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

72 Pages Posted: 18 Jun 2018

See all articles by Joshua R Bruce

Joshua R Bruce

Gies College of Business

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 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.

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 2018). NBER Working Paper No. w24724. Available at SSRN: https://ssrn.com/abstract=3198026

Joshua R Bruce (Contact Author)

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John M. De Figueiredo

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Duke University - Fuqua School of Business ( email )

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Brian S. Silverman

University of Toronto - Rotman School of Management ( email )

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