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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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  • Scott J. Wallsten
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    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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    Bibliographic 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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    Cited by:
    1. Hyytinen, Ari & Toivanen, Otto, 2005. "Do financial constraints hold back innovation and growth?: Evidence on the role of public policy," Research Policy, Elsevier, vol. 34(9), pages 1385-1403, November.
    2. Ensthaler, Ludwig & Giebe, Thomas, 2010. "A dynamic auction for multi-object procurement under a hard budget constraint," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 310, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. Sonja Radas & Ivan-Damir Anic, 2013. "Evaluating Additionality of an Innovation Subsidy Program Targeted at SMEs: An Exploratory Study," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 15(1), pages 61-88, April.
    4. Colombo, Massimo G. & Croce, Annalisa & Guerini, Massimiliano, 2013. "The effect of public subsidies on firms’ investment–cash flow sensitivity: Transient or persistent?," Research Policy, Elsevier, vol. 42(9), pages 1605-1623.
    5. Segarra Blasco, Agustí, 1958- & Gombau, Verònica, 2013. "Young innovative firms and R&D strategies: is the Spanish case different?," Working Papers 2072/222200, Universitat Rovira i Virgili, Department of Economics.
    6. Nicolae BACILA, 2012. "The relationship between government and business r&d expenditure in the European Union," Anale. Seria Stiinte Economice. Timisoara, Faculty of Economics, Tibiscus University in Timisoara, vol. 0, pages 134-141, May.
    7. 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.
    8. Huergo, Elena & Moreno, Lourdes, 2014. "National or international public funding? Subsidies or loans? Evaluating the innovation impact of R&D support programmes," MPRA Paper 54218, University Library of Munich, Germany.
    9. 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.
    10. Takalo, Tuomas & Tanayama, Tanja & Toivanen, Otto, 2013. "Market failures and the additionality effects of public support to private R&D: Theory and empirical implications," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 634-642.
    11. Itzhak Goldberg, 2004. "Poland and the Knowledge Economy : Enhancing Poland's Competitiveness in the European Union," World Bank Publications, The World Bank, number 14908, October.
    12. Frederico Roch, 2014. "Does Governmental Support To Innovation Have Positive Effect On R&D Investments? Evidence From Brazil," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 165, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    13. Camilla Jensen & Itzhak Goldberg, 2014. "Demand-driven innovation policies in the EU," CASE Network Studies and Analyses 0467, CASE-Center for Social and Economic Research.
    14. Azagra-Caro,Joaquín M. & Consoli,Davide, 2013. "Knowledge Flows and Public-Private Cooperation across National Contexts," INGENIO (CSIC-UPV) Working Paper Series 201304, INGENIO (CSIC-UPV).

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