Center for Economic Analysis

The Small Business Innovation Research (SBIR) program is entering its 35th year, and has issued over 150,000 awards totaling nearly $44 billion. Most literature on the SBIR program is primarily focused on three of the four program priorities, summarized here as: (1) stimulating innovation; (2) increasing private sector commercialization from federal R&D; and (3) meeting federal R&D needs. However, we identified and discussed the handful of recent studies that considered the remaining priority area, fostering participation in innovation and entrepreneurship by woman and socially and economically disadvantaged persons. Building on this second body of literature, we empirically examine regional influences on minority-owned and woman-owned firms that got SBIR awards relative to the base firm type, white, male-owned firms. We developed a "revealed choice" modeling framework, where agencies that participate in the SBIR program make award decisions based on range of factors that include regional, geographic, and demographics factors. For our empirical specification, we constructed a multinomial logistic regression panel model that includes a spillover term, and report the average particle effects (APE). Three sets of results are highlighted in the summary and conclusion. First, there is variation across agencies in terms of selecting different firm types for SBIR awards, which is consistent with the prior literature we reviewed. Next, regional factors appear to only influence phase I award selection under our revealed-choice framework. Finally, spillovers and knowledge flows appear more important for minority-owned and woman-owned firms in terms of getting SBIR awards, and compared to base firms. 3