IDEAS home Printed from https://ideas.repec.org/a/kap/jtecht/v43y2018i3d10.1007_s10961-017-9633-5.html
   My bibliography  Save this article

The longer term effects of federal subsidies on firm survival: evidence from the advanced technology program

Author

Listed:
  • Daniel Smith

    (North Carolina Department of Commerce
    University of North Carolina at Chapel Hill)

  • Maryann Feldman

    (University of North Carolina at Chapel Hill)

  • Gary Anderson

    (National Science Foundation)

Abstract

The goal of this paper is to conduct a survival analysis to determine the causal impact of federal R&D subsidies on firms’ long-term survival. The data are small firms which applied to the Advanced Technology Program (ATP) in 1998 and 2000. The ATP’s focus was on ensuring that early stage, high-risk research was eventually commercialized successfully and resulted in broad economic benefits for society overall. This paper therefore explores whether the knowledge and benefits the ATP initially provided to a firm allowed it to more successfully transition future research projects from development and testing to commercialization. This paper utilizes a variant of the Heckman (Econometrica 47(1):153–161, 1979) research design to control for inherent pre-award differences between awarded and non-awarded firms. By using administrative data on reviewer scores, this analysis shows that the impact of ATP on small firm survival is robust to sample selection. This paper’s findings suggest that recei ving an ATP award can have a significant and positive causal effect on firm survival.

Suggested Citation

  • Daniel Smith & Maryann Feldman & Gary Anderson, 2018. "The longer term effects of federal subsidies on firm survival: evidence from the advanced technology program," The Journal of Technology Transfer, Springer, vol. 43(3), pages 593-614, June.
    • Handle: RePEc:kap:jtecht:v:43:y:2018:i:3:d:10.1007_s10961-017-9633-5
    DOI: 10.1007/s10961-017-9633-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10961-017-9633-5
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10961-017-9633-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wagner, Joachim, 2002. "The causal effects of exports on firm size and labor productivity: first evidence from a matching approach," Economics Letters, Elsevier, vol. 77(2), pages 287-292, October.
    2. Bronwyn Hall & Alessandro Maffioli, 2008. "Evaluating the impact of technology development funds in emerging economies: evidence from Latin America," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 172-198.
    3. Patrick Musso & Stefano Schiavo, 2008. "The impact of financial constraints on firm survival and growth," Journal of Evolutionary Economics, Springer, vol. 18(2), pages 135-149, April.
    4. Rachel Griffith & Stephen Redding & John Van Reenen, 2004. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 883-895, November.
    5. Luigi Aldieri & Michele Cincera, 2009. "Geographic and technological R&D spillovers within the triad: micro evidence from US patents," The Journal of Technology Transfer, Springer, vol. 34(2), pages 196-211, April.
    6. Joel A. C. Baum & Tony Calabrese & Brian S. Silverman, 2000. "Don't go it alone: alliance network composition and startups' performance in Canadian biotechnology," Strategic Management Journal, Wiley Blackwell, vol. 21(3), pages 267-294, March.
    7. Frédérique Sachwald, 2008. "Location choices within global innovation networks: the case of Europe," The Journal of Technology Transfer, Springer, vol. 33(4), pages 364-378, August.
    8. Junichi Nishimura & Hiroyuki Okamuro, 2011. "R&D productivity and the organization of cluster policy: an empirical evaluation of the Industrial Cluster Project in Japan," The Journal of Technology Transfer, Springer, vol. 36(2), pages 117-144, April.
    9. Elena Cefis & Orietta Marsili, 2005. "A matter of life and death: innovation and firm survival," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(6), pages 1167-1192, December.
    10. 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.
    11. Czarnitzki, Dirk & Hanel, Petr & Rosa, Julio Miguel, 2011. "Evaluating the impact of R&D tax credits on innovation: A microeconometric study on Canadian firms," Research Policy, Elsevier, vol. 40(2), pages 217-229, March.
    12. 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.
    13. Feldman, Maryann P. & Kelley, Maryellen R., 2006. "The ex ante assessment of knowledge spillovers: Government R&D policy, economic incentives and private firm behavior," Research Policy, Elsevier, vol. 35(10), pages 1509-1521, December.
    14. Nick Johnstone & Ivan Haščič & David Popp, 2010. "Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(1), pages 133-155, January.
    15. Albert N. Link, 2016. "Public sector entrepreneurship: introduction to the special section," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 43(4), pages 355-356, December.
    16. Massimo Colombo & Philippe Mustar & Mike Wright, 2010. "Dynamics of Science-based entrepreneurship," The Journal of Technology Transfer, Springer, vol. 35(1), pages 1-15, February.
    17. Blanes, J. Vicente & Busom, Isabel, 2004. "Who participates in R&D subsidy programs?: The case of Spanish manufacturing firms," Research Policy, Elsevier, vol. 33(10), pages 1459-1476, December.
    18. Katrin Hussinger, 2008. "R&D and subsidies at the firm level: an application of parametric and semiparametric two-step selection models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 729-747.
    19. Hans Lööf & Anders Broström, 2008. "Does knowledge diffusion between university and industry increase innovativeness?," The Journal of Technology Transfer, Springer, vol. 33(1), pages 73-90, February.
    20. Dennis Patrick Leyden, 2016. "Public-sector entrepreneurship and the creation of a sustainable innovative economy," Small Business Economics, Springer, vol. 46(4), pages 553-564, April.
    21. Jeffrey H. Dyer, 1997. "Effective interim collaboration: how firms minimize transaction costs and maximise transaction value," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 535-556, August.
    22. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 2000. "Is public R&D a complement or substitute for private R&D? A review of the econometric evidence," Research Policy, Elsevier, vol. 29(4-5), pages 497-529, April.
    23. Bercovitz, Janet E.L. & Feldman, Maryann P., 2007. "Fishing upstream: Firm innovation strategy and university research alliances," Research Policy, Elsevier, vol. 36(7), pages 930-948, September.
    24. Steven Klepper, 2002. "Firm Survival and the Evolution of Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 37-61, Spring.
    25. Patrick Puhani, 2000. "The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
    26. Petr Hanel & Marc St-Pierre, 2006. "Industry–University Collaboration by Canadian Manufacturing Firms," The Journal of Technology Transfer, Springer, vol. 31(4), pages 485-499, July.
    27. Bronwyn H. Hall & Albert N. Link & John T. Scott, 2003. "Universities as Research Partners," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 485-491, May.
    28. Toby E. Stuart, 2000. "Interorganizational alliances and the performance of firms: a study of growth and innovation rates in a high‐technology industry," Strategic Management Journal, Wiley Blackwell, vol. 21(8), pages 791-811, August.
    29. Silviano Esteve-Pérez & Juan Mañez-Castillejo, 2008. "The Resource-Based Theory of the Firm and Firm Survival," Small Business Economics, Springer, vol. 30(3), pages 231-249, March.
    30. Caloghirou, Yannis & Tsakanikas, Aggelos & Vonortas, Nicholas S, 2001. "Univeristy-Industry Cooperation in the Context of the European Framework Programmes," The Journal of Technology Transfer, Springer, vol. 26(1-2), pages 153-161, January.
    31. Elias Einiö, 2014. "R&D Subsidies and Company Performance: Evidence from Geographic Variation in Government Funding Based on the ERDF Population-Density Rule," The Review of Economics and Statistics, MIT Press, vol. 96(4), pages 710-728, October.
    32. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    33. 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.
    34. Dennis Leyden & Albert Link, 2013. "Knowledge spillovers, collective entrepreneurship, and economic growth: the role of universities," Small Business Economics, Springer, vol. 41(4), pages 797-817, December.
    35. Bronwyn Hall & Alessandro Maffioli, 2008. "Evaluating the impact of technology development funds in emerging economies: evidence from Latin America," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 172-198.
    36. Link, Albert N., 2015. "Capturing Knowledge: Private Gains and Public Gains from University Research Partnerships," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 11(3), pages 139-206, November.
    37. Tuomas Takalo & Tanja Tanayama, 2010. "Adverse selection and financing of innovation: is there a need for R&D subsidies?," The Journal of Technology Transfer, Springer, vol. 35(1), pages 16-41, February.
    38. Hall, Michael & Link, Albert, 2015. "Technology-Based Growth Policies: The Case of North Carolina’s Green Business Fund," UNCG Economics Working Papers 15-1, University of North Carolina at Greensboro, Department of Economics.
    39. Klette, Tor Jakob & Moen, Jarle & Griliches, Zvi, 2000. "Do subsidies to commercial R&D reduce market failures? Microeconometric evaluation studies1," Research Policy, Elsevier, vol. 29(4-5), pages 471-495, April.
    40. Becchetti, Leonardo & Trovato, Giovanni, 2002. "The Determinants of Growth for Small and Medium Sized Firms: The Role of the Availability of External Finance," Small Business Economics, Springer, vol. 19(4), pages 291-306, December.
    41. P. Holmes & A. Hunt & I. Stone, 2010. "An analysis of new firm survival using a hazard function," Applied Economics, Taylor & Francis Journals, vol. 42(2), pages 185-195.
    42. Maryann P. Feldman, 1994. "The University and Economic Development: The Case of Johns Hopkins University and Baltimore," Economic Development Quarterly, , vol. 8(1), pages 67-76, February.
    43. Barry Bozeman & John Hardin & Albert Link, 2008. "Barriers To The Diffusion Of Nanotechnology," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(7-8), pages 749-761.
    44. Mansfield, Edwin, 1995. "Academic Research Underlying Industrial Innovations:," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 55-65, February.
    45. Michael Hall & Albert Link, 2015. "Technology-based state growth policies: the case of North Carolina’s Green Business Fund," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(2), pages 437-449, March.
    46. Donna Marie DeCarolis & David L. Deeds, 1999. "The impact of stocks and flows of organizational knowledge on firm performance: an empirical investigation of the biotechnology industry," Strategic Management Journal, Wiley Blackwell, vol. 20(10), pages 953-968, October.
    47. Feldman, Maryann P & Kelley, Maryellen R, 2003. "Leveraging Research and Development: Assessing the Impact of the U.S. Advanced Technology Program," Small Business Economics, Springer, vol. 20(2), pages 153-165, March.
    48. Oughton, Christine & Landabaso, Mikel & Morgan, Kevin, 2002. "The Regional Innovation Paradox: Innovation Policy and Industrial Policy," The Journal of Technology Transfer, Springer, vol. 27(1), pages 97-110, January.
    49. Scott J. Wallsten, 2000. "The Effects of Government-Industry R&D Programs on Private R&D: The Case of the Small Business Innovation Research Program," RAND Journal of Economics, The RAND Corporation, vol. 31(1), pages 82-100, Spring.
    50. Kevin Morgan, 1997. "The Learning Region: Institutions, Innovation and Regional Renewal," Regional Studies, Taylor & Francis Journals, vol. 31(5), pages 491-503.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Supradeep Dutta & Jenna Rodrigues & Timothy B. Folta, 2023. "Does NIH select the right healthcare ventures through the SBIR grant program?," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1206-1220, August.
    2. Aleksandar Giga & Alexandra Graddy-Reed & Andrea Belz & Richard J. Terrile & Fernando Zapatero, 2022. "Helping the Little Guy: the impact of government awards on small technology firms," The Journal of Technology Transfer, Springer, vol. 47(3), pages 846-871, June.
    3. Marian Negoita & Annelies Goger, 2024. "State-Level Policies to Incentivize Workplace Learning: Impacts of a California Publicly Funded Employee Training Program," Economic Development Quarterly, , vol. 38(1), pages 15-24, February.
    4. Jiao, Jian-ling & Zhang, Xiao-lan & Tang, Yun-shu, 2020. "What factors determine the survival of green innovative enterprises in China? -- A method based on fsQCA," Technology in Society, Elsevier, vol. 62(C).
    5. Hackler, Darrene & Harpel, Ellen, 2021. "Incentives for Entrepreneurial Firms and Technical and Policy Appendices," MPRA Paper 109173, University Library of Munich, Germany.
    6. Chang, Kai & Long, Yu & Yang, Jiahui & Zhang, Huijia & Xue, Chenqi & Liu, Jianing, 2022. "Effects of subsidy and tax rebate policies on green firm research and development efficiency in China," Energy, Elsevier, vol. 258(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Smith, Daniel, 2020. "The Effects of Federal Research and Development Subsidies on Firm Commercialization Behavior," Research Policy, Elsevier, vol. 49(7).
    2. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
    3. Marco Mariani & Fabrizia Mealli, 2018. "The Effects of R&D Subsidies to Small and Medium-Sized Enterprises. Evidence from a Regional Program," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 4(2), pages 249-281, July.
    4. Beck, Mathias & Junge, Martin & Kaiser, Ulrich, 2017. "Public Funding and Corporate Innovation," IZA Discussion Papers 11196, Institute of Labor Economics (IZA).
    5. Kiman Kim & Sang Ok Choi & Sooyeon Lee, 2021. "The Effect of a Financial Support on Firm Innovation Collaboration and Output: Does Policy Work on the Diverse Nature of Firm Innovation?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 645-675, June.
    6. José Ángel Zúñiga-Vicente & César Alonso-Borrego & Francisco J. Forcadell & José I. Galán, 2014. "Assessing The Effect Of Public Subsidies On Firm R&D Investment: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(1), pages 36-67, February.
    7. Bettina Becker, 2015. "Public R&D Policies And Private R&D Investment: A Survey Of The Empirical Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 917-942, December.
    8. 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.
    9. Chen, Jin & Heng, Cheng Suang & Tan, Bernard C.Y. & Lin, Zhijie, 2018. "The distinct signaling effects of R&D subsidy and non-R&D subsidy on IPO performance of IT entrepreneurial firms in China," Research Policy, Elsevier, vol. 47(1), pages 108-120.
    10. Carboni, Oliviero A., 2017. "The effect of public support on investment and R&D: An empirical evaluation on European manufacturing firms," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 282-295.
    11. Daniel NEICU, 2019. "Evaluating the Effects of an R&D Policy Mix of Subsidies and Tax Credits," Management and Economics Review, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 4(2), pages 1-13, June.
    12. Wang, Yanbo & Li, Jizhen & Furman, Jeffrey L., 2017. "Firm performance and state innovation funding: Evidence from China’s innofund program," Research Policy, Elsevier, vol. 46(6), pages 1142-1161.
    13. Zhao, Bo & Ziedonis, Rosemarie, 2020. "State governments as financiers of technology startups: Evidence from Michigan's R&D loan program," Research Policy, Elsevier, vol. 49(4).
    14. Shuang Wang & Shukuan Zhao & Dong Shao & Hongyu Liu, 2020. "Impact of Government Subsidies on Manufacturing Innovation in China: The Moderating Role of Political Connections and Investor Attention," Sustainability, MDPI, vol. 12(18), pages 1-21, September.
    15. Michel Dumont, 2015. "Working Paper 05-15 - Evaluation of federal tax incentives for private R&D in Belgium: An update," Working Papers 1505, Federal Planning Bureau, Belgium.
    16. Francesco Aiello & Giuseppe Albanese & Paolo Piselli, 2017. "Public R&D Support In Italy. Evidence From A New Firm-Level Patent Data Set," Working Papers 201702, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    17. Daniel Nepelski & Giuseppe Piroli, 2018. "Organizational diversity and innovation potential of EU-funded research projects," The Journal of Technology Transfer, Springer, vol. 43(3), pages 615-639, June.
    18. Silva Filipe & Carreira Carlos, 2017. "Financial Constraints: Do They Matter to Allocate R&D Subsidies?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-26, October.
    19. Aboal, Diego & Garda, Paula, 2015. "Does public financial support stimulate innovation and productivity? An impact evaluation," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    20. Bronzini, Raffaello & Piselli, Paolo, 2016. "The impact of R&D subsidies on firm innovation," Research Policy, Elsevier, vol. 45(2), pages 442-457.

    More about this item

    Keywords

    Federal; R&D; Subsidies; Firm; Survival; Innovation;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jtecht:v:43:y:2018:i:3:d:10.1007_s10961-017-9633-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.