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An Assessement of the Small Business Innovation Research Program: Project Methodology
The extent of commercialization
SBIR is charged with supporting the commercialization of technologies developed with federal government support. In many agencies, this requirement is articulated as a focus on the “commercialization” of SBIR supported research.30 At the simplest level, commercialization means, “reaching the market,” which some agency managers interpret as “first sale”: the first sale of a product in the market place, whether to public or private sector clients.31 This definition is certainly practical and defensible. However, it risks missing significant components of commercialization that do not result in a discrete sale. At the same time, it also fails to provide any guidance on how to evaluate the scale of commercialization, which is critical to assessing the degree to which SBIR programs successfully encourage commercialization: the sale of a single widget is not the same as playing a critical role in the original development of Qualcomm’s cell-phone technology.
Thus, the Committee’s assessment of commercialization will require working operational definitions for a number of components. These include:
Sales—what constitutes a sale?
Application—how is the product used? For example, products like software are re-used repeatedly.
Measuring scale—over what interval is the impact to be measured. (e.g., Qualcomm’s SBIR grant was by all accounts very important for the company. The question arises as to how long the dollar value of Qualcomm’s wireless related sales, stemming from its original SBIR grant, should be counted.)32
Licensing—how should commercial sales generated by third party licensees of the original technology be counted. Is the licensing revenue from the licensee to be counted, or the sales of that technology by the licensee—(or both)?
Complex sales—technologies are often sold as bundles with other technologies (auto engines with mufflers for example). Given this, how is the share of the total sales value attributable to the technology that received SBIR funding to be defined?
Lags—some technologies reach market rapidly, but others can take 10 years or more. What is an appropriate discount rate and timeframe to measure award impact?
Metrics for assessing commercialization can be elusive. Notably, one cannot easily calculate the full value of developed “enabling technology” that can be used across industries. Also elusive is the value of material that enables a commercial service. In such cases, a qualitative approach to “commercialization” will need to be employed.
While the theoretical concept of additionality will be of some relevance to these questions, practicalities must govern, and the availability of data will substantially shape the Committee’s approach in this area. This is particularly the case where useful data must be gathered from thousands of companies, often at very considerable expense in dollars and time. 33
The NRC study will resolve these very practical questions by the early stages of the study’s second phase. The Committee plans to adapt, where appropriate, definitions and approaches used in the Fast Track study for the current study.34
Broad economic effects
SBIR programs may generate a wide range of economic effects. While some of these may be best considered in a national context, others fall more directly on participating firms and on the agencies themselves. The Committee will consider these possible benefits and costs in terms of the level of incidence.
A key objective of the 1982 Small Business Innovation Development Act is to increase private sector commercialization derived from federal research and development. The role of SBIR in stimulating commercialization was cited as a justification in the reauthorization of the Act in 1992: that SBIR “has effectively stimulated the commercialization of technology development through federal research and development, benefiting both the public and private sectors of the Nation.”
For analysis of observed variations in timelines for commercialization, see NISTIR 6917 ”Different Timelines for Different Technologies: Evidence from the Advanced Technology Program” at http://www.atp.nist.gov/eao/ir-6917/chapt5.htm
Buisseret, T.J., Cameron, H., and Georghiou, L. (1995) “What difference does it make? Additionality in the public support of R&D in large firms”, International Journal of Technology Managemen, Vol.10, Nos. 4/5/6 pp. 587-600. See also, Luke Georghiou, “Impact and Additionality of Innovation Policy,” Paper presented at the Six Countries Programme on Innovation, Spring 2002, Brussels.
See National Research Council, SBIR: An Assessment of the Department o Defense Fast Track Initiative, 2000, op. cit.