Unanticipated consequences: concerns about the sale of taxpayer-funded technologies to foreign entities

An unanticipated consequence from the U.S. Small Business Innovation Research (SBIR) program is the propensity of U.S. firms to sell their SBIR-funded and developed technology rights to foreign entities. While such sales are factually documented in reports from both the U.S. National Academies and from the Department of Defense, the U.S. Congress has only recently shown concern about such activity. Using project-level data, we document the extent of foreign sales of technology rights. We also highlight the role of foreign development funding during the commercialization phase. Our statistical analysis finds a positive association between the probability of selling technology rights to foreign firms or investors and the receipt of foreign development funding. This finding might be a bellwether to the U.S. Congress and to other countries that have adopted programs that mirror the U.S. program.