Government as entrepreneur: Evaluating the commercialization success of SBIR projects
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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- Albert N. Link & John T. Scott, 2013.
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Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 11, pages 157-174
Edward Elgar Publishing.
- 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.
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- 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.
- 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.
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- 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.
- Albert N. Link & Christopher J. Ruhm, 2013. "Bringing science to market:commercializing from NIH SBIR awards," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 1, pages 3-24 Edward Elgar Publishing.
- 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.
- Albert N. Link & Christopher J. Ruhm, 2008. "Bringing Science to Market: Commercializing from NIH SBIR Awards," NBER Working Papers 14057, National Bureau of Economic Research, Inc.
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