Determinants of Small Business Innovation Research Performance

This analysis shows that the Air Force SBIR Program has seen a high rate of failure (over 91%) in Phase II efforts that have completed funding within the last three Fiscal Years. The Joint Capability Area assignment process and subsequent analysis identified several high and low performing groups. Force Integration, Battlespace Awareness, and Protection JCAs were top performers while Command/Control, Logistics, and Force Application were low performers. Additional analysis showed that small businesses have more than double the commercialization rate of large businesses. The commercialization rates for businesses with 150 employees or fewer is 9% while the rate for businesses with greater than 150 employees is only 4%. Readability statistics were calculated for the requirements of each SBIR project in the data set. For the maintenance and sustainability subset, it seems that readability correlates with success. However, there are other effects at play that result in a reversal of behavior for the larger set. In the logistic regression model, readability was found to have a significant impact of the commercialization rate, but the direction of the effect was the opposite of what was originally hypothesized. These findings provide the Air Force SBIR Program focus areas to concentrate funding or attention, to improve the commercialization rate, and to ultimately improve the return on investment for a program that utilizes almost $1 billion in annual DoD funding