The Dawnbreaker Dilemma: Evaluating The Impact of Department of Energy SBIR Awards on Innovation Outcomes for Underserved Groups

Abstract

The SBIR program has provided billions of dollars to different government agencies since its creation in 1982 in order to bolster innovation outcomes across the U.S. One agency that targets underserved communities through the SBIR program is the Department of Energy, raising questions on the ability of underserved groups to create successful innovations compared to their counterparts. This paper uses Poisson Pseudo-Maximum Likelihood regression on both raw patent counts and citation-weighted patent counts to evaluate innovation performance by underserved firms and other firm-level subgroup classifications, as well as evaluate the marginal impact of SBIR dollars on these innovation outcomes. The findings of this analysis reveal that whilst most subgroups underperform compared to their counterparts, they are all highly sensitive to marginal increases in the value of SBIR awards. This suggests that innovation can thrive among firms facing multiple barriers to innovation, yielding important policy implications for both SBIR and R&D funding across the U.S.