The Government as Venture Capitalist: The Long-Run Impact of the Sbir Program

49 Pages Posted: 25 Nov 1996

See all articles by Josh Lerner

Josh Lerner

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: February 1998


The effectiveness of the many government programs to finance small firms has attracted little empirical attention. This paper examines the largest U.S. public venture capital initiative, the Small Business Innovation Research (SBIR) program, which has provided over $7 billion to small high-technology firms between 1983 and 1997. Using a unique database of awardees compiled by the U.S. General Accounting Office, I show that SBIR awardees grew significantly faster than a matched set of firms over a ten-year period. The superior performance of SBIR awardees was confined to firms based in zip codes with substantial venture capital activity. The impact of the awards was pronounced in high-technology industries. No increase of performance was associated with multiple awards. These patterns are consistent with the awards playing an important role in certifying firm quality, but also with some distortions of the award process.

JEL Classification: G23; H57

Suggested Citation

Lerner, Josh, The Government as Venture Capitalist: The Long-Run Impact of the Sbir Program (February 1998). Available at SSRN: or

Josh Lerner (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6065 (Phone)
617-496-7357 (Fax)


Harvard University - Entrepreneurial Management Unit

Cambridge, MA 02163
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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