Comparative Economic Outcomes from SBIR Funding: 'Underserved' Versus High-Award States

Abstract

This study analyzes the comparative economic outcomes of the U.S. Department of Defense (DoD) Small Business Innovation Research and Small Business Technology Transfer (SBIR/ STTR) programs, conducting an analysis to determine if high-award states or low-award states are more effective at commercializing technology as a direct result of the DoD SBIR/STTR programs. Three common definitions of underserved states are used for this analysis — states that receive fewer awards (underserved), states that receive relatively fewer awards when adjusted for population, and states participating in the National Science Foundation's Established Program to Stimulate Competitive Research. The data used in these analyses represent the economic outcomes of the entire survey population of DoD SBIR Phase II awards on which information was obtained (a total of 96 percent of the 16,959 awards in the study). The findings indicate that commercialization success of DoD SBIR Phase II projects in underserved states was superior to those in high-award states. Sixty different measures were used to compare the relative success of these different states and awardees. Analysis showed that underserved states consistently outperformed high-award states in commercializing the outcomes of their DoD SBIR Phase II projects. For 47 of the 60 different measures — 30 of which were statistically significant for low-award states — the low-award states outperformed the high-award states. On only 10 of the 60 measures did the high-award states show superior results. These results support the argument that SBIR program efforts to assist firms in low-award states are a sound investment. However, the findings call for additional research as to why states with fewer awards, fewer awards per capita, and other disadvantages have more commercial success with their awards than select counterparts.