The Small Business Innovation Research Program Challenges and Opportunities (1999) / Chapter Skim
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Panel II: Research Perspectives on the SBIR
Panel II: Research Perspectives on the SBIR
Pages 52-61
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From page 52... ...
Programs examined in the publication included the SBIR program, the Small Business Technology Transfer program, several financing programs managed by SEA, along with the Commerce Department's Advanced Technology Program (ATP) and Manufacturing Extension Partnership.
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From page 53... ...
Lerner began the presentation of his work by describing the size of public-sector support for entrepreneurial firms relative to that provided by private venture capitalists. Although public programs no longer dominate the field the way they did in the 1960s, when their combined size was three times that of the private venture funds, their resources still amount to a "significant fraction" of those of an expanded independent venture sector.
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From page 54... ...
Though theoretically designed to deal with this challenge, venture capital represents a "very narrow and targeted financing mechanism." To illustrate, Dr. Lerner cited figures for 1996, during which roughly 1 million firms began operation in the United States: Although this was a record year for venture-capital activity, only about 600 firms received venture financing for the first time.
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From page 55... ...
Lerner stated that the two most common approaches to assessing public technology programs surveys in which the companies involved are asked what the direct benefits of participation in a particular program have been, and academic studies of research funding that take place at the level of the general economy have not necessarily provided answers that reliably demonstrate whether a program is reaching its intended goals. Surveys: One problem with the former approach, polling individual award recipients directly, is that a program's advocates may tend to attribute all their success to the program.
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From page 56... ...
Lerner posited a "fundamental pattern" according to which the awarders experience far more growth and the growth is concentrated in high-tech regions and industries; scrutiny of multiple awarders revealed no additional growth to be associated with the additional awards. Besides looking at how well individual firms did under SBIR, it would be desirable to examine the impact of the program on society through its effect on the rate of innovation, on the growth of knowledge, and on spillovers to other firms; doing so would be very difficult, however.
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From page 57... ...
Lerner: . that the social return of R&D projects has often been shown to be greater than their private return, in part for reasons connected with the extent to which private investors can appropriate the benefits of innovative activities; and · that information asymmetries in financial markets create a role for government as a certifier of worthwhile projects.
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From page 58... ...
One such proposal, offered by Scott Wallsten of Stanford University, is using R&D tax credits rather than SBIR to subsidize investment in innovations for which social return is expected to exceed private return. The problem with this idea is that a project with a small private return will have a small private return even after a tax credit; in contrast, a project offering a private return but no social return will have a larger private return after the tax credit.
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From page 59... ...
"Contrary to popular belief, government does an excellent job of picking winners; that is, the government bureaucrats who are picking these projects are astute enough to pick the firms that are going to succeed anyway." Government causes winners. There are three different possible mechanisms: Government certification causes success in dealing with asymmetries in the financial market; giving the actual dollars causes success, although Dr.
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From page 60... ...
Still, Dr. Flamm conjectured that some of the program' s apparent success may actually be resulting in the "incubation of 'Beltway Bandits"' that firms getting a start through the SBIR program might subsequently stay alive as contract researchers by cultivating close relationships with government agencies.
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From page 61... ...
"What one is really looking for is that out of the many failures will come a few that will just be so spectacularly successful that that will undo the many small losses. But that can often be a hard lesson to absorb." James Woo of the Small Business Technology Coalition pointed out that, as some federal agencies have not funded business per se and as the procurement programs of others notably the Pentagon have virtually precluded their going to small business, the SBIR program allows the government to tap into the innovative capabilities of small technology companies in connection with specific agency missions.
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