Exploring Successful U.S. Department of Defense Small Business Innovation Research Program Outcomes and Corresponding Public Sector Commercialization Success Factors

Abstract

The Small Business Innovation Research (SBIR) program operated by the United States government has supported research and development activities at firms with fewer than 500 employees since 1982. The third and final phase of the SBIR program enables work that continues or completes a past SBIR award and is funded by an awarding agency rather than through the SBIR program. SBIR Phase III production contracts are infrequent but provide a critical pathway for commercializing, scaling, and deploying innovative technologies and products. This dissertation seeks to reveal new insights about public sector commercialization stemming from the SBIR program, as evidenced by attaining a Department of the Navy SBIR Phase III award or receiving designation at the firm level as a SBIR Success. Logistic regression and machine learning classification algorithms are used on publicly available SBIR award data from 2008 to 2023. Decision tree-based methods are able to predict whether a firm receiving a SBIR Phase II award from DoD, or from the Department of the Navy, is designated as a SBIR Success with over 70% mean accuracy. Successful variables or features of recipient firms are discerned from a SHapley Additive eXplanations game theoretic approach and non-parametric statistical tests. Award Amount, Award Year, and Number Employees are found to be significant predictors of receiving a Department of the Navy SBIR Phase III production contract, and Annual Revenue, Number Employees, Number of SBIR Phase I Awards, Number of SBIR Phase II Awards, and Total SBIR Investment are found to be significant predictors of being designated as a SBIR Success by the U.S. Small Business Administration or a federal agency participating in the SBIR program. Total SBIR Investment, or the cumulative amount of Phase I and Phase II award funding invested in a firm through the SBIR program, is found to be a discriminating variable between firms that achieve commercialization outside of a Department of the Navy SBIR Phase III production contract and firms that achieve commercialization through a Department of the Navy SBIR Phase III production contract. These insights can enable SBIR program participant firms to take proactive, strategic measures to position themselves to achieve successful commercialization outcomes, whether through a government program of record or private sector sales.