Are public subsidies effective for university spinoffs? Evidence from SBIR awards in the University of California system

46 Pages Posted: 15 Nov 2022

See all articles by Riccardo Fini

Riccardo Fini

University of Bologna - Department of Management

Markus Perkmann

Imperial College Business School

Martin Kenney

University of California, Davis

Kanetaka Maki

University of California, San Diego (UCSD) - Rady School of Management

Date Written: January 1, 2023

Abstract

This study examines the impact of public subsidies, and specifically, Small Business Innovation Research (SBIR) awards on university spinoff companies. Using unique data for a population of University of California spinoffs, we find pronounced differences between companies commercializing digital technologies (software and hardware), and those that focus on other product spaces. For digital spinoffs, receiving an SBIR award has a negative impact on raising venture capital and no impact on IPOs, exits or first sales. Conversely, for non-digital firms (e.g., biotechnology, energy), receiving an SBIR award has a positive effect on raising venture capital and performance outcomes. We reason that digital technologies are subject to faster cycle times and higher market uncertainty, relative to technological uncertainty. Digital firms may therefore benefit less from subsidies designed to support technology development, and private investors may view the need of digital companies to obtain such subsidies as a negative certification. Our findings inform policy by suggesting that the industrial domain may be an important boundary condition for the effectiveness of SBIR-type subsidies for university spinoffs.

Keywords: university spinoffs, SBIR, venture capital, academic entrepreneurship, technology transfer, commercialization, digital technologies.

JEL Classification: O00, O3, M00

Suggested Citation

Fini, Riccardo and Perkmann, Markus and Kenney, Martin and Maki, Kanetaka, Are public subsidies effective for university spinoffs? Evidence from SBIR awards in the University of California system (January 1, 2023). Research Policy, 52(1): 104662, Available at SSRN: https://ssrn.com/abstract=4264947

Riccardo Fini (Contact Author)

University of Bologna - Department of Management ( email )

Via Terracini 28
Bologna, 40131
Italy

HOME PAGE: http://www.unibo.it/faculty/riccardo.fini

Markus Perkmann

Imperial College Business School ( email )

London, SW7 2AZ
United Kingdom

Martin Kenney

University of California, Davis ( email )

Community and Regional Development Unit
Davis, CA 95616
United States
5305745943 (Phone)

Kanetaka Maki

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
13
Abstract Views
100
PlumX Metrics