Helping the Little Guy: The Impact of Government Awards on Small Technology Firms

32 Pages Posted: 18 Oct 2017 Last revised: 27 Jul 2020

See all articles by Aleksandar Giga

Aleksandar Giga

University of Southern California

Alexandra Graddy-Reed

Sol Price School of Public Policy University of Southern California

Andrea Belz

University of Southern California - Viterbi School of Engineering

Richard Terrile

Government of the United States of America - Jet Propulsion Laboratory

Fernando Zapatero

Questrom School of Business, Boston University

Date Written: November 15, 2019

Abstract

The Small Business Innovation Research (SBIR) program provides federally funded research awards to companies with 500 or fewer employees. We explore the differential effects of the National Aeronautics and Space Administration SBIR program on firms of various sizes on their future patenting activity. Using propensity score matching, we construct comparable samples of selected and non-selected Phase II SBIR applicants by firm size. We then estimate the effect of selection for the matched sample on the probability of forward patent activity and conditional on any forward patenting, the count of patents within three years of the proposal. While firms with fewer than 10 employees, are least likely to patent, their probability of patenting is positively affected by receiving a Phase II award. We find no corresponding increase for larger firms. Nor do we find any evidence that a Phase II award impacts the conditional number of forward patents in the three years following the award. These data suggest that the Phase II award serves to advance the smallest teams "over the hump" to creating a potential source of competitive advantage.

Keywords: Innovation Policy, SBIR, R&D Subsidies, Entrepreneurship

JEL Classification: O310, O380

Suggested Citation

Giga, Aleksandar and Graddy-Reed, Alexandra and Belz, Andrea and Terrile, Richard and Zapatero, Fernando, Helping the Little Guy: The Impact of Government Awards on Small Technology Firms (November 15, 2019). Available at SSRN: https://ssrn.com/abstract=3054809 or http://dx.doi.org/10.2139/ssrn.3054809

Aleksandar Giga

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

Alexandra Graddy-Reed

Sol Price School of Public Policy University of Southern California ( email )

Lewis Hall 312
Los Angeles, CA 90089-062
United States

HOME PAGE: http://https://graddyreed.com

Andrea Belz (Contact Author)

University of Southern California - Viterbi School of Engineering ( email )

3650 McClintock Ave
Los Angeles, CA
United States
2138210829 (Phone)

Richard Terrile

Government of the United States of America - Jet Propulsion Laboratory ( email )

Pasadena, CA
United States

Fernando Zapatero

Questrom School of Business, Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States
617-353-3631 (Phone)

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