The Innovation Impact of U.S. Universities

Connecting innovation activities to economic growth and prosperity

America’s long-term economic growth demands a stepped-up commitment to promoting the innovation impact of the nation’s top-tier universities and other research institutions.

For research institutions themselves, this commitment means prioritizing research, empowering great researchers, building efficient and outcomes-focused technology transfer operations, instilling cultures of innovation and entrepreneurship, and engaging with surrounding business and innovation communities. For America as a whole, it means funding more research resources and paying more attention to the worldwide competition for human talent, including high-skilled immigrants.

American universities play a pivotal role in fueling innovation, which in turn drives economic growth and raises living standards in the United States. U.S. universities spend approximately $75 billion per year on research, amounting to 13 percent of America’s total spending on research and development (R&D). Most of this spending funds research activities in science, technology, engineering, and mathematics (STEM) fields.

Universities conduct a majority of the country’s basic research, while the private sector largely focuses on product development, which is often reliant on discoveries from basic research. The overall volume and quality of R&D activity in turn drive the pace of technological progress in the economy as a whole.

The COVID-19 crisis has dramatically underscored the importance of great research institutions to America’s well-being and economic future. Major research institutions are at the center of efforts to understand and combat the novel coronavirus, focusing new research programs on the emergency at a scale and pace reminiscent of their national defense mobilization during WWII. The economic aftershocks of the COVID-19 crisis threaten the financial models that underpin America’s world-leading universities, raising urgent questions for policy makers. But institutions that build competitive research operations around life science, biotechnology, and other vital STEM fields are likely to be successful in overcoming growing challenges to traditional ways of doing business in higher education.

This report sets forth a new set of rankings of U.S. research universities and research institutions for innovation impact. We rank institutions for overall innovation output and separately for productivity in converting research inputs measured in terms of research spending to output. Our aim in publishing rankings is to highlight high- performing institutions — particularly stand-out performers in innovation impact productivity — so that other institutions, as well as policy makers and other leaders, can learn from their example. We also look closely at why some universities are exceptionally productive in generating innovation impact through their research activities.

Summary of Policy Conclusions

For university leaders:

  • Prioritize research
  • Compete for hard to attract and retain star faculty researchers
  • Run an efficient, outcomes-focused technology transfer operation
  • Instill a culture of innovation and entrepreneurship throughout the university
  • Engage closely with the surrounding business and innovation community
  • Avoid overreliance on sponsored research funding from industry
  • Monitor, quantify, and transparently disclose innovation impact results

For policy makers, business leaders, philanthropists, and communities:

  • Increase public-sector support for university research
  • Understand how institutions vary in their innovation impact productivity
  • Compete hard for talent — including immigrant talent
  • Invest in integrated physical spaces that connect researchers with entrepreneurs, investors, and other potential nonacademic partners
  • Support technology transfer operations and other enablers of innovation impact