The Effects of Government-Industry R&D Programs on Private R&D: The Case of the Small Business Innovation Research Program
Volume: Volume 31, No. 1
Issue: Spring 2000
Pages: pp. 82-100
Authors: Scott J. Wallsten
Title: The Effects of Government-Industry R&D Programs on Private R&D: The Case of the Small Business Innovation Research Program
Abstract: I ask whether government-industry commercial R&D grants increase private R&D. Regressing some measure of innovation on the subsidy can establish a correlation between grants and R&D, but it cannot determine whether grants increase firm R&D or whether firms that do more R&D received more grants. Using a dataset of firms involved in the Small Business Innovation Research (SBIR) program, I estimate a multi-equation model to test these hypotheses. Firms with more employees and that appear to do more research win more SBIR grants, but the grants do not affect employment. Moreover, I find evidence that the grants crowd out firm-financed R&D spending dollar for dollar.
JEL Classification
Management of Technological Innovation and R&D (O320)