Public Contracting for Private Innovation: Government Expertise, Decision Rights, and Performance Outcomes

Joshua R. Bruce, John M. de Figueiredo and Brian Silverman

No 24724, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine how the U.S. Federal Government governs R&D contracts with private-sector firms. The government chooses between two contractual forms: grants and cooperative agreements. The latter provides the government substantially greater discretion over, and monitoring of, project progress. Using novel data on R&D contracts and on the geo-location and technical expertise of each government scientist over a 12-year period, we test implications from the organizational economics and contracting literatures. We find that cooperative agreements are more likely to be used for early-stage projects and those for which local government scientific personnel have relevant technical expertise; in turn, cooperative agreements yield greater innovative output as measured by patents, controlling for endogeneity of contract form. The results are consistent with multi-task agency and transaction-cost approaches that emphasize decision rights and monitoring.

JEL-codes: H11 H57 L14 L24 L33 O32 (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-cta, nep-ino, nep-law, nep-pbe, nep-ppm and nep-sbm
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Published as Bruce, Joshua R., John M. de Figueiredo, and Brian S. Silverman (2019). “Public Contracting for Private Innovation: Government Capabilities, Decision Rights, and Performance Outcomes,” Strategic Management Journal 40(4): 533-555.

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