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

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Title: Are public subsidies effective for university spinoffs? Evidence from SBIR awards in the University of California system
Authors: Fini, R
Perkmann, M
Kenney, M
Maki, KM
Item Type: Journal Article
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.
Issue Date: 1-Jan-2023
Date of Acceptance: 31-Oct-2022
URI: http://hdl.handle.net/10044/1/101372
DOI: 10.1016/j.respol.2022.104662
ISSN: 0048-7333
Publisher: Elsevier
Journal / Book Title: Research Policy
Volume: 52
Issue: 1
Copyright Statement: © 2022 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
Publication Status: Published
Article Number: ARTN 104662
Online Publication Date: 2022-11-14
Appears in Collections:Imperial College Business School



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