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Private Investor Participation and Commercialization Rates for Government-sponsored Research and Development: Would a Prediction Market Improve the Performance of the SBIR Programme?

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  • ALBERT N. LINK
  • JOHN T. SCOTT

Abstract

An objective of the US Small Business Innovation Research (SBIR) programme is the private sector commercialization of funded R&D projects. However, our estimate of the actual or expected probability of commercialization of such R&D is fairly low; our analysis of Department of Defense (DoD) Phase II awards suggests that the estimated probability of commercialization is only 0.47. We investigate econometrically whether outside private investors have useful information about proposed SBIR projects' prospects for commercialization. Our findings suggest that they do, thereby providing support for the possibility that a prediction market could improve the performance of the SBIR programme. Copyright (c) The London School of Economics and Political Science 2008.

Suggested Citation

  • 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, April.
  • Handle: RePEc:bla:econom:v:76:y:2009:i:302:p:264-281
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    References listed on IDEAS

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    1. Manski, Charles F., 2006. "Interpreting the predictions of prediction markets," Economics Letters, Elsevier, vol. 91(3), pages 425-429, June.
    2. Martin, Stephen & Scott, John T., 2000. "The nature of innovation market failure and the design of public support for private innovation," Research Policy, Elsevier, vol. 29(4-5), pages 437-447, April.
    3. Kohn, Meir & Scott, John T, 1982. "Scale Economies in Research and Development: The Schumpeterian Hypothesis," Journal of Industrial Economics, Wiley Blackwell, vol. 30(3), pages 239-249, March.
    4. Justin Wolfers & Eric Zitzewitz, 2006. "Interpreting prediction market prices as probabilities," Working Paper Series 2006-11, Federal Reserve Bank of San Francisco.
    5. John Scott, 2000. "The Directions for Technological Change: Alternative Economic Majorities and Opportunity Costs," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 17(1), pages 1-16, August.
    6. David B. Audretsch & Albert N. Link & John T. Scott, 2013. "Public/private technology partnerships: evaluating SBIR-supported research," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 5, pages 91-104 Edward Elgar Publishing.
    7. Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 107-126, Spring.
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    Citations

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    Cited by:

    1. David B. Audretsch & Dennis P. Leyden & Albert N. Link, 2013. "Universities as research partners in publicly supported entrepreneurial firms," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 12, pages 175-192 Edward Elgar Publishing.
    2. Albert N. Link & John T. Scott, 2013. "The exploitation of publicly funded technology," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 8, pages 127-135 Edward Elgar Publishing.
    3. Albert N. Link & John T. Scott, 2013. "Employment growth from public support of innovation in small firms," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 3, pages 41-64 Edward Elgar Publishing.
    4. Albert N. Link & John T. Scott, 2013. "Employment growth from the Small Business Innovation Research program," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 4, pages 65-88 Edward Elgar Publishing.
    5. Albert N. Link & John T. Scott, 2013. "Governments as entrepreneur: Evaluating the commercialization success of SBIR projects," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 2, pages 25-38 Edward Elgar Publishing.
    6. Link, Albert N. & Scott, John T., 2013. "Bending the Arc of Innovation: Public Support of R&D in Small, Entrepreneurial Firms," UNCG Economics Working Papers 13-8, University of North Carolina at Greensboro, Department of Economics.
    7. Dora Gicheva & Albert Link, 2013. "Leveraging entrepreneurship through private investments: does gender matter?," Small Business Economics, Springer, vol. 40(2), pages 199-210, February.
    8. repec:kap:revind:v:52:y:2018:i:4:d:10.1007_s11151-018-9617-0 is not listed on IDEAS
    9. Scott, John T. & Scott, Troy J., 2016. "The entrepreneur's idea and outside finance: Theory and evidence about entrepreneurial roles," European Economic Review, Elsevier, vol. 86(C), pages 118-130.
    10. Donald Siegel & Charles Wessner, 2012. "Universities and the success of entrepreneurial ventures: evidence from the small business innovation research program," The Journal of Technology Transfer, Springer, vol. 37(4), pages 404-415, August.
    11. Stuart D. Allen & Stephen K. Layson & Albert N. Link, 2013. "Public gains from entrepreneurial research: Inferences about the economic value of public support of the Small Business Innovation Research program," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 6, pages 105-112 Edward Elgar Publishing.
    12. Barry Bozeman & Albert N. Link, 2015. "Toward an assessment of impacts from US technology and innovation policies," Science and Public Policy, Oxford University Press, vol. 42(3), pages 369-376.
    13. David B. Audretsch & Dennis P. Leyden & Albert N. Link, 2013. "Regional Appropriation of University-Based Knowledge and Technology for Economic Development," Economic Development Quarterly, , vol. 27(1), pages 56-61, February.
    14. T. Aldridge & David Audretsch & Sameeksha Desai & Venkata Nadella, 2014. "Scientist entrepreneurship across scientific fields," The Journal of Technology Transfer, Springer, vol. 39(6), pages 819-835, December.
    15. Link, Albert & Scott, John, 2018. "Propensity to Patent and Firm Size for Small R&D-Intensive Firms," UNCG Economics Working Papers 18-1, University of North Carolina at Greensboro, Department of Economics.
    16. Haifeng Qian & Kingsley Haynes, 2014. "Beyond innovation: the Small Business Innovation Research program as entrepreneurship policy," The Journal of Technology Transfer, Springer, vol. 39(4), pages 524-543, August.
    17. Aldridge, T. Taylor & Audretsch, David, 2011. "The Bayh-Dole Act and scientist entrepreneurship," Research Policy, Elsevier, vol. 40(8), pages 1058-1067, October.

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