US Small Business Research Articles

The limited innovation of small businesses in the solar photovoltaic sector in the USA: is small business innovation research program such a boon for US small businesses?

The limited innovation of small businesses in the solar photovoltaic sector in the USA: is small business innovation research program such a boon for US small businesses?

Toward an assessment of the US Small Business Innovation Research Program at the National Institutes of Health

The Small Business Innovation Development Act of 1982, which established the Small Business Innovation Research (SBIR) program, is arguably the hallmark policy initiative in USA to support technology development and commercialization in small firms. While scholars have studied this program in detail, there has yet to be a systematic assessment of how well it is meeting its legislated goals of stimulating technological innovation and increasing private sector commercialization. We use a unique set of data on projects funded by the National Institutes of Health (NIH) SBIR program to assess the extent to which these program goals are being met. We find that, relative to a counterfactual control group, NIH can be characterized as supporting, on average, the development of high commercialization risk technologies, and we suggest that this finding aligns with the goals of the SBIR program and may in fact be for the common weal.

How does agency workforce diversity influence Federal R&D funding of minority and women technology entrepreneurs? An analysis of the SBIR and STTR programs, 2001–2011

US Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs provide Federal research and development (R&D) grants to technology ventures. We explore how grantor demographic diversity explains why demographically diverse grantees experience different odds for successfully transitioning from initial to follow-on R&D grants. We empirically analyze 52,126 Phase I SBIR/STTR awards granted by 11 Federal agencies (2001–2011). We find a positive association between agency workforce diversity and Phase II funding for Phase I grantees, but minority and women technology entrepreneurs are less likely to receive this funding than their non-minority and male counterparts. Agencies valuing workforce ethnic diversity or leveraging gender homophily positively influence the likelihood of women technology entrepreneurs obtaining Phase II funding. We discuss evidence-based implications for policy and practice.

Training the world: using archetypes to create a practical global learning strategy

Purpose – The purpose of this paper is to define a new methodology for designing corporate learning for a global audience and to provide a case study of that methodology in action. The Global Learning Archetypes approach adapts well-established cultural preference models and combines them with insightful learning models. The result is three primary Global Learning Archetypes and six secondary archetypes that allow training to be designed once and used around the world. Design/methodology/approach – The Global Learning Archetype approach was created by evaluating well-established global cultural preferences models, integrating them with a proprietary learning criteria model, and developing a model for rapidly and cost-effectively creating learning for multiple geographies. Additionally, a case study illustrates both the challenges and successes when implementing this model in a large global corporation. Findings – Most organizations create global learning either by creating content in their “home” location and then adapting it for other locations, or by distributing a single version of content and trusting local facilitators to provide context for it. The first method is expensive and time-consuming; the second method is risky and unreliable. The Global Archetype method provides for creating learning interactions that are appropriate for multiple geographies in a single effort. Practical implications – Most large organizations are global, and smaller organizations increasingly have a global footprint. According to Fortune Magazine, the Fortune Global 500 are headquartered in 37 different countries and do business in over 150 different countries. An Institute for the Future/Intuit study notes that by 2018, half of all US small businesses will be involved in international trade. CSA Research observes that businesses spend about US$31 billion a year on localization. A method for providing global learning in both an impactful and cost-effective way is clearly necessary. Originality/value – The Global Learning Archetypes method is comparatively new, but it draws from well-established and well-vetted content on worldwide cultural preferences and on effective learning criteria. As such, it is a valuable synthesis of the proven and the innovative. Far more than a conceptual model, the Global Archetypes have been used by some of the largest organizations in the world; a case study of one such implementation is provided in this paper.

The politics of small business organization, partisanship and institutionalization: similarities in the contrasting cases of Japan and the US

Partisanship and institutionalization are more important to group formation and dynamics than is often recognized in the literature on interest groups. This study examines the contrasting cases of small business group formation and dynamics in Japan and the United States to demonstrate how opposition to the party or parties in power was crucial to the timing and nature of the largest small business organizations formed in both countries. Parties are also important to subsequent developments in the organization and institutional interactions of the sector. It is these processes which explain the divergent outcome whereby the US small business sector is identified with the political right and the small business in Japan with the political left.

Beyond innovation: the Small Business Innovation Research program as entrepreneurship policy

Entrepreneurship or new firm formation plays an increasingly important role in knowledge-based economic development. Public policy to encourage new firm formation has not focused on high quality, high potential firms, and the search for entrepreneurship policy with high economic impact is still needed. This research evaluates the efficacy of the US Small Business Innovation Research (SBIR) program from the perspective of promoting high technology entrepreneurship. In particular, we examine whether the local presence of SBIR awards is associated with increased new firm formation rates in the high technology sector. Although the primary objective of SBIR is to facilitate technological commercialization in small businesses, our policy analysis based on spatial multivariate methods suggests that this program may also serve as an effective entrepreneurship policy.

The Shaky Start of the UK Small Business Research Initiative (SBRI) in Comparison to the US Small Business Innovation Research Programme (SBIR)

In this paper a comparison is made between data on the US S mall B usiness I nnovation R esearch programme (SBIR) and UK Small Business Research Initiative ( SBRI ) (Tredgett & Coad 2013). Quantitative data on the first three y ears of the UK SBRI (2009 – 2013 ) was compared to data on the first three y ears of the US SBIR (1983 – 1987 ) from the US Small Business Administration. The data includes numbers of competitions, applicants and mo ney spent on research contracts . Some key differences in implementation of the two initiatives are identified and discussed in relation to the quantitative data. Quantitative data shows that while the US SBIR had steady growth, the UK SBRI has had a shaky start. Possible explanations for these results are suggested. Further work to stren gthen the data and improve the validity of the evaluation is then outlined.

Marketing to the American entrepreneur

PurposeAt the marketing/entrepreneurship interface, most research concerns how entrepreneurs market their businesses, rather than how advertisers market to entrepreneurs. The purpose of this study is to address this gap.Design/methodology/approachThe authors undertake a content analysis of 88 recent issues of the two largest print magazine titles targeted at American entrepreneurs, with particular attention to advertising content for known small business success factors.FindingsThis study finds no correlation between factors most important to small business success and advertising volume. However, this study finds a strong, inverse correlation between US small business performance for each success factors and the volume of advertising for that competitiveness factor. Finally, it is found that advertisement characteristics (placement, timing, repetition, contact channel, and competitor comparison) vary by competitiveness factor.Research limitations/implicationsThis study is limited to print advertising to US entrepreneurs. The findings imply that small business competitiveness factors may need to be amended, and that the nature of advertising to small businesses should be further investigated.Practical implicationsThe ability to identify shortcomings in what small businesses need to succeed may spur advertisers to remedy the gap with product promotions that create awareness of need solutions.Originality/valueThis study is the first to use content analysis of B2B print advertising targeted at entrepreneurs to develop insights into the nature of the target market (US entrepreneurs); to explore the extent to which advertised goods and services match needs of the target market; and to examine whether advertisers communicate the various factors that address target market needs, in different manners.

The exploitation of publicly funded technology

In this paper we focus on technology that resulted from R&D projects funded by US Small Business Innovation Research (SBIR) Phase II awards. We ask: Is there evidence that strategic commercial agreements allow foreign firms to exploit the technologies developed through the SBIR program and funded by US taxpayers? Based on descriptive information from Phase II SBIR-funded project data collected by the National Research Council within the National Academies, we conclude that SBIR funds for Phase II projects and the technologies associated with those projects are not, to a pronounced extent, benefitting foreign firms through agreements with SBIR firms or investors. In that sense, there is no evidence that the technologies developed with funds from US taxpayers are, to any significant extent, being exploited by foreign firms through commercial agreements with SBIR firms.

Verifying the State of Financing Constraints: Evidence from US Business Credit Contracts

Which of the strategies for financing constraints in economic models is the most empirically plausible? This paper tests two commonly used models of financing constraints, costly state verification (Townsend, 1979) and moral hazard (Holmstrom and Tirole, 1997), using a comprehensive data set of US small business credit contracts. The data include detailed information about the business, its owner, bank balance sheet information, and the terms of credit. In line with the predictions of models of financing constraints, I find that an additional dollar of net worth accounts for about 30 cents of external finance. More than two thirds of the business credit contracts can be rationalized by one period debt contracts with costly state verification. The parameter values obtained in the costly state verification model imply bankruptcy costs of 28% of expected output and a rate of return ranging between 5% and 8% annually, which are consistent with studies on bankruptcy incidences and returns to entrepreneurial investment. The moral hazard model, however, performs poorly. The correlation between model implied interest rates and actual interest rates paid is close to zero because the bank variables emphasized by this model do not explain loan interest rates.

Company Births, Deaths and Marriages: Flaws in Age Fields in Business Microdata

In identifying gazelles (generally defined in the literature as young, fast growing businesses) researchers traditionally rely on commercially available databases not designed for scholarly work, to identify a pool of suitable study participants. This paper discusses systemic biases in the most commonly-deployed databased used in gazelle studies, the Dun and Bradstreet database, with a focus on the Australian market.

Minority, Black and Non-Black People of Color: ‘New’ Color-Blind Racism and the US Small Business Administration’s Approach to Minority Business Lending in the Post-Civil Rights Era

This study examines the current approach of the US Small Business Administration (SBA) to minority lending and considers the implications for minority business development in the post-civil rights era. Interviews with SBA employees in Los Angeles and New York reveal that the SBA takes a ‘new’ color-blind approach that emphasizes race and minority status but fails to address racial stratification. I analyze the SBA’s conceptualization of minority, lending goals, outreach methods, and its reliance on banks to promote its loan program, revealing how these practices build upon and reinforce existing inequalities among people of color. Data suggests flexible approaches to minority business development by the SBA may ultimately be unhelpful for African Americans but useful for non-black people of color. The study concludes with the policy recommendation that the SBA create a direct loan program that explicitly promotes black business, with consideration given to the difficulties of having such a proposal adopted.

Verifying the State of Financing Constraints: Evidence from U.S. Business Credit Contracts

Which of the strategies for financing constraints in economic models is the most empirically plausible? This paper tests two commonly used models of financing constraints, costly state verification (Townsend, 1979) and moral hazard (Holmstrӧm and Tirole, 1997), using a comprehensive data set of US small business credit contracts. The data include detailed information about the business, its owner, bank balance sheet information, and the terms of credit. In line with the predictions of models of financing constraints, I find that an additional dollar of net worth accounts for about 30 cents of external finance. More than two thirds of the business credit contracts can be rationalized by one period debt contracts with costly state verification. The parameter values obtained in the costly state verification model imply bankruptcy costs of 28% of expected output and a rate of return ranging between 5% and 8% annually, which are consistent with studies on bankruptcy incidences and returns to entrepreneurial investment. The moral hazard model, however, performs poorly. The correlation between model implied interest rates and actual interest rates paid is close to zero because the bank variables emphasized by this model do not explain loan interest rates.

Economic implications of raising the threshold funding limits on US Small Business Innovation Research awards

The purpose of this paper is twofold. First, we investigate empirically the economic implications of increasing the threshold funding limits on Small Business Innovation Research (SBIR) awards. Specifically, we estimate the impact of an increase in an SBIR Phase II research award amount on the likelihood that the funded project will reach technical completion, that is, it will not be discontinued early or fail. Although an increase in the threshold amount of Phase II awards was mandated by the Act of 1992, and although a recent SBIR policy directive allows such, the economic implications of an increase have yet to be considered in any systematic manner. Second, we offer a call for a further evaluation of the SBIR program, and more broadly a prospective evaluation of public-private partnership science and technology programs, along the lines of an investigation of the determinants of milestone successes and failures. Copyright , Beech Tree Publishing.

Using government procurement to help grow new science and technology companies: Lessons from the US small business innovation research (SBIR) programme

(2009). Using government procurement to help grow new science and technology companies: Lessons from the US small business innovation research (SBIR) programme. Innovation: Vol. 11, No. 1, pp. 127-134.

Private Investor Participation and Commercialization Rates for Government‐sponsored Research and Development: Would a Prediction Market Improve the Performance of the SBIR Programme?

An objective of the US Small Business Innovation Research (SBIR) programme is the private sector commercialization of funded R&D projects. However, our estimate of the actual or expected probability of commercialization of such R&D is fairly low; our analysis of Department of Defense (DoD) Phase II awards suggests that the estimated probability of commercialization is only 0.47. We investigate econometrically whether outside private investors have useful information about proposed SBIR projects' prospects for commercialization. Our findings suggest that they do, thereby providing support for the possibility that a prediction market could improve the performance of the SBIR programme.

Are good or bad borrowers discouraged from applying for loans? Evidence from US small business credit markets

This paper takes the concept of a discouraged borrower originally formulated by Kon and Storey [Kon, Y., Storey, D.J., 2003. A theory of discouraged borrowers. Small Business Economics 21, 37–49] and examines whether discouragement is an efficient self-rationing mechanism. Using US data it finds riskier borrowers have higher probabilities of discouragement, which increase with longer financial relationships, suggesting discouragement is an efficient self-rationing mechanism. It also finds low risk borrowers are less likely to be discouraged in concentrated markets than in competitive markets and that, in concentrated markets, high risk borrowers are more likely to be discouraged the longer their financial relationships. We conclude discouragement is more efficient in concentrated, than in competitive, markets.

An analysis of small business in Chile: a correlational study

PurposeThis paper sets out to investigate small business success factors in Chile.Design/methodology/approachThe research on which this paper is based involves a survey correlational study involving a sample of 145 small business owners in Chile that replicates Lussier's success variables validated in the USA.FindingsThe results of this research study show that there were 26 significant correlations between the success variables. A major finding shows that business owners tend not to make much use of professional advisors, yet this factor was correlated with six other variables.Research limitations/implicationsThere were no other small business success factor studies of Chile found in the specialist literature, thus the results could not be compared with findings of similar studies.Practical implicationsThe findings indicate that small business owners and managers may benefit from using more professional advisors. Public policy makers should consider providing more professional help to small business, such as offering services similar to that of the US Small Business Administration.Originality/valueThis is the first major small business success factor study conducted in Chile. Researchers have a foundation for further research and comparisons.

Instant messaging: observations from two small e‐commerce businesses

PurposePlatform‐independent low‐cost instant messaging (IM) may allow small businesses with limited financial and technical resources to communicate and collaborate internally and externally. Little research has been done investigating IM in the small business context. This study seeks to address this research gap and to investigate how small businesses respond to and actively exploit the opportunities brought by IM.Design/methodology/approachTwo comparative case studies were conducted with two US small businesses. The research sites were selected based on the companies' IM usage pattern. Multiple data collecting methods were used including observation, interview, and IM transcripts. Open coding and qualitative data analysis were employed to get rich descriptive findings about IM usage.FindingsIM was found beneficial to small businesses in several ways. The IM usage management is more a managerial issue than a technical one and a set of organizational and managerial factors were identified critical to the achievements of these benefits.Originality/valueThis paper addresses a research gap and investigates the under‐researched IM management issue. The study shows that creative and constructive usage of IM could bring a variety of organizational benefits to small businesses. The findings of this study provide guidance to IM researchers and small business practitioners as to how small businesses can manage IM to exploit its benefits. The comparative study method employed by this study also identifies situations where the utility of IM usage could be limited.

Stem Cell Biotech: Seeking a Piece of the Action

Venture capital groups and big pharma have largely held back from investing in biotech companies focused on regenerative medicine. Will it take a clinical bull's eye to bring venture capitalists and big pharma into the cell therapy arena?