Are public subsidies effective for university spinoffs? Evidence from SBIR awards in the University of California system

Riccardo Fini, Markus Perkmann*, Martin Kenney, Kanetaka M. Maki

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This study examines the impact of public subsidies, and specifically, Small Business Innovation Research (SBIR) awards on university spinoff companies. Using unique data for a population of University of California spinoffs, we find pronounced differences between companies commercializing digital technologies (software and hardware), and those that focus on other product spaces. For digital spinoffs, receiving an SBIR award has a negative impact on raising venture capital and no impact on IPOs, exits or first sales. Conversely, for non-digital firms (e.g., biotechnology, energy), receiving an SBIR award has a positive effect on raising venture capital and performance outcomes. We reason that digital technologies are subject to faster cycle times and higher market uncertainty, relative to technological uncertainty. Digital firms may therefore benefit less from subsidies designed to support technology development, and private investors may view the need of digital companies to obtain such subsidies as a negative certification. Our findings inform policy by suggesting that the industrial domain may be an important boundary condition for the effectiveness of SBIR-type subsidies for university spinoffs.

Original languageEnglish
Article number104662
JournalResearch Policy
Volume52
Issue number1
DOIs
Publication statusPublished - 2023 Jan
Externally publishedYes

Keywords

  • Academic entrepreneurship
  • Commercialization
  • Digital technologies
  • SBIR
  • Technology transfer
  • University spinoffs
  • Venture capital

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

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