The Small Business Innovation Research Program An Assessment of the Department of Defense Fast Track Initiative (2000) / Chapter Skim
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Statistical Analysis of the National Academy of Sciences Survey of SBIR Awardees: Analyzing the Influence of the Fast Track Program
Statistical Analysis of the National Academy of Sciences Survey of SBIR Awardees: Analyzing the Influence of the Fast Track Program
Pages 291-306
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From page 291... ...
than do non-Fast Track projects, Fast Track projects experience a shorter funding gap between Phase I and Phase II awards than do non-Fast Track projects, and Fast Track projects have greater employment growth than do non-Fast Track projects. These findings are extremely robust.
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From page 292... ...
For example, the cofounders of a new startup developing genetically based rats experienced a funding gap between Phase I and Phase II research. The turnover of key personnel that resulted from the lapse of funding forced the company to incur retraining because of key personnel turnover.
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From page 293... ...
review its SBIR Fast Track program to determine, to the extent possible, · if the Fast Track Initiative encourages more rapid commercialization of research results through the acquisition of private investment capital, and · if Fast Track projects progress more rapidly than do the standard SBIR awards. To accomplish this, the NAS undertook a multifaceted research strategy that included both a broad-based mail survey to a representative sample of SBIR awardees and focused regional case studies of firms taken from that sample.
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From page 294... ...
Larger enterprises have established a proven track record, whereas the new small firms have not. External financiers may be uncertain about the outcome of the proposed project and even unable to evaluate accurately its technological and commercial prospects, but they can be certain about the past performance of the established large firm.
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From page 295... ...
This is the direct result of the externality of knowledge and experience created in innovative efforts by small firms that ultimately fail. The gap between the valuable and useful knowledge with a potential commercial value created in small firms and the ability of private investors to earn a return on that knowledge results in an underinvestment in technologybased small firms.
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From page 296... ...
, a mail survey was sent in early 1999 to a representative sample of companies that had received an SBIR Phase II award since 1992. This sample of 379 projects consisted of all 48 Fast Track projects funded since the inception of the program in 1996, all 127 BMDO co-investment projects funded between 1992 and 1996, a matched control group for Fast Track and BMDO projects, and an additional 29 projects for population adjustments.
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while conducting case studies of SBIR awarders. The experience of each research company in the subset of 112 projects was characterized along five dimensions, each dimension hypothesized to have an independent influence on performance output.
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An inspection of the regression results in column 2 of Tables 2 through 4 suggests that, ceteris paribus: · The survey respondents associated with Fast Track projects have a greater expectation of future sales than those associated with non-Fast Track projects. 7All projects considered in the sample of 112 are active projects even if the Phase II research is complete.
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From page 299... ...
Regarding duration of the funding gap as a performance output measure, the results reported in column 2 of Table 5 suggest that, ceteris paribus: . Fast Track projects are associated with a shorter funding gap, compared to non-Fast Track projects, as expected, given the focus of the Fast Track Initiative.
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From page 300... ...
Finally, regarding employment growth during the Phase II projects, the results reported in Table 6 suggest that, ceteris paribus: Employment growth is greater in Fast Track projects than in non-Fast Track projects. Company founders who have a business background, compared to an academic or public-sector background, expand staffing slower, perhaps reflecting prior experience or lessons learned.
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From page 301... ...
Estimation of our five basic models yields essentially the same results, as discussed earlier, whether or not we control for the possibility that the error in the estimating equation is correlated with the binary variable denoting Fast Track status, FT. There are two reasons that we might expect such a correlation, and if the correlation exists, our previously discussed estimates of the relationship between Fast Track status and performance output would be biased.
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From page 302... ...
Our results regarding the association of Fast Track projects with performance outputs are essentially unchanged when either the probability of response (results are shown in each table of regression results in column 3) or the hazard rate for response (results are shown in each table of regression results in column 4)
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HazardRate -0.810 (-0.577) R2 0.289 0.312 0.315 F-level 2.81 2.82 2.85 Second, the error in the estimating equations could be correlated with the binary variable denoting Fast Track status because Fast Track status can be modeled as an endogenous variable, with Fast Track status having as its ultimate cause better expected commercial performance.
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From page 304... ...
For example, experience with private investors prior to the SBIR award, the number of founders with a business background, and the agency making the SBIR award were among the instruments available. Our results regarding the relationship between Fast Track status and performance output are essentially the same qualitatively in the instrumental variable specifications.
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From page 305... ...
Further, the basic finding of our paper the association of Fast Track projects with better performance regarding expected sales and employment growth, and a more rapid movement from Phase I to Phase II development remains when we control for the possibility that the failure to respond by some recipients of the survey could affect the results of our estimations. Additionally, the basic finding of the paper remains when we control for the possibility that there is a simultaneous-equations effect because Fast Track status itself is affected by expected performance.
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From page 306... ...
1999. "An Assessment of the Small Business Innovation Research Program in New England: Fast-Track Compared with Non-Fast Track Projects," this volume.
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