Mapping the 'Valley of Death': Managing Selection and Technology Advancement in NASA's Small Business Innovation Research Program

32 Pages Posted: 14 Aug 2018 Last revised: 14 Jan 2019

See all articles by Andrea Belz

Andrea Belz

University of Southern California - Viterbi School of Engineering

Fernando Zapatero

Questrom School of Business, Boston University

Richard Terrile

Government of the United States of America - Jet Propulsion Laboratory

Michael Kawas

University of Southern California - Department of Economics

Aleksandar Giga

University of Southern California

Date Written: April 17, 2018

Abstract

We determine the risk mitigation process inherent in managing a portfolio of technologies diverse in both their readiness for infusion and the nature of the performing organization, focusing on the so-called "valley of death" in which the technology's principles have been proven but prototypes have yet to be developed. Using the Technology Readiness Levels (TRLs) of projects funded by the National Aeronautics and Space Administration (NASA) Small Business Innovation Research (SBIR) proposals and awards, we find that the result of selection is a tendency toward larger companies. In the second round of funding, technology maturity is a stronger determinant of selection and company headcount is no longer a statistically significant driver. This combination allows the program to manage risk and deliver real technical advancement from even the smallest companies. We find that technologies typically advance from TRL 2, concept formulation, at the program's outset to roughly TRL 5, component validation, at the program's conclusion; these outcomes precede economic benefits from the subsidy. These findings illuminate a mechanism to address risk as well as demonstrating the technical outcomes of a managed early-stage technology program.

Keywords: TRL, NASA, SBIR, Entrepreneurship, Innovation, Technology Maturity

JEL Classification: O31, O32, O38, H50

Suggested Citation

Belz, Andrea and Zapatero, Fernando and Terrile, Richard and Kawas, Michael and Giga, Aleksandar, Mapping the 'Valley of Death': Managing Selection and Technology Advancement in NASA's Small Business Innovation Research Program (April 17, 2018). Available at SSRN: https://ssrn.com/abstract=3221328 or http://dx.doi.org/10.2139/ssrn.3221328

Andrea Belz (Contact Author)

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

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

Fernando Zapatero

Questrom School of Business, Boston University ( email )

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

Richard Terrile

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

Pasadena, CA
United States

Michael Kawas

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

Aleksandar Giga

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

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