How do grants influence firm performance?: an econometric evaluation of the SBIR program at NIH

This thesis is an econometric study of the impact of Small Business Innovation Research (SBIR) grants awarded by the US National Institutes of Health (NIH). NIH is the largest biomedical research funding agency in the world, investing over $29 billion annually in medical research. The budget of SBIR at NIH reached $558.9 million in 2008. In the current economic environment, NIH administrators are interested in the relationship between their funding and health, economic growth and global competitiveness. This thesis will contribute towards an understanding of this relationship by examining sales and employment growth in firms that received SBIR awards from NIH. Using this information, all firms are matched to the National Establishment Time-Series (NETS) Database which provides firm-level sales and employment observations, as well as information on other explanatory variables. The main finding from the thesis is that the NIH SBIR program stimulates both sales and employment growth. Firms that received any number of Phase I and/or Phase II awards experienced 6.82% greater sales growth, and 6.90% greater employment growth over the three years following the first year they received an award compared to firms that applied to the program but were rejected, controlling for other factors. Firms that received one or more Phase II awards experienced 6.13% greater sales growth and 7.86% greater employment growth over the three years following the first year they received an award compared to those that applied but were rejected.M.S.Includes bibliographical references (p. 105-107)by Metin Eg