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

See all articles by Sabrina T Howell

Sabrina T Howell

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER)

Jason Rathje

Government of the United States of America - U.S. Air Force Academy

John Van Reenen

Massachusetts Institute of Technology (MIT)

Jun Wong

New York University (NYU)

Date Written: March 7, 2023

Abstract

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

Howell, Sabrina T and Rathje, Jason and Van Reenen, John and Wong, Jun, Opening up Military Innovation: Causal Effects of ‘Bottom-Up’ Reforms to U.S. Defense Research (March 7, 2023). Available at SSRN: https://ssrn.com/abstract=3825034 or http://dx.doi.org/10.2139/ssrn.3825034

Sabrina T Howell (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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Jason Rathje

Government of the United States of America - U.S. Air Force Academy

John Van Reenen

Massachusetts Institute of Technology (MIT) ( email )

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United States

Jun Wong

New York University (NYU) ( email )

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United States

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