The Urban–Rural Divide: The Effects of the Small Business Innovation Research Program in Small and Nonmetro Counties

Abstract

This study assesses the efficacy of the Small Business Innovation Research Program on innovation, employment, and business formation in small and nonmetropolitan counties. The primary goal is to further understand rural innovation and growth process through government intervention on small business development. Using panel data and employing fixed-effect models, the results suggest that, compared with large metropolitan counties, the Small Business Innovation Research Program may not be an effective program to generate employment and entrepreneurship opportunities in small and nonmetropolitan regions, but it could be a viable source to improve rural innovation outcome. The geographical effects of the program are heterogeneous across implementation years and award agencies. This study contributes to the innovation policy agenda in small and nonmetropolitan regions, which is an important and emerging topic in the field.

Testing biasedness of self-reported microbusiness innovation in the annual business survey

“…In our study, we use the ABS data to test the null hypothesis that there is no underreporting of innovation activities due to the survey design in which microbusinesses receive both R&D and innovation modules, while small businesses (10 or more employees) receive only an innovation module. Additionally, our study primarily concentrates on businesses with approximately 10 employees, thereby contributing to the literature on small business innovation and entrepreneurship [10][11][12][13].…”