Public Contracting for Private Innovation: Government Expertise, Decision Rights, and Performance Outcomes

71 Pages Posted: 25 Jun 2018

See all articles by Joshua R. Bruce

Joshua R. Bruce

Gies College of Business, University of Illinois at Urbana-Champaign

John M. de Figueiredo

Duke University School of Law; Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Brian S. Silverman

University of Toronto - Rotman School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2018

Abstract

We examine how the U.S. Federal Government governs R&D contracts with private-sector firms. The government chooses between two contractual forms: grants and cooperative agreements. The latter provides the government substantially greater discretion over, and monitoring of, project progress. Using novel data on R&D contracts and on the geo-location and technical expertise of each government scientist over a 12-year period, we test implications from the organizational economics and contracting literatures. We find that cooperative agreements are more likely to be used for early-stage projects and those for which local government scientific personnel have relevant technical expertise; in turn, cooperative agreements yield greater innovative output as measured by patents, controlling for endogeneity of contract form. The results are consistent with multi-task agency and transaction-cost approaches that emphasize decision rights and monitoring.

Keywords: Contracting for Innovation, Organizational Economics, Transaction Costs, R&D, Technological Expertise, Capabilities

JEL Classification: O32, L33, H57, H11, L14, L24

Suggested Citation

Bruce, Joshua R. and de Figueiredo, John M. and Silverman, Brian S., Public Contracting for Private Innovation: Government Expertise, Decision Rights, and Performance Outcomes (June 1, 2018). Duke Law School Public Law & Legal Theory Series No. 2018-46, Available at SSRN: https://ssrn.com/abstract=3193882 or http://dx.doi.org/10.2139/ssrn.3193882

Joshua R. Bruce

Gies College of Business, University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

HOME PAGE: http://giesbusiness.illinois.edu/profile/joshua-bruce

John M. De Figueiredo

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative

215 Morris St., Suite 300
Durham, NC 27701
United States

Brian S. Silverman (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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