MIT report identifies keys to new American innovation

http://web.mit.edu/newsoffice/2013/production-in-the-innovation-economy-report-mit-0222.html

 

 

What kinds of industrial production can bring innovation to the American economy? An intensive, long-term study by a group of MIT scholars suggests that a renewed commitment to research and development in manufacturing, sometimes through creative new forms of collaboration, can spur innovation and growth in the United States as a whole.

"The findings are outlined in the preview of a report issued by a special MIT commission on innovation, called Production in the Innovation Economy (PIE). Among the approaches the report recommends are new forms of collaboration and risk-sharing — often through public-private partnerships or industry-university agreements — that can enable a wide variety of firms and industries to grow.

The report follows two years of in-depth research on hundreds of firms across various industrial sectors, ranging in size from high-tech startups to small “Main Street” manufacturers and multinational corporations. While there are a variety of reasons why the nation should seek to retain its own manufacturing base, from defense capacities to job creation, the report aims to highlight the larger potential that manufacturing holds for innovation-based economic growth in the United States.

“It has been suggested by previous reports that sustaining the strength of U.S. manufacturing is essential to America’s future; a strong advanced-manufacturing base is crucial to national security, and it represents a key source of good-paying jobs,” MIT President L. Rafael Reif says. “But as the PIE report makes clear, local production is very important to sustaining a vibrant innovation ecosystem in a region. Thus, we must also take steps now to regain U.S. manufacturing momentum if we want to sustain the nation’s signature economic advantage: innovation.”

Among other conclusions, the report emphasizes that manufacturing should not be regarded as a small group of traditional, shrinking industries. Instead, manufacturing is a diverse, evolving group of industries in which new products and knowledge frequently emerge from firms of all sizes throughout the country.

“There is no reason manufacturing has to disappear in an advanced industrial society,” says Suzanne Berger, the Raphael Dorman-Helen Starbuck Professor of Political Science at MIT and a co-chair of the PIE commission. “There is much greater innovative capacity all across the United States than we realized.”

From Main Street to multinationals

The current report is based on the work of the 21-member PIE commission, formed in 2010, which includes 20 MIT faculty members. Two books on the subject are forthcoming from MIT Press in the fall.

“The work of PIE is trying to understand how producing goods feeds back into the innovation process,” says Martin Schmidt, a professor of electrical engineering and computer science and associate provost at MIT, who served on the commission.

The commission conducted in-depth research on 255 manufacturing companies, of which 178 were located in the United States. Faculty members asked all of the companies a series of questions in order to find out what innovations firms had attempted to deliver in the last five years, and to determine which elements — capital, skilled workers, suppliers, or expertise — had been hard to find.

The commission interviewed officials at four types of companies: U.S.-based multinationals that invest heavily in research and development; startup firms; small-scale “Main Street” manufacturers that are local or regional in scope; and foreign firms in China and Germany."