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2 Small Business Innovation at the U.S. Department of Energy: Framework for Evaluating the DOE SBIR/STTR Programs
Pages 33-48

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From page 33...
... Dedicated to a mission to "ensure America's security and prosperity by addressing its energy, environmental, and nuclear challenges through transformative science and technology solutions" (DOE, n.d.a) , DOE was formed through the amalgamation of energy-related programs scattered throughout the federal government, including defense responsibilities that included the design, construction, and testing of nuclear weapons dating from the Manhattan Project, along with 17 national laboratories.
From page 34...
... Essential to innovation is the idea that government investment is required for early-stage idea development due to the existence of market failures that lead to underinvestment by private firms. Yet, of course, to commercialize technological innovation requires a supporting system of private firms, both suppliers and customers; follow-on investors; and developed product markets (Nelson, 1993)
From page 35...
... Having laid out the foundations and mechanics of SBIR/STTR and reviewed the legislative mandates for the programs in Chapter 1, the committee selected outcomes and reviewed relevant literature along four key dimensions, or potential sources of value, for SBIR/STTR:  Stimulating technological innovation  Helping agencies meet federal research and development needs  Serving as an engine for the creation of human capital through both firm growth and a broader pool of entrepreneurs  Promoting commercialization of products and technologies Stimulate Innovation First, the SBIR/STTR programs should stimulate innovation. For DOE, the SBIR/STTR programs stimulate technological innovation and facilitate the commercialization of pathbreaking technologies in myriad ways: generating patents, producing collaborative partnerships that result in technology transfer, broadening the geographic scope of DOE's research activities, and regularly identifying and supporting technological and commercial breakthroughs.
From page 36...
... Help Agencies Meet Research and Development Goals Second, the SBIR/STTR should facilitate agency objectives by supporting basic research and procurement using a network of small firms and their university partners. For over 30 years DOE has used SBIR (and for over 20 years used STTR)
From page 37...
... While difficult to measure with available data, DOE's offices can leverage their funding opportunity announcements to attract specialists whose use of the funding will contribute to ongoing agency efforts in niche technological areas. The program structure itself also fosters such collaborations by encouraging partnerships with DOE national labs while creating potential pathways to procurement.
From page 38...
... study found evidence that SBIR awards boost sales and employment, but that these effects were concentrated in geographic regions with high levels of venture capital activity. Lerner's study also found that the benefits of SBIR were strongest in high-technology industries.
From page 39...
... (Multiple measures) Toole and Czarnitski, 2007 SBIR DHHS Regression University academics add value to SBIR firms when seeking private financing Wallsten, 2000 SBIR and GAO Matched Sample Awards inhibit funding from the private sector; larger eligible firms secure more SBIR grants but the grants do not impact employment NOTE: DOD = Department of Defense; GAO = Government Accountability Office.
From page 40...
... The Howell (2017) study is the only SBIR/STTR study to make use of applicant data for all firms for two DOE program offices (Energy Efficiency and Renewable Energy, and Fossil Energy)
From page 41...
... study of non-competitive state matching programs encouraged evaluation of SBIR/STTR within a broader mix of policies and institutions rather than viewing the program in a silo of direct inputs and outputs. The results revealed that the matching state programs increase the likelihood of Phase I applications and the successful conversion of Phase I to Phase II awards.
From page 42...
... These unobserved and more qualitative inputs reflect the difficulty in measuring and attributing more complex outcomes, such as overall technological output in key DOE mission areas. The next section discusses some more specific assessment challenges in greater detail, highlighting the committee's approach to dealing with those challenges and appealing to relevant literature.
From page 43...
... Another key example of this type of assessment challenge lies in measuring economic outcomes. Program evaluations, by their very nature, focus on marginal gains from an intervention for the marginal firms, with program impacts reported in terms of average effects.
From page 44...
... In either case, commercialization and firm growth may be difficult and occur along very long time horizons even as substantial benefits accrue from basic research and potential agency procurement. This provides some justification for continued support of MARs in cases in which growth in commercialization and conventional economic outcomes proceeds at a relatively slow pace.
From page 45...
... On the other hand, more horizontally oriented firms may be searching for awards across multiple agencies to match their own specific technologies or to take advantage of an established familiarity with the application process. The committee distinguishes between these horizontal and vertical MARs in this report and presents descriptive statistics for both groups.
From page 46...
... In selecting those outcomes, the committee prioritized its formal Statement of Task while also considering the gaps in prior literature such as the need for consideration of qualitative data on process, extreme outliers, and outcomes such as procurement and basic research which may compete with more straightforward economic outputs such as job growth and product commercialization. As such, our assessment employs both qualitative primary data and quantitative administrative data at the firm, funding opportunity announcement, and program office levels.
From page 47...
... Strong performance in certain areas may mean corresponding deficits in others, and individual firm performance will not capture the full value of return to SBIR/STTR investment given spillovers and unobservable influences within these systems. In-depth interviews and detailed description of patterns and findings at multiple levels of SBIR/STTR process are essential for explaining these dynamics.


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