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Government as entrepreneur: Evaluating the commercialization success of SBIR projects

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Author Info

  • Link, Albert N.
  • Scott, John T.

Abstract

Thinking of government as entrepreneur is a unique lens through which to view a subset of government actions. The lens is not a template for an evaluation of government policy; rather, it is a characterization that underscores the government's purposeful intent, ability to act in new and innovative ways, and willingness to undertake policy actions that have uncertain outcomes. Our focus is on the U.S. Small Business Innovation Research (SBIR) program. We argue that the innovative action of government - the innovative use of public resources through the SBIR program to target and support research in small firms - does lessen innovation barriers that cause small firms to underinvest in R&D. However, this government action is subject to entrepreneurial risk, namely the a priori uncertainty that the funded research will result in a commercialized product, process, or service. We quantify the uncertainty that the government accepts in the context of innovation supported by the SBIR program; or stated alternatively, we quantify the probability that a project funded by the SBIR program will fail to commercialize its results. Our empirical results show that the entrepreneurial risk that characterizes the SBIR program is, on average, somewhat more than the probability of failing to get heads on the toss of a fair coin. Importantly, however, our evidence shows that there is a large range in the entrepreneurial risk that the government accepts--across the projects, the predicted probability of failure covers essentially the entire range from 0 to 1.0.

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Bibliographic Info

Article provided by Elsevier in its journal Research Policy.

Volume (Year): 39 (2010)
Issue (Month): 5 (June)
Pages: 589-601

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Handle: RePEc:eee:respol:v:39:y:2010:i:5:p:589-601

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Web page: http://www.elsevier.com/locate/respol

Related research

Keywords: Government entrepreneur Small business innovation research (SBIR) Research and development (R&D);

References

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  1. Audretsch, David B. & Link, Albert N. & Scott, John T., 2002. "Public/private technology partnerships: evaluating SBIR-supported research," Research Policy, Elsevier, vol. 31(1), pages 145-158, January.
  2. Gregory Tassey, 2005. "Underinvestment in Public Good Technologies," The Journal of Technology Transfer, Springer, vol. 30(2_2), pages 89-113, 01.
  3. Albert Link, 1999. "Public/Private Partnerships In The United States," Industry and Innovation, Taylor & Francis Journals, vol. 6(2), pages 191-217.
  4. Albert Link & Christopher Ruhm, 2009. "Bringing science to market: commercializing from NIH SBIR awards," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(4), pages 381-402.
  5. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  6. Albert N. Link & John T. Scott, 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, London School of Economics and Political Science, vol. 76(302), pages 264-281, 04.
  7. Baumol William J. & Litan Robert E & Schramm Carl J, 2007. "Sustaining Entrepreneurial Capitalism," Capitalism and Society, De Gruyter, vol. 2(2), pages 1-38, November.
  8. Link, Albert N. & Scott, John T., 2001. "Public/private partnerships: stimulating competition in a dynamic market," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 763-794, April.
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Citations

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Cited by:
  1. Gicheva, Dora & Link, Albert N., 2011. "Leveraging Entrepreneurship through Private Investments: Does Gender Matter?," Working Papers 11-21, University of North Carolina at Greensboro, Department of Economics.
  2. Albert Link & John Scott, 2012. "The exploitation of publicly funded technology," The Journal of Technology Transfer, Springer, vol. 37(3), pages 375-383, June.
  3. Donald Siegel & Charles Wessner, 2009. "Universities and the Success of Entrepreneurial Ventures: Evidence from the Small Business Innovation Research Program," Working Papers 1, Jerusalem Institute for Market Studies (JIMS).
  4. Link, Albert N. & Scott, John T., 2011. "Employment Growth from Public Support of Innovation in Small Firms," Working Papers 11-17, University of North Carolina at Greensboro, Department of Economics.
  5. Heike Grimm & Johannes Jaenicke, 2012. "What drives patenting and commerzialisation activity at East German universities? The role of new public policy, institutional environment and individual prior knowledge," The Journal of Technology Transfer, Springer, vol. 37(4), pages 454-477, August.
  6. Link, Albert & Scott, John, 2010. "Employment Growth from the Small Business Innovation Research Program," Working Papers 10-8, University of North Carolina at Greensboro, Department of Economics.
  7. Donna Kidwell, 2014. "Navigating the role of the principal investigator: a comparison of four cases," The Journal of Technology Transfer, Springer, vol. 39(1), pages 33-51, February.
  8. Audretsch, David B. & Leyden, Dennis P. & Link, Albert N., 2012. "Universities as Research Partners in Publicly Supported Entrepreneurial Firms," Working Papers 12-2, University of North Carolina at Greensboro, Department of Economics.
  9. Audretsch, David B. & Link, Albert N., 2011. "Entrepreneurship and Innovation: Public Policy Frameworks," Working Papers 11-19, University of North Carolina at Greensboro, Department of Economics.
  10. Bradley, Samantha R. & Gicheva, Dora & Hassell, Lydia & Link, Albert N., 2013. "Gender Differences in Access to Private Investment Funding to Support the Development of New Technologies," Working Papers 13-9, University of North Carolina at Greensboro, Department of Economics.
  11. Elston, Julie Ann & Audretsch, David B., 2010. "Risk attitudes, wealth and sources of entrepreneurial start-up capital," Journal of Economic Behavior & Organization, Elsevier, vol. 76(1), pages 82-89, October.
  12. Bradley, Samantha R. & Gicheva, Dora & Hassell, Lydia & Link, Albert N., 2013. "Private Investment to Support New Technologies: Quantifying Gender Differences," Working Papers 13-11, University of North Carolina at Greensboro, Department of Economics.

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