Small Business Innovation Development Act – Definition

Cite this article as:"Small Business Innovation Development Act – Definition," in The Business Professor, updated April 26, 2019, last accessed October 29, 2020, https://thebusinessprofessor.com/lesson/small-business-innovation-development-act-definition/.

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Small Business Innovation Development Act Definition

The Small Business Innovation Development Act was enacted in 1982, this act enrolled the Small Business Innovation research (SBIR) program whose role was to strengthen small businesses. SBIR was saddled with the responsibility of empowering small business concerning federally-funded Research and Development (R&D).

SBIR strengthens the role of small innovative firms and motivates them to utilize R&D for the creation of technical innovation that would help the growth of nation’s economy. Through this program over 112, 500 awards have been issued to small innovative firms who embrace the opportunities provided by R&D to contribute to the growth of the country.

A Little More on the Small Business Innovation Development Act

The Small Business Innovation Development Act was passed in 1982. The Small Business Research and Development Enhancement Act on the other hand was passed by the congress in December 2000. However, the Small Business Reauthorization Act of 2000 reauthorized this program in September 2008 and this led to the emergence of other extensions and programs.  SBIR program is the most recent extension of the 2008 reauthorisation. Through SBIR, small businesses or small innovative firms are strengthened inn federally funded research and development. The utilization of S&R will meet the firm’s needs and also strengthen the economy of a nation.

Not all businesses and firms are eligible for the SBIR program, only small innovative firms and businesses in the United States are eligible. Also, before a small business can win the SBIR award certain criteria must be met such as a formal collaboration with a research institution. The criteria for the Phase I and II of the SBIR awards are;

  • The small business must be owned by citizens or permanent residents of the United states.
  • The business must be a organized-for-profit business with its location in the United States.
  • The employee strength of the firm must not exceed 500. ‘
  • The awardee must meet basic requirements in terms of its progress.

Despite that the SBIR program is open to small innovative businesses in the United states, the program is highly competitive. Even after meeting the eligibility criteria for the SBIR program, businesses must compete with other firms who also want to engage R&D for the purpose of commercialization.

SBIR program strengthens the role of small businesses to engage in Federal Research/Research and Development (R/R&D). Through this program, small business explores their technical innovations and technological ideas so as to profit from commercialization. Also, through the participation of small business in SBIR program, innovative technological solutions are stimulated which meets the needs of the small businesses and expand the growth of a nation’s economy.

The mission of the SBIR program is to advance technological innovation by enlisting the participation of small businesses in Federal Research/Research and Development (R/R&D). SBIR aim is to build the economy of a nation and also enhance the development f participating firms, the goals of SBIR are in four-fold.  One of it is to stimulate technological innovation in the country, SBIR’s goal is also to meet federal research and development needs by encouraging participation in technological innovation. SBIR also seeks to increase the commercialization of these innovations through the participation of private-sector.

SBIR program is in three phases. The first phase sees to the establishment of technical merit, its possibility and commercial tendencies of Federal Research/Research and Development (R/R&D). The first phase ensures that there is quality performance of the awardees and provides further support in Phase II.

The second phase on the other hand ensures continuity of the R/R&D technological initiatives launched in Phase I. Through the results achieved in Phase I, Phase II provides funding and follow up on projects. Also, only Phase I awardees and eligible for Phase II award.

Phase III of the SBIR program pursue the commercialization objectives that started from the activities of Phase I and Phase II.

References for Small Business Innovation Development Act

Academic Research on Small Business Innovation Development Act

Purpose and performance of the Small Business Innovation Research (SBIR) program, Cooper, R. S. (2003). Small Business Economics, 20(2), 137-151.

Employment growth from the small business innovation research program, Link, A. N., & Scott, J. T. (2012). Small Business Economics, 39(2), 265-287.

An empirical comparison between objective and subjective measures of the product innovation domain of corporate entrepreneurship, Jennings, D. F., & Young, D. M. (1990). Entrepreneurship Theory and Practice, 15(1), 53-66.

The small business innovation research program, Link, A. N., & Scott, J. T. (2012). ISSUES in Science and Technology, 28(4), 89.

Grantsmanship and entrepreneurship: A partnership opportunity under the Small Business Innovation Development Act, Brannen, K. C., & Gard, J. C. (1985). Journal of Small Business Management (pre-1986), 23(000003), 44.

Public gains from entrepreneurial research: Inferences about the economic value of public support of the Small Business Innovation Research program, Allen, S. D., Layson, S. K., & Link, A. N. (2012). Research evaluation, 21(2), 105-112.

The effects of government-industry R&D programs on private R&D: the case of the Small Business Innovation Research program, Wallsten, S. J. (2000). The RAND Journal of Economics, 82-100.

Private equity and the innovation strategies of entrepreneurial firms: Empirical evidence from the Small Business Innovation Research Program, Link, A. N., Ruhm, C. J., & Siegel, D. S. (2014). Managerial and Decision Economics, 35(2), 103-113.

Estimates of the social returns to small business innovation research projects, Link, A. N., & Scott, J. T. (2000). The small business innovation research program: An assessment of the department of defense fast track initiative, 275-290.

The Shaky Start of the UK Small Business Research Initiative (SBRI) in Comparison to the US Small Business Innovation Research Programme (SBIR), Tredgett, E., & Coad, A. (2013).

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