The longer term effects of federal subsidies on firm survival: evidence from the advanced technology program
- 350 Downloads
The goal of this paper is to conduct a survival analysis to determine the causal impact of federal R&D subsidies on firms’ long-term survival. The data are small firms which applied to the Advanced Technology Program (ATP) in 1998 and 2000. The ATP’s focus was on ensuring that early stage, high-risk research was eventually commercialized successfully and resulted in broad economic benefits for society overall. This paper therefore explores whether the knowledge and benefits the ATP initially provided to a firm allowed it to more successfully transition future research projects from development and testing to commercialization. This paper utilizes a variant of the Heckman (Econometrica 47(1):153–161, 1979) research design to control for inherent pre-award differences between awarded and non-awarded firms. By using administrative data on reviewer scores, this analysis shows that the impact of ATP on small firm survival is robust to sample selection. This paper’s findings suggest that recei ving an ATP award can have a significant and positive causal effect on firm survival.
KeywordsFederal R&D Subsidies Firm Survival Innovation
JEL ClassificationH2 O3
- Azoulay, P., Graff-Zivin, J., Li, D., & Sampat, B. (2014). Public R&D Investments and Private Sector Patenting: Evidence from NIH Funding Rules. Kellogg School of Management. Retrieved from http://economics-eng.huji.ac.il/Uploads/Contents/documents/Pierre_Azoulayy.pdf.
- Balutis, A., & Lambis, B. (2001). The ATP Competition Structure. In C. Wessner (Ed.), The advanced technology program: Assessing outcomes (pp. 175–188). Washington, D.C.: National Academy Press.Google Scholar
- Blanes, J., & Busom, I. (2004). Who participates in R&D subsidy programs? The case of Spanish manufacturing firms. Regional Policy, 33(10), 1459–1476.Google Scholar
- Chesbrough, W. (2003). Open innovation: The new imperative for creating and profiting from technology. Watertown, MA: Harvard Business Press.Google Scholar
- Christensen, C. (1997). The innovator’s dilemma: When new technologies cause great firms to fail. Boston, MA: Harvard Business Press.Google Scholar
- Cleves, M., Gould, W., & Gutierrez, R. (2004). An introduction to survival analysis using stata (Revised ed.). College Station, TX: Stata Press.Google Scholar
- Dublin Institute of Technology. (2017). Topics and themes: T2S2015. Retrieved from http://www.t2s2015.com/page/9/topics-and-themes/.
- Dyer, J., & Singh, H. (1998). The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review, 23(4), 660–679.Google Scholar
- Klette, T., Møen, J., & Griliches, Z. (2000). Do subsidies to commercial R&D reduce market failures? Microeconometric Evaluation Studies. Research Policy, 29(4–5), 471–495.Google Scholar
- Murnane, R., & Willett, J. (2011). Methods matter: Improving causal inference in educational and social science research. New York, NY: Oxford University Press.Google Scholar
- National Institute of Health. (2015). What are SBIR and STTR programs?. Retrieved from https://sbir.nih.gov/.
- National Institute of Standards and Technology. (1998). Advanced Technology Program proposal preparation kit. Gaithersburg, MD: National Institute of Standards and Technology.Google Scholar
- National Institute of Standards and Technology. (2004). ATP Proposal Preparation Kit. Retrieved from http://www.atp.nist.gov/atp/kit-04/final-kit.pdf.
- National Institute of Standards and Technology. (2005). Survey of ATP Applicants 2000: Introduction. Retrieved from http://www.atp.nist.gov/eao/applicants/intro.htm.
- National Institute of Standards and Technology. (2007). America COMPETES Act Brings Immediate Changes to NIST. Retrieved from https://www.nist.gov/news-events/news/2007/08/america-competes-act-brings-immediate-changes-nist.
- National Institute of Standards and Technology. (n.d.). Technology Innovation Program. Retrieved from https://www.nist.gov/technology-innovation-program.
- National Institutes of Health. (2016). What is SBIR and STTR?. Retrieved from https://sbir.nih.gov/about/what-is-sbir-sttr.
- National Research Council. (2001). The Advanced Technology Program: Assessing outcomes. Washington, D.C.: National Academy Press.Google Scholar
- Richardson, A., Audretsch, D., & Aldridge, T. (2016). Motivating entrepreneurship and innovative activity: Analyzing U.S. policies and programs. In D. Audretsch & A. Link (Eds.), Essays in Public Sector Entrepreneurship. Berlin: Springer.Google Scholar
- Saxenian, A. (1994). Regional advantage: Culture and competition in Silicon Valley and Route 128. Cambridge, MA: Harvard University Press.Google Scholar
- Shadish, W., Cook, T., & Campbell, D. (2002). Experimental and quasi-experimental designs for generalized causal inference. Belmont, CA: Wadsworth.Google Scholar
- U.S. Department of Energy. (2016). 2016 ARPA-E Energy Innovation Summit. Retrieved from https://arpa-e.energy.gov/?q=events/2016-arpa-e-energy-innovation-summit.
- U.S. National Institute of Standards and Technology. (n.d.). ATP fiscal year 1998 competition results. Retrieved from http://www.atp.nist.gov/comps/index98.htm.
- U.S. Department of Energy. ta (n.d.). ARPA-E: General questions. Retrieved from https://arpa-e.energy.gov/?q=faq/general-questions.
- U.S. Small Business Administration. (n.d.). About SBIR. Retrieved from https://www.sbir.gov/about/about-sbir.
- U.S. Small Business Administration. (2014). Summary of size standards by industry sector. Retrieved from https://www.sba.gov/content/summary-size-standards-industry-sector.
- Welsh, W. (2014). GAO pushes better reporting of federal grants data. Information Week.Google Scholar