business schools, dedicated to preparing a new kind of business leader – one with the deep technical skills, broad global perspective, and high ethical standards required to make a difference in an ever-changing world. Our rich, diverse arts and sciences program, combined with an advanced business curriculum, prepares informed professionals who make an impact in their chosen fields. Located on a classic New England campus minutes from Boston, Bentley is a dynamic community of leaders, scholars and creative thinkers. The McCallum Graduate School emphasizes the impact of technology on business practice, in offerings that include MBA and Master of Science programs, PhD programs in accountancy and in business, and customized executive education programs. The university enrolls approximately 4,100 full-time undergraduate, 140 adult part-time undergraduate, 1,430 graduate, and 43 doctoral students. Bentley is accredited by the New England Association of Schools and Colleges; AACSB International – The Association to Advance Collegiate Schools of Business; and the European Quality Improvement System, which benchmarks quality in management and business education.
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