The Role of Accelerated Government R&D Funding for Small Businesses

Scientific discovery and its successful commercial translation are critical components of U.S. global competitiveness. With growing international competition and a diminishing share of federal funding for research and development (R&D) compared to other sources, there is a need to better understand the effectiveness of government R&D funding programs. The Small Business Administration’s (SBA) Small Business Innovation Research and Small Business Technology Transfer programs (hereafter, SBIR/STTR), which provide non-dilutive funding to small U.S. businesses, are the most well-known of such programs. A long literature evaluates their effectiveness, and the U.S. Congress requires periodic review for reauthorization, yet critical elements of program design have been left out of quantitative evaluations and recipients acknowledge several potential design flaws. One overlooked element is the role of timing between SBIR/STTR grant rounds and specifically the impact of long waits between SBIR/STTR funding tranches. Advancing understanding around the role of timing could significantly improve program success and technology outcomes, furthering national technology and SBA priorities. This research evaluates the impact of accelerated government R&D funding for small technology business. The research uses data on federal R&D funding awards, data on commercialization, finance, and procurement outcomes, empirical modeling, and interviews. The project identifies policy levers for enhancing public programs that finance innovation, and explores the comparative advantage of such programs for some scientists and firms versus others, with particular attention to those innovators who have been overlooked and under-funded. The researchers examine 1) impacts of gaps in waiting time between government R&D funding tranches 2) the impacts on key firms that have been identified as priorities for support. The project has the potential to improve technology development and the ability of new, small technology firms to survive. It will provide actionable, evidence-based policy recommendations and have direct implications for federal programs, related state programs, and nonprofits that support firms in applying for SBIR/STTR awards. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.