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The Effects of Government-Industry R&D Programs on Private R&D: The Case of the Small Business Innovation Research Program

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Author Info
Scott J. Wallsten
Abstract

I ask whether government-industry commercial R&D grants increase private R&D. Regressing some measure of innovation on the subsidy can establish a correlation between grants and R&D, but it cannot determine whether grants increase firm R&D or whether firms that do more R&D received more grants. Using a dataset of firms involved in the Small Business Innovation Research (SBIR) program, I estimate a multi-equation model to test these hypotheses. Firms with more employees and that appear to do more research win more SBIR grants, but the grants do not affect employment. Moreover, I find evidence that the grants crowd out firm-financed R&D spending dollar for dollar.

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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 31 (2000)
Issue (Month): 1 (Spring)
Pages: 82-100
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Handle: RePEc:rje:randje:v:31:y:2000:i:spring:p:82-100

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  1. Ari Hyytinen & Otto Toivanen, 2003. "Do Financial Constraints Hold Back Innovation and Growth? Evidence on the Role of Public Policy," Discussion Papers 820, The Research Institute of the Finnish Economy. [Downloadable!]
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  2. Joshua S. Gans & Scott Stern, 2000. "When Does Funding Research by Smaller Firms Bear Fruit?: Evidence from the SBIR Program," NBER Working Papers 7877, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Ralph Siebert, 1999. "The Impact of R&D Subsidies on the Introduction of New Products by Incumbent Firms
    old title -(New Product Introduction by Incumbent Firms)
    ," CIG Working Papers FS IV 99-19, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG), revised Aug 2003. [Downloadable!]
  4. Daniel Chudnovsky & Andrés López & Martín Rossi & Diego Ubfal, 2006. "Evaluating A Program of Public Funding of Private Innovation Activities. An Econometric Study of FONTAR in Argentina," OVE Working Papers 1606, Inter-American Development Bank, Office of Evaluation and Oversight (OVE). [Downloadable!]
  5. Aerts, Kris & Schmidt, Tobias, 2006. "Two for the price of one? : On additionality effects of R&D subsidies ; a comparison between Flanders and Germany," ZEW Discussion Papers 06-63, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  6. Czarnitzki, Dirk & Fier, Andreas, 2002. "Do Innovation Subsidies Crowd Out Private Investment? : Evidence from the German Service Sector," ZEW Discussion Papers 02-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  7. Hannu Piekkola, 2005. "Public Funding of R&D and Growth: Firm-level Evidence from Finland," Discussion Papers 996, The Research Institute of the Finnish Economy. [Downloadable!]
  8. Almus, Matthias & Prantl, Susanne, 2001. "Die Auswirkungen öffentlicher Gründungsförderung auf das Überleben und Wachstum junger Unternehmen," ZEW Discussion Papers 01-03, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  9. Silviya Draganinska & Ruediger Wink, 2005. "Interregional and international knowledge flows in medium technology sectors - The role of formal and informal institutions," ERSA conference papers ersa05p381, European Regional Science Association. [Downloadable!]
  10. Tuomas Takalo & Tanja Tanayama & Otto Toivanen, 2005. "Selection Or Self-Rejection? Applications Into A Treatment," Industrial Organization 0510002, EconWPA. [Downloadable!]
  11. José; Miguel Benavente H., 2004. "Technological Innovation In Chile Where We Are and What Can be Done," Working Papers Central Bank of Chile 295, Central Bank of Chile. [Downloadable!]
  12. Toole, Andrew A. & Czarnitzki, Dirk, 2005. "Biomedical Academic Entrepreneurship Through the SBIR Program," ZEW Discussion Papers 05-47, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  13. Paul H. Jensen & Elizabeth Webster, 2004. "SMEs and Their Use of Intellectual Property Rights in Australia," Melbourne Institute Working Paper Series wp2004n17, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  14. Andrew A. Toole & Dirk Czarnitzki, 2005. "Biomedical Academic Entrepreneurship Through the SBIR Program," NBER Working Papers 11450, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Herrera, Liliana & Nieto Antolín, Mariano, 2006. "The Regional Dimension of the Distribution and Effects of Public Incentives Directed towards Innovation of Firms," Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". Working Papers "New Trends on Business Administration". 2006-03, Interuniversitary Doctorate Program "New Trends on Business Administration", Universities of Valladolid, Burgos and Salamanca (Spain). Programa de Doctorado Interuniversitario "Nuevas Tendencias en Di. [Downloadable!]
  16. Fier, Andreas & Heneric, Oliver, 2005. "Public R&D Policy: The Right Turns of the Wrong Screw? The Case of the German Biotechnology Industry," ZEW Discussion Papers 05-60, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  17. Alan Hughes, 2007. "Innovation Policy as cargo cult: Myth and Reality in knowledge-led Productivity Growth," ESRC Centre for Business Research - Working Papers wp348, ESRC Centre for Business Research. [Downloadable!]
  18. Czarnitzki, Dirk & Ebersberger, Bernd & Fier, Andreas, 2004. "The Relationship between R&D Collaboration, Subsidies and Patenting Activity : Empirical Evidence from Finland and Germany," ZEW Discussion Papers 04-37, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  19. Nestor Duch Brown & Daniel Montolio Estivill & Mauro Mediavilla, 2007. "Evaluating the Impact of Public Subsidies on a Firms Performance: a Quasi-experimental Approach," Working Papers in Economics 181, Universitat de Barcelona. Espai de Recerca en Economia. [Downloadable!]
    Other versions:
  20. Ralph Siebert, 1999. "Credible Vertical Preemption," CIG Working Papers FS IV 99-20, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG), revised Jul 2003. [Downloadable!]
  21. Dominique Guellec & Bruno Van Pottelsberghe De La Potterie, 2003. "THE IMPACT OF PUBLIC R&D EXPENDITURE ON BUSINESS R&D," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 12(3), pages 225-243, January. [Downloadable!] (restricted)
    Other versions:
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