Abstract
In this paper we focus on technology that resulted from R&D projects funded by US Small Business Innovation Research (SBIR) Phase II awards. We ask: Is there evidence that strategic commercial agreements allow foreign firms to exploit the technologies developed through the SBIR program and funded by US taxpayers? Based on descriptive information from Phase II SBIR-funded project data collected by the National Research Council within the National Academies, we conclude that SBIR funds for Phase II projects and the technologies associated with those projects are not, to a pronounced extent, benefitting foreign firms through agreements with SBIR firms or investors. In that sense, there is no evidence that the technologies developed with funds from US taxpayers are, to any significant extent, being exploited by foreign firms through commercial agreements with SBIR firms.
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Notes
This research was funded through a grant from the W.E. Upjohn Institute for Employment Research. The remainder of this paper draws directly from our final report to the Institute with permission of the Institute. That report was published as Link and Scott (2012).
We are defining exploitation to mean that the resulting US funded technology is not being entirely used within the United States and that the benefits from the funded R&D are in part being captured by other countries.
The 1982 Act amended the Small Business Act of 1953 (P.L. 85–536) which established the Small Business Administration.
The 1982 Act allowed for this percentage to increase over time.
DoD maintains the largest program, awarding over 50 % of total funds and accounting for over 50 % of total awards.
We thank Dr. Charles Wessner of the NRC for making these data available to us.
See the note in Table 3 for the construction of this qualitative summary agreement variable.
Of course, there is the possibility of spillovers of the technologies to foreign firms without any payments to the innovating SBIR firms—a possibility the NRC database does not allow us to assess.
Link and Scott (2012) show, with respect to one economic impact, that strategic commercial agreements are often negatively associated with greater than projected employment growth within the firm. An SBIR-funded firm develops a technology during a Phase II project, but often sells the rights to the technology to another firm, mostly US firms and investors. Thus, the employment impact of the SBIR award is then realized elsewhere in the economy where the other firm has employment growth to support production using the technology developed in the SBIR project.
References
Link, A. N., & Scott, J. T. (2009). Private investor participation and commercialization rates for government-sponsored research and development: Would a prediction market improve the performance of the SBIR programme? Economica, 76, 264–281.
Link, A. N., & Scott, J. T. (2010). Government as entrepreneur: Evaluating the commercialization success of SBIR Projects. Research Policy, 39, 589–601.
Link, A. N., & Scott, J. T. (2012). Employment growth from public support of innovation in small firms. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.
Link, A. N., & Scott, J. T. (forthcoming). Employment growth from public support of innovation in small firms. Economics of Innovation and New Technology.
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Link, A.N., Scott, J.T. The exploitation of publicly funded technology. J Technol Transf 37, 375–383 (2012). https://doi.org/10.1007/s10961-012-9255-x
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DOI: https://doi.org/10.1007/s10961-012-9255-x