Multilevel public funding for small business innovation: a review of US state SBIR match programs

US State governments invest in early-stage innovative activity as an economic development strategy. Nevertheless, attention directed at the public sector’s role in this capacity has been placed on federal policy actions overlooking the growing role of states. The primary aims of this paper are two-fold: (1) to articulate the motivations for multilevel public support for small business innovative activity, placing emphasis on state level incentives directed towards entrepreneurial activity; and (2) to empirically evaluate the State Match Phase I (SMP-I) program. The SMP-I program is a diffuse state level policy designed to complement the federal Small Business Innovation Research (SBIR) program by offering noncompetitive matching funds to the state’s successful SBIR Phase I recipients. This offers an opportunity to examine the marginal impact of public R&D given the state intervention. This paper employs a state and year fixed effects model and considers two outcome variables—SBIR Phase II success rates and SBIR Phase I application activity. To account for industrial heterogeneity, the data are stratified by the federal mission agencies. Results from the empirical analysis indicate that the state match increases the Phase II success rates for firms participating in the National Science Foundation SBIR program.     

SBIR first decade-results,benefits, problems from a Michigan perspective

This paper reports on the economic contributions and impact of the Small Business Innovation Research (SBIR) Program in Michigan during the first decade. The Michigan SBIR experience is examined to learn how researchers and small businesses use the SBIR Program, whether to start or strengthen businesses, how they view SBIR after a decade, and how the program has served Michigan businesses that have successfully carried out Phase I, Phase II, and Phase III SBIR projects. From the beginning of the SBIR Program, MERRA has coordinated annual SBIR conferences for Michigan companies. The MERRA staff has helped small businesses prepare suitable R&D projects and write effective SBIR proposals. Numerous SBIR awards have resulted from MERRA supportive efforts, and the MERRA small business outreach activity has kept MERRA in touch with successful firms to assist them in getting the best results from their SBIR projects and to assess progress. For this study, in-depth evaluations were made of various Michigan firms that won SBIR awards, including both mature small businesses and start-up companies to learn in what ways their SBIR experiences are parallel and in what ways they diverge. The study covers those that have used SBIR funds to diversify and add new areas of business to existing core areas. Other companies examined were created by researchers associated with universities, industry, or research organizations who utilized SBIR awards to assist in starting new businesses. Also considered were Michigan companies at different levels of development that have employed SBIR awards as seed money to perfect innovative new products for marketing.     

Commercialization activities in the SBIR program (part 1)

Telephone surveys were conducted over a three-year period on more than 800 Small Business Innovation Research (SBIR) Phase II projects initiated during the first three years of the program. For most of these projects, respondents were surveyed four years after receiving their Phase II award Five distinct levels of commercialization activity were identified ranging from “commercialization has occurred” (Level 1) to “commercialization is not expected” (Level 5). At the time of the survey, 12% of the projects had achieved commercialization (Level 1) and 18% were experiencing some commercialization success (Levels 1 and 2 combined). Of the participating federal agencies, the Department of Health and Human Services had by far the largest percentage of commercialized projects. For all agencies, over 60% of the respondents attributed nearly all of their projects' success to the SBIR program. Eighty-four percent stated that the technology development effort would not have been pursued without SBIR. Survey responses were also analyzed for a series of factors to determine their influence on the extent of commercialization activity. Factors included in the series are those related to the SBIR company conducting the project, the technology being developed, and marketing the product or service expected to be derived from the SBIR effort.     

Universities and the success of entrepreneurial ventures: evidence from the small business innovation research program

There has been little direct, systematic empirical analysis of the role that universities play in enhancing the success of entrepreneurial ventures. We attempt to fill this gap by analyzing data from the US SBIR program, a ??set-aside?? program that requires key federal agencies (e.g., Department of Defense) to allocate 2.5% of their research budget to small firms that attempt to commercialize new technologies. Based on estimation of Tobit and negative binomial regressions of the determinants of commercial success, we find that start-ups with closer ties to universities achieve higher levels of performance.     

How does initial public financing influence private incentives for follow-on investment in early-stage technologies?

One common rationale supporting public financing programs for small firms is that initial public investment creates incentives for follow-on private investment. However, there does not appear to be a unified statement in the literature describing how initial public investment creates incentives for follow-on private investment. Focusing on external private investors, we use a two-stage net present value model to identify four effects from initial public investment on the private decision for follow-on investment. Our empirical analysis uses a sample of non-venture backed firms entering the SBIR program to examine how reduced risk, the number of SBIR awards, and size of initial public investment influence the likelihood of follow-on venture capital investment. We find the probability of follow-on venture capital investment is more likely when firms reach Phase II of the program, is less likely as firms win multiple Phase I and Phase II awards, and is more likely as the size of initial public investment in Phase I increases.

How to benefit from publicly funded pre-competitive research: an empirical investigation for Germany’s ICR program

This paper contributes to the debate on the systemic effects of technology policy by investigating spillovers of pre-competitive publicly funded Industrial Collective Research (ICR) in Germany which is carried out by non-profit research institutes. Using data for 911 firms surveyed in 2006, the results show that non-actively involved firms in ICR projects use ICR results to a large extent. Almost all of these firms are engaged in collaborative research projects with non-profit research institutes. We conclude that company–scientists linkages are an important pre-requisite to absorb ICR results by non-actively involved firms in ICR projects.     

Commercialization activities in the SBIR program: Changes over time (part 2)

In order to explore how the extent of commercialization changes over time, longitudinal surveys were conducted by telephoning several sets of awardees in the Small Business Innovation Research (SBIR) program. A model was formulated that predicts how the distribution of SBIR projects among five commercialisation levels changes from one year to the next. It was found that the distribution in any given year is dependent on the distribution in the previous year only. Projections show that as many as 30% of SBIR projects may eventually achieve commercialization.     

Beyond innovation: the Small Business Innovation Research program as entrepreneurship policy

Entrepreneurship or new firm formation plays an increasingly important role in knowledge-based economic development. Public policy to encourage new firm formation has not focused on high quality, high potential firms, and the search for entrepreneurship policy with high economic impact is still needed. This research evaluates the efficacy of the US Small Business Innovation Research (SBIR) program from the perspective of promoting high technology entrepreneurship. In particular, we examine whether the local presence of SBIR awards is associated with increased new firm formation rates in the high technology sector. Although the primary objective of SBIR is to facilitate technological commercialization in small businesses, our policy analysis based on spatial multivariate methods suggests that this program may also serve as an effective entrepreneurship policy.     

The NASA/Florida Minority Institution Entrepreneurial Partnership: An Infrastructure to Enable Technology Transfer to Small Businesses

The NASA/Florida Minority Institution Entrepreneurial Partnership (FMIEP) represents a new infrastructure for technology transfer based on an alliance between the National Aeronautics and Space Administration (NASA)-Kennedy Space Center (KSC), the Technological Research and Development Authority (TRDA), and four Minority Institutions in the State of Florida. This paper describes this partnership, their key activities, and some of the initial results accomplished. The NASA-FMIEP was developed in order to assist in the technological advancement of small businesses through the support of existing federal programs. Many of these programs are underutilized, particularly by small and minority-owned businesses. One of these programs aims to transfer advanced NASA technologies to the private sector. The FMIEP supports Kennedy Space Center by identifying new potential markets for technologies developed at the Center and by developing innovative information technology applications necessary to support the efforts of technology transfer. In addition, the FMIEP';s business thrust includes assisting Kennedy Space Center in promoting the participation by small business in the Technology Outreach Program and the Small Business Innovation Research Program. To date, one NASA technology has been successfully commercialized, seven hundred businesses have been made aware of these federal business-assistance programs, and four companies received important assistance that enabled them to become SBIR winners.     

The effect of Japanese corporate acquisition on the us military-industrial base

This paper utilizes a technique called the analysis of competing hypotheses to study Japanese acquisitions that involve majority interests in US firms. Findings show that there seem to be strategic trends in the Japanese procurement process, and that there are four domestic product groups that appear to be particularly vulnerable. Such foreign control of American commercial enterprises may well be a threat to the economy and national security.     

Audit fee pricing and internationally-credible GAAP: a property rights analysis

This paper applies a property rights analysis to examine what optimal audit fee compensation schedule is required by foreign based firms in order to produce internationally-credible generally accepted accounting principles (GAAP) that are acceptable to the Securities and Exchange Commission (SEC). The SEC has property rights to take away from foreign firms their discretion over what form of internationally-credible GAAP they must comply with in order to enter US securities markets. This takings decision is costly for foreign firms because it requires them to incur higher marginal audit fees associated with complying with US GAAP and the Sarbanes–Oxley Act. Utilising an argument developed by the property rights literature, a model is presented which assumes four participants: (a) Congress; (b) the SEC; (c) foreign based firms; and (d) audit firms, who compete for political influence over the determination of internationally credible-GAAP. The optimal audit fee compensation schedule required to be incurred by foreign based firms in order to produce internationally-credible GAAP financial reports is found to depend upon with which of these interest groups the SEC’s preferences coincide. Evidence is provided which supports the proposition implied by the model that European firms overinvested in the audit expenditures required to comply with the US disclosure and legal requirements.     

Pathways to national economic benefits from ATP-funded technologies

An important component of the Advanced Technology Program’s (ATP) economic evaluation plan for tracking project progress and outcomes is the administration of an electronic survey on a regular basis to participants in all projects funded since 1993. Progress of projects is compared against business plans and projected economic benefit goals outlined in their proposals. The resulting Business Reporting System (BRS) database is used for ATP project management and for evaluation research. Based on BRS data compiled through December 31, 1996, filed by 480 companies in 210 projects, funded in 19 competitions, this paper provides an overview of pathways to achieving targeted commercial and broader economic goals. Progress reports for the group of projects provide a variety of evidence of (a) opportunities for economic spillovers and national economic benefit and (b) activities supporting technology diffusion.     

Transferring superconductivity technology at a national-laboratory user center

Department of Energy national laboratories have long sought to expedite the transfer of commercially viable technologies to the private sector through publications and reports, workshops, the licensing of inventions, and personnel exchanges and other cooperative agreements between laboratories, industry, and universities. This article focuses on the transfer of patentable technologies through a case study of the Oak Ridge National Laboratory high temperature superconductivity Pilot Center (HTSC-PC). The Pilot Center was established in 1988 to encourage rapid incubation and commercialization of high temperature superconductivity technologies. The success of this venture will hinge upon assuring compatibility of objectives between the center and likely industrial participants and directing center efforts toward the aspirations of potential collaborators and the ultimate consumers of HTSC technologies. Lessons for general multi-program-laboratory technology transfer include the need for a model of collaboration that emphasizes openness and non-rigidity and facilitates the streamlining of information vital to the cross-fertilization of ideas, continuing reform of the licensing and royalty-sharing process, and simplifying the process of scientific exchange with external constituencies. David Lewis Feldman has a Ph.D. in political science from the University of Missouri-Columbia. He serves on the staff of the Energy Division of the Oak Ridge National Laboratory in Tennessee where he does research on the environmental impacts of energy developments, international and comparative environmental policy, environmental regulation, and technology policy. He is the author of several articles and recently completed a book on natural resources policy in the US. He also serves as senior editor ofForum for Applied Research and Public Policy published at the University of Tennessee.     

Supplemental grant to continue cooperative agreements with 10 predictor variables grantees and their research coordinating center. CSAP, SAMHSA, HHS. Supplement to support an additional year of intervention follow-up and data collection among the Predictor Variables by Developmental Stage grantees and their Research Coordinating Center

This notice is to inform the public that an estimated $1.65 million will be available to support up to 11 supplemental awards to 10 existing Predictor Variables Study Sites and one existing Research Coordinating Center in FY 1999. The purpose of the award is to support enhancement of current programs and allow the collection and analyses of additional follow-up data for children currently included in these studies. CSAP will make the awards based on the recommendations of the initial review group and the CSAP National Advisory Council. Supplemental awards will be made in Fiscal Year 1999, by September 30, 1999. The studies funded under this supplement are projected to end September 30, 2000. Eligibility is limited to existing SAMHSA/CSAP's Predictor Variables by Developmental Stage study sites, and their Research Coordinating Center. All currently active Predictor Variables grantees are eligible to apply for supplemental funds under this GFA. Given the short implementation time frame and limited funds available for this activity, as well as existing research protocols that limit the scope of new activities that could be introduced at this point in the study, the existing Predictor Variables projects are the only projects that can effectively implement the required booster sessions and follow-up data collection activities. These studies have already demonstrated that they can make a positive impact on children within selected developmental parameters. It is important to document that this impact on these same children can be maintained as they enter the next developmental stages. The Research Coordinating Center has put considerable effort into developing cross-site rapport and collecting process data from the individual sites; an effort that would be redundant and not cost-effective if attempted by another entity at this point in the project. Additionally, it is important to the continuity of the study that the Research Coordinating Center be able to continue its current analyses and be able to conduct secondary analyses based on the totality of the data submitted throughout the life of the study.     

The strategic value of new university technology and its impact on exclusivity of licensing transactions: An empirical study

Commercialization of new university technology within the new product development process is an important tool by which established firms can expand their innovative capabilities. The strategic importance of the university technology to the firm, however, can vary considerably. An exclusivity agreement is a useful tool to protect the firm’s investment and help ensure that value is appropriated through the commercialization process. An empirical study of 66 technology transfer projects in the information and communications technology industry reveals that licensing transactions are usually secured by some form of exclusivity agreements when the product innovation enabled by the new university technology is new-to-the-firm or new-to-the-market and the firm’s perception of the strategic value of the new technologies is high.      

Determinants of knowledge transfer: evidence from Canadian university researchers in natural sciences and engineering

This paper addresses three questions: First, what is the extent of research transfer in natural sciences and engineering among Canadian university researchers? Second, are there differences between various disciplines with regard to the extent of this transfer? And third, what are the determinants of research transfer? To answer these questions, the paper begins by differentiating between technology transfer and knowledge transfer. It then identifies the individual researcher as the unit of analysis of this study and introduces a conceptual framework derived from the resource-based approach of firms. The paper then reviews the literature on each of the factors included in the conceptual framework, beginning with the dependent variable, knowledge transfer. The conceptual framework includes four categories of resources and one category of research attributes that are likely to influence knowledge transfer. Based on a survey of 1,554 researchers funded by the Natural Sciences and Engineering Research Council of Canada (NSERC), comparisons of means of research transfer across research fields were conducted. Multivariate regression analyses were used to identify the determinants of research transfer by research field. The results of these analyses indicate that researchers transferred knowledge much more actively when no commercialization was involved than when there was commercialization of protected intellectual property. This paper thus adds to the relatively scarce evidence about knowledge transfer by examining knowledge transfer from a broader perspective than strict commercialization. The findings of this paper are also interesting for other reasons. We obtained statistical evidence indicating that researchers in certain research fields were much more active in knowledge transfer than those in other fields, thereby pointing to differences in levels of knowledge activities across research fields. Furthermore, we obtained evidence showing that only two determinants explained knowledge transfer in all the six research fields considered in this study, namely, focus of research projects on users’ needs, and linkages between researchers and research users. Statistical evidence obtained indicates that the other determinants that influence knowledge transfer vary from one research field to another, thus suggesting that different policies would be required to increase knowledge transfer in different research fields. The last part of the paper outlines the implications of the regression results for theory building, public policy and future research.     

Informing public policy on science and innovation: the Advanced Technology Program’s experience

The Advanced Technology Program (ATP) collected a unique source of data from highly innovative firms beginning in 1993. These data follow the OECD’s guidelines for collecting innovation data and provide important insights for understanding the innovation process within firms. Although the data are not representative of the population of firms, there is sufficient number of firms in the dataset to test hypotheses and to provide a starting point for calls for innovation metrics. Because of the confidential nature of the data, ATP worked with the National Opinion Research Center (NORC) to create a Data Enclave so that researchers could remotely access the ATP data in a secure environment. To initiate the use of ATP data in the Data Enclave, the ATP program funded researchers to undertake research projects that use ATP data. Other organizations have joined the Data Enclave, including the Department of Agriculture and the Kauffman Foundation.

The Catch-up Strategy of Petrobrás through Cooperative R&D

This article seeks to reflect on the possibilities of cooperative R&D to constitute an opportunity for companies in developing countries to take part in the innovation concerning technological frontier. In order to show this thesis can be true, this article is based on the case study of Petrobrás, the Brazilian state-owned oil company, which has employed the resource of cooperative R&D to gain access to the new subsea boosting technology and to acquire a place in the vanguard of such technology. However, the catch-up occurs only when firms in developing countries actively take part in the innovation process and accomplish an efficient process of technological learning, which is reflected on the evolution of interactions with external partners. The experience of Petrobrás is analyzed emphasizing the technological learning process through the transformation in its agreements with external partners. We present three cases of subsea boosting technologies developed by Petrobrás together with a majority of foreign producers or institutes. The analysis of these experiences allows us to show that the learning process and the mastery of in-house processes were accompanied by a significant evolution in the agreements with external sources. Petrobrás passes on from the position of cosponsor to that of articulator of the innovation process in technological cooperation agreements. The article proposes an evolutionary sequence to analyze the company's learning process. The evolutionary trajectories are different in each case, but in all of them it was possible to prove the increasing commitment of Petrobrás to the innovation effort.     

Legal Elites and the Shaping of Corporate Law Practice in Brazil: A Historical Study

Brazil today has a legal market that allows for foreign lawyers and foreign firms, but existing regulations are restrictive. Foreign lawyers cannot practice domestic law or litigation, nor can Brazilian‐licensed lawyers working for foreign firms or partnering with foreign lawyers. This was not always the case, however. Until 1963, there was little regulation of the legal profession. Beginning in 1913, elite US lawyers traveled to Brazil, with some even becoming prominent domestic practitioners. They partnered with local elite lawyers (who maintained their domestic privileges) and served as key brokers for US businesses seeking market entry. Drawing on the elite theory literature, and on ethnographies, interview data, and over 1,000 pages of rare Portuguese and English archival sources, this study's thesis is that sophisticated US and Brazilian legal elites capitalized on the lack of regulation to advance their financial interests, and in the process transformed Brazil's corporate legal sector.     

License Compliance Issues For Biopharmaceuticals: Special Challenges For Negotiations Between Companies And Non-Profit Research Institutions

Biopharmaceuticals are therapeutic products based on biotechnology. They are manufactured by or from living organisms and are the most complex of all commercial medicines to develop, manufacture and qualify for regulatory approval. In recent years biopharmaceuticals have rapidly increased in number and importance with over 400() already marketed in the U.S. and European markets alone. Many companies throughout the world are now ramping up investments in biopharmaceutical R&D and expanding their portfolios through licensing of early-stage biotechnologies from universities and other non-profit research institutions, and there is an increasing number of license agreements for biopharmaceutical product development relative to traditional small molecule drug compounds. This trend will only continue as large numbers of biosimilars and biogenerics enter the market.A primary goal of technology transfer offices associated with publicly-funded, non-profit research institutions is to establish patent protection for inventions deemed to have commercial potential and license them for product development. Such licenses help stimulate economic development and job creation, bring a stream of royalty revenue to the institution and, hopefully, advance the public good or public health by bringing new and useful products to market. In the course of applying for such licenses, a commercial development plan is usually put forth by the license applicant. This plan indicates the path the applicant expects to follow to bring the licensed invention to market. In the case of small molecule drug compounds, there exists a widely-recognized series of clinical development steps, dictated by regulatory requirements, that must be met to bring a new drug to market, such as completion of preclinical toxicology, Phase 1, 2 and 3 testing and product approvals. These steps often become the milestone/benchmark schedule incorporated into license agreements which technology transfer offices use to monitor the licensee's diligence and progress; most exclusive licenses include a commercial development plan, with penalties, financial or even revocation of the license, if the plan is not followed, e.g., the license falls too far behind.This study examines whether developmental milestone schedules based on a small molecule drug development model are useful and realistic in setting expectations for biopharmaceutical product development. We reviewed the monitoring records of all exclusive Public Health Service (PHS) commercial development license agreements for small molecule drugs or therapeutics based on biotechnology (biopharmaceuticals) executed by the National Institutes of Health (NIH) Office of Technology Transfer (OTT) between 2003 and 2009. We found that most biopharmaceutical development license agreements required amending because developmental milestones in the negotiated schedule could not be met by the licensee. This was in stark contrast with license agreements for small molecule chemical compounds which rarely needed changes to their developmental milestone schedules. As commercial development licenses for biopharmaceuticals make up the vast majority of NIH's exclusive license agreements, there is clearly a need to: 1) more closely examine how these benchmark schedules are formed, 2) try to understand the particular risk factors contributing to benchmark schedule non-compliance, and 3) devise alternatives to the current license benchmark schedule structural model. Schedules that properly weigh the most relevant risk factors such as technology classification (e.g., vaccine vs recombinant antibody vs gene therapy), likelihood of unforeseen regulatory issues, and company size/structure may help assure compliance with original license benchmark schedules. This understanding, coupled with a modified approach to the license negotiation process that makes use of a clear and comprehensive term sheet to minimize ambiguities should result in a more realistic benchmark schedule.