Recent Research: Understanding the Evolving Role of the Federal Government in U.S. Innovation

Collaborative research, particularly federally funded R&D, is playing an increasingly significant role in producing the top innovations each year, according to a new analysis released by the Information Technology and Innovation Foundation (ITIF). Where Do Innovations Come From? Transformations in U.S. National Innovation System, 1970-2006 shows a dramatically diminishing role for the largest firms acting independently to fuel future technological advances.
 
Fred Block and Matthew Keller examined a random sample of 1,200 of the nation’s top commercialized innovations over the past four decades – as identified by R&D Magazine for its annual R&D 100 Awards – to determine the type of entity or entities that were responsible.
 
The total number of the top 100 innovations each year that include Fortune 500 firms either working independently or collaboratively with others has fallen from the mid-40s during the 1970s to only six in 2006.
 
Conversely, projects involving federal labs working either alone or collaboratively has risen from four in 1971 to 42 in 2006. Interorganizational collaborations of all types were nearly four times more numerous in the 2006 award list than in 1971, now representing almost 70 percent of the nation’s top innovations.
 
Projects funded through the federal SBIR program also account for a growing number of the R&D 100 Awardees, attesting to the importance of the federal program on the continued competitiveness of the country, the authors argue.  Those projects involving innovations resulting from SBIR funding conservatively account for 21 percent to 25 percent of the awards since 1997, based on the sample. The caution on the figure, the authors explain, is because the commercialized innovations in the R&D 100 may involve dozens of patents or technologies that could involve multiple SBIR awards. Funding sources for an innovation, not provided in the R&D Magazine award nomination requirements, had to be independently researched and identified by the authors for the analysis.
 
The authors conclude from their findings that the U.S. innovation system benefits from the decentralized nature of how innovation is supported by the federal government, particularly through policy interventions such as the SBIR program and federal lab system.
 
At the same time, Block and Keller point out the inefficiencies inherent in federal research support being too decentralized. The federal system “carries decentralization to an unproductive extreme,” they caution. “Under the current arrangements, it is entirely possible that five different government agencies might be supporting 30 different teams of technologists working on an identical problem without a full awareness of the duplication of efforts.”
 
More funding for collaborative research is also recommended. Federal support for R&D has been declining in real terms since 2003.
 
Where Do Innovations Come From? Transformations in U.S. National Innovation System, 1970-2006 is available at: http://www.itif.org/index.php?id=158