Association for Public Policy Analysis & Management

Technology-based small businesses (TBSBs) contribute to U.S. competitiveness by promoting innovation, creating fresh ideas, and commercializing new products. This is equally true in the field of national security, as it is elsewhere. In particular, TBSBs provide the Department of Defense (DOD) with solutions to technical problems, through the Small Business Innovation Research (SBIR) program. Through this initiative, TBSBs identify technical feasibility, assess technological impact, conduct R&D, and commercialize R&D outcomes. By hedging the financial risk associated with R&D, SBIR funding encourages TBSBs to tackle high-risk R&D initiatives; it also supports the commercialization of potential discoveries, and allows TBSBs to later harvest the returns. 

Following the recent President’s emphasis on the commercialization of federally funded R&D and the SBIR Reauthorization, the transition of technologies created through the SBIR program, from idea generation and R&D to government agencies’ procurement and warfighters’ use, is drawing more and more attention in the DOD that has the largest SBIR budget (approximately one billion dollars) of federal agencies. Although there are a great body of qualitative evaluations (mostly through interviews and surveys), there is relatively little quantitative research on how to facilitate the transition of the DOD SBIR technologies. Furthermore, most of empirical studies have focused on entrepreneur- or firm-level characteristics rather than contextual ones such as industry, region, and network.

To fill the gap in empirical studies and elicit sound policy recommendations on the issue, I seek to answer the following research questions:

1)      How do industrial characteristics (e.g., technology life cycles, and technology market concentration) influence the success of technology transition implemented by firms that are situated in the industry?

2)      How do regional characteristics (e.g., state-level science and technology index, locations of military bases and defense laboratories, and SBIR matching programs) influence the success of SBs’ technology transition?

3)      How do network characteristics (e.g. technological positions of SBs relative to prime contractors and DOD, and SBIR funding network) influence the success of SBs’ technology transition?

To examine the effects of industrial, regional and network characteristics on the success of technology transition, I employ hierarchical linear models using government procurement data as a dependent variable; and firm-level data for lower level and industry/region-level data for upper level as independent variables. Specifically, I apply the concept of technology life cycle to reflect different characteristics across industries based on patent data, use location data of military bases and defense laboratories to incorporate DOD-specific regional aspects, and employ the theories of environmental dynamism and cognitive distance to look into how the technological positions (or technological (dis)similarity) of SBIR awardees between DOD components (or their research laboratories) and prime contractors influence the success of technology transition.