Innovation Transition Success: Practice Doesn’t Make Perfect

Abstract

The authors of this research examine and evaluate organizational factors associated with commercialization under the Air Force Small Business Innovation Research (SBIR) program. Their objective is to improve return on investment. The data set used was the SBIR Phase II program data set, which contains information on 433 SBIR topics with closed contracts reported during Department of Defense (DoD) fiscal years (FYs) 2015 to 2018. Each data point contained characteristics of the topic, including commercialization. Military capability or topic areas were hypothesized to have varying commercialization rates. Incumbency was theorized to be a characteristic of successful programs, while increased company size was theorized as a characteristic of unsuccessful programs. Variables were analyzed through graphs and logistic regression. Small businesses (1 to 31 employees) have a 2.6% increased commercialization rate compared to large businesses (32 to 499 employees); this increase is significant when compared to the 8.8% global success rate of SBIR projects. No learning effect or improved performance was observed between companies new to the SBIR program (fewer than 14 contracts) and incumbents (15–419 contracts). The opposite—learning—was observed with new entrants outperforming incumbents. A bump in the data appears for newer entrants with some experience. In FY 2019, DoD obligated $1.8 billion in SBIR funding, and previous research indicated the commercialization rate of SBIR Phase II contracts is approximately 8.8%. This exploratory research looks at factors and trends seen in successful programs. Findings indicate factors that may guide investment choices to improve commercialization rates.