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Public Contracting for Private Innovation: Government Expertise, Decision Rights, and Performance Outcomes

Author

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  • Joshua R. Bruce
  • John M. de Figueiredo
  • Brian S. Silverman

Abstract

We examine how the U.S. Federal Government governs R&D contracts with private-sector firms. The government chooses between two contractual forms: grants and cooperative agreements. The latter provides the government substantially greater discretion over, and monitoring of, project progress. Using novel data on R&D contracts and on the geo-location and technical expertise of each government scientist over a 12-year period, we test implications from the organizational economics and contracting literatures. We find that cooperative agreements are more likely to be used for early-stage projects and those for which local government scientific personnel have relevant technical expertise; in turn, cooperative agreements yield greater innovative output as measured by patents, controlling for endogeneity of contract form. The results are consistent with multi-task agency and transaction-cost approaches that emphasize decision rights and monitoring.

Suggested Citation

  • Joshua R. Bruce & John M. de Figueiredo & Brian S. Silverman, 2018. "Public Contracting for Private Innovation: Government Expertise, Decision Rights, and Performance Outcomes," NBER Working Papers 24724, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24724
    Note: IO LE PE PR
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    Cited by:

    1. Jiao Luo & Aseem Kaul, 2019. "Private action in public interest: The comparative governance of social issues," Strategic Management Journal, Wiley Blackwell, vol. 40(4), pages 476-502, April.
    2. Iossa, Elisabetta & De Chiara, Alessandro, 2019. "Public Procurement as a Demand-side Policy: Project Competition and Innovation Incentives," CEPR Discussion Papers 13664, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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