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Public Gains from Entrepreneurial Research: Inferences about the Economic Value of Public Support of the Small Business Innovation Research Program

Author

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  • Allen, Stuart D.

    (University of North Carolina at Greensboro, Department of Economics)

  • Layson, Stephen K.

    (University of North Carolina at Greensboro, Department of Economics)

  • L, Albert N.

    (University of North Carolina at Greensboro, Department of Economics)

Abstract

This paper presents a systematic analysis of the net economic benefits associated with the Small Business Innovation Research (SBIR) program. We offer a derivation of producer and consumer surplus to estimate economic benefits. Fundamental to the implementation of these models is a specific value of the elasticity of demand, but in its absence we estimate what its value would be when the benefit-to-cost ratio associated with public support of the SBIR program equals unity. We infer from these calculations, and from general knowledge about the ability of SBIR-funded firms to exploit their monopoly position, that the SBIR program likely generates positive net economic benefits to society.

Suggested Citation

  • Allen, Stuart D. & Layson, Stephen K. & L, Albert N., 2012. "Public Gains from Entrepreneurial Research: Inferences about the Economic Value of Public Support of the Small Business Innovation Research Program," UNCG Economics Working Papers 12-4, University of North Carolina at Greensboro, Department of Economics.
    • Handle: RePEc:ris:uncgec:2012_004
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    1. Albert N. Link & John T. Scott, 2013. "Governments as entrepreneur: Evaluating the commercialization success of SBIR projects," Chapters, in: Public Support of Innovation in Entrepreneurial Firms, chapter 2, pages 25-38, Edward Elgar Publishing.
    2. Albert N. Link & John T. Scott, 2013. "Private Investor Participation and Commercialization Rates for Government-sponsored Research and Development: Would a Prediction Market Improve the Performance of the SBIR Programme?," Chapters, in: Public Support of Innovation in Entrepreneurial Firms, chapter 11, pages 157-174, Edward Elgar Publishing.
    3. Link, Albert N. & Scott, John T., 2011. "Public Goods, Public Gains: Calculating the Social Benefits of Public R&D," OUP Catalogue, Oxford University Press, number 9780199729685.
    4. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    5. Edwin Mansfield & John Rapoport & Anthony Romeo & Samuel Wagner & George Beardsley, 1977. "Social and Private Rates of Return from Industrial Innovations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(2), pages 221-240.
    6. Albert N. Link & John T. Scott, 2013. "Employment growth from public support of innovation in small firms," Chapters, in: Public Support of Innovation in Entrepreneurial Firms, chapter 3, pages 41-64, Edward Elgar Publishing.
    7. Albert N. Link & John T. Scott, 2013. "The theory and practice of public-sector R&D economic impact analysis," Chapters, in: Albert N. Link & Nicholas S. Vonortas (ed.), Handbook on the Theory and Practice of Program Evaluation, chapter 2, pages 15-55, Edward Elgar Publishing.
    8. Albert N. Link & Christopher J. Ruhm, 2013. "Bringing science to market:commercializing from NIH SBIR awards," Chapters, in: Public Support of Innovation in Entrepreneurial Firms, chapter 1, pages 3-24, Edward Elgar Publishing.
    9. Michael P. Gallaher & Albert N. Link & Alan C. O’Connor, 2012. "Public Investments in Energy Technology," Books, Edward Elgar Publishing, number 14348.
    10. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    11. Albert N. Link & John T. Scott, 2005. "Evaluating Public Sector R&D Programs: The Advanced Technology Program's Investment in Wavelength References for Optical Fiber Communications," The Journal of Technology Transfer, Springer, vol. 30(2_2), pages 241-251, January.
    12. Albert N. Link & John T. Scott, 2005. "Evaluating Public Sector R&D Programs: The Advanced Technology Program’s Investment in Wavelength References for Optical Fiber," Springer Books, in: Albert N. Link & F. M. Scherer (ed.), Essays in Honor of Edwin Mansfield, pages 87-97, Springer.
    13. Zvi Griliches, 1958. "Research Costs and Social Returns: Hybrid Corn and Related Innovations," Journal of Political Economy, University of Chicago Press, vol. 66(5), pages 419-419.
    14. Albert N. Link & John T. Scott (ed.), 2011. "The Economics of Evaluation in Public Programs," Books, Edward Elgar Publishing, number 14418.
    15. H. Spencer Banzhaf, 2009. "Objective or Multi-Objective? Two Historically Competing Visions for Benefit-Cost Analysis," Land Economics, University of Wisconsin Press, vol. 85(1), pages 3-23.
    16. Scherer, F M, 1979. "The Welfare Economics of Product Variety: An Application to the Ready-to-Eat Cereals Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 28(2), pages 113-134, December.
    17. Georghiou, Luke & Roessner, David, 2000. "Evaluating technology programs: tools and methods," Research Policy, Elsevier, vol. 29(4-5), pages 657-678, April.
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    Cited by:

    1. Michael J. Hall, 2015. "Public investments in sustainable technology: an evaluation of North Carolina's Green Business Fund," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 24(5), pages 436-456, July.
    2. Albert N Link & John T Scott, 2018. "Toward an assessment of the US Small Business Innovation Research Program at the National Institutes of Health," Science and Public Policy, Oxford University Press, vol. 45(1), pages 83-91.
    3. Onken, James & Aragon, Richard & Calcagno, Anna Maria, 2019. "Geographically-related outcomes of U.S. funding for small business research and development: Results of the research grant programs of a component of the National Institutes of Health," Evaluation and Program Planning, Elsevier, vol. 77(C).
    4. Martin S. Andersen & Jeremy W. Bray & Albert N. Link, 2017. "On the failure of scientific research: an analysis of SBIR projects funded by the U.S. National Institutes of Health," Scientometrics, Springer;Akadémiai Kiadó, vol. 112(1), pages 431-442, July.
    5. Link, Albert, 2022. "An Assessment and Evaluation of the U.S. Small Business Technology Transfer (STTR) Program," UNCG Economics Working Papers 22-8, University of North Carolina at Greensboro, Department of Economics.
    6. Albert N. Link, 2023. "The U.S. Small Business Technology Transfer (STTR) Program: An Assessment and an Evaluation of the Program," Annals of Science and Technology Policy, now publishers, vol. 7(2), pages 81-151, March.
    7. Link, Albert & Scott, John, 2017. "Toward an Assessment of the U.S. Small Business Innovation Research (SBIR) Program at the National Institutes of Health," UNCG Economics Working Papers 17-6, University of North Carolina at Greensboro, Department of Economics.

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    More about this item

    Keywords

    Entrepreneurship; Innovation; Technology; SBIR Program; Benefit-to-cost Ratio; Program Evaluation; Producer Surplus; Consumer Surplus;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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