Business planning and progress of small firms engaged in technology development through the advance technology program

Abstract

This report assesses participation, strategies, and progress of firms engaged in technology development through partnerships with the Advanced Technology Program (ATP). The focus is on the performance of small firms (those with fewer than 500 employees) compared with medium-to-large firms (grouped together and referred to as "larger" firms in this report, and defined as firms with 500 or more employees). Using 1997 data collected through the ATP's Business Reporting System (BRS) from firms receiving ATP awards in 1993 through 1996, the report identifies factors contributing to the success of small firms in ATP competitions; and it addresses whether small firms are adopting effective "strategies for success," using ATP funding to accelerate R&D cycles and attract increased private funding, and overcoming at least the initial hurdles to commercial success and broad diffusion of their technologies. For purposes of comparison, parallel analyses are presented for larger firms funded by the ATP during the same period. Whether or not the firm is a participant in a joint-venture project is examined as a source of variation in the results for small firms as compared with larger firms.The study finds that small companies have been successful in winning ATP awards in competition with larger firms. Their success likely relates to their ambitious plans for numerous applications, including many "new-to-the-world" and high-performance products. Small firms also appear to be following strategies for success cited in the literature. While collaboration activity is widespread across both small firms and larger firms, small firms are placing more emphasis on strategic alliances with customers and other supply chain linkages than larger firms and more frequently report significant effects of collaboration on identifying customer needs, and on raising capital. Most small firms as well as larger firms have experienced acceleration of their R&D in the critical race to market as a result of the increased levels of investment and of collaborative activity with other organizations. On the other hand, larger firms more frequently report that they require ATP funding to undertake their projects at all. At similar stages of their projects, a larger percentage of small firms have set up pilot production, begun production, and/or have earned revenues from their ATP-funded technologies. Small firms in single-company projects are taking advantage of early opportunities for revenues from spin-off activities to support cash flow. Small firms in joint ventures appear to be making particularly strong progress towards actual production of products incorporating ATP-funded technology. Larger firms are more likely than small firms to be pursuing new or improved process technologies. Evidence to date, at a time when most of the firms are still in the R&D phase, suggests that small firms funded by the ATP are progressing at a pace at least equivalent to larger firms and engaging in collaborative and other commercialization activities needed for ...

Different timelines for different technologies:

“…However, the status reports were based on short case studies, not on more comprehensive BRS data. The present study partially updates the earlier statistical studies by Powell and Lellock (2000) and Powell (1999) and also extends those analyses to examine variation by technology area. Powell and Lellock (2000) is a general report on commercialization progress of ATP projects based on the BRS database through 1997.…”

“…The present study follows a series of case-study status reports of ATP's completed projects by Long (1999) and ATP (2001) and statistical studies by Powell (1999) and Powell and Lellock (2000). The status report volumes were the first ATP studies to examine technical and commercialization performance by technology area.…”

“…Powell and Lellock (2000) is a general report on commercialization progress of ATP projects based on the BRS database through 1997. Powell (1999) focused on small firms in comparison with larger firms.…”

“…They may be under pressure to satisfy outside investors, and therefore may be more eager to launch early products whether or not these embody the full technological potential (Powell, 1999). These firms are also more likely to be in the fluid, early stage of the innovation life cycle, where the pace of change and shifts in market dominance are most rapid.…”

“…See Powell (1999) and Feldman and Kelley (2001) for earlier evidence and a discussion of the halo effect of ATP funding.…”