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When does funding research by smaller firms bear fruit?: Evidence from the SBIR program

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  • Joshua Gans
  • Scott Stern

Abstract

This paper evaluates whether the relative concentration of funding for small, research-oriented firms in a small number of high-technology industries is related to differences across industries in the appropriability level facing small firms. We exploit a novel test based on the relationship between industry-level private venture financing and the performance of government-subsidized R&D projects. If industries differ in their appropriability level, then private funding and subsidized project performance should be positively correlated. Our principal finding is that subsidized project performance is higher in industrial segments with higher rates of private venture capital investment. Industrial sectors therefore seem to differ in the degree of appropriability and this variation helps explain why venture capital is concentrated. * The latest version of this paper is available at http://www.mbs.edu/home//jgans/research.htm

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 12 (2003)
Issue (Month): 4 ()
Pages: 361-384

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Handle: RePEc:taf:ecinnt:v:12:y:2003:i:4:p:361-384

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Related research

Keywords: Innovation; Appropriability; Subsidy; Capital Constraints; Technological Opportunity; Venture Capital;

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References

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Citations

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Cited by:
  1. Audretsch, David B. & Link, Albert N. & Scott, John T., 2002. "Public/private technology partnerships: evaluating SBIR-supported research," Research Policy, Elsevier, Elsevier, vol. 31(1), pages 145-158, January.
  2. Toole, Andrew A. & Czarnitzki, Dirk, 2005. "Biomedical Academic Entrepreneurship Through the SBIR Program," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 05-47, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Hyytinen, Ari & Pajarinen, Mika, 2001. "Financial Systems and Venture Capital in Nordic Countries: A comparative Study," Discussion Papers, The Research Institute of the Finnish Economy 774, The Research Institute of the Finnish Economy.
  4. Rodriguez-Palenzuela, Diego, 2001. "Sources of economic renewal: from the traditional firm to the knowledge firm," Working Paper Series, European Central Bank 0043, European Central Bank.
  5. Marco Da Rin & Giovanna Nicodano & Alessandro Sembenelli, 2004. "Public Policy and the Creation of Active Venture Capital Markets," Working Papers, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University 270, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  6. Ali-Yrkkö, Jyrki & Hyytinen, Ari & Liukkonen, Johanna, 2001. "Exiting Venture Capital Investments: Lessons from Finland," Discussion Papers, The Research Institute of the Finnish Economy 781, The Research Institute of the Finnish Economy.
  7. Hyytinen, Ari & Pajarinen, Mika, 2002. "Small Business Finance in Finland. A Descriptive Study," Discussion Papers, The Research Institute of the Finnish Economy 812, The Research Institute of the Finnish Economy.
  8. Da Rin, M. & Hellmann, T. & Puri, M.L., 2011. "A Survey of Venture Capital Research," Discussion Paper, Tilburg University, Center for Economic Research 2011-111, Tilburg University, Center for Economic Research.
  9. Cockburn, Iain M. & MacGarvie, Megan J. & Müller, Elisabeth, 2009. "Patent thickets, licensing and innovative performance," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 08-101 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Haifeng Qian & Kingsley Haynes, 2014. "Beyond innovation: the Small Business Innovation Research program as entrepreneurship policy," The Journal of Technology Transfer, Springer, Springer, vol. 39(4), pages 524-543, August.
  11. Joshua S. Gans & David H. Hsu & Scott Stern, 2002. "When Does Start-Up Innovation Spur the Gale of Creative Destruction?," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 571-586, Winter.
  12. Astebro, Thomas B. & Dahlin, Kristina B., 2005. "Opportunity knocks," Research Policy, Elsevier, Elsevier, vol. 34(9), pages 1404-1418, November.
  13. Antonelli Cristiano & Teubal Morris, 2011. "From the corporation to venture capitalism: new surrogate markets for knowledge and innovation-led economic growth"," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201106, University of Turin.
  14. Hyytinen, Ari & Pajarinen, Mika, 2002. "Financing of Technology-Intensive Small Business: Some Evidence on the Uniqueness of the ICT Industry," Discussion Papers, The Research Institute of the Finnish Economy 813, The Research Institute of the Finnish Economy.

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