Opening up Military Innovation: Causal Effects of ‘Bottom-Up’ Reforms to U.S. Defense Research
102 Pages Posted: 13 Apr 2021 Last revised: 3 Apr 2023
Date Written: March 7, 2023
For governments procuring innovation, one choice is whether to specify desired products (a “Conventional” approach) or allow firms to suggest ideas (an “Open” approach). Using a U.S. Air Force R&D grant program, where Open and Conventional competitions were held simultaneously, we find that Open awards increase both commercial innovation and technology adoption by the military. In contrast, Conventional awards have no positive technology effects, but do create more program lock-in. The Open program attracts new types of applicants (e.g. start-ups), but openness also has a differential impact beyond inducing selection. These results suggest benefits from open approaches to innovation procurement.
Keywords: Innovation, defense, R&D, procurement
JEL Classification: O31, O32, O38, H56, H57
Suggested Citation: Suggested Citation