NEWSRELEASE
For Release: October 28, 2002
Contact: John McDowell (202) 205-6941
john.mcdowell@sba.gov
SBA Number: 02-40 ADVO
University R&D Expenditures Jump-Start Small Business
Formation,
Study Shows
“Spillover” Drives New Firms, Jobs, And Economic Growth
WASHINGTON, D.C. - Research and development expenditures by America’s universities are a primary driver of small business formation, new jobs, and positively affect local economic growth according to a study released today by the Office of Advocacy of the U.S. Small Business Administration (SBA).
“Small business formation clearly receives a jump-start from university R&D,” said Thomas M. Sullivan, Chief Counsel for Advocacy. “Research universities, and investment in R&D at these universities, are major factors contributing to economic growth in their markets,” he continued.
The study examined a number of socio-economic factors that could drive new firm formation and job creation in the labor market areas (LMAs) surrounding research universities. Once the researchers controlled for these variables, they concluded that the lag between university R&D investments and local new firm formation is the most statistically significant at two years. Moreover, they found that these effects last as long as five years.
The research also determined that new firms form around university research activity centers much in the same way as they form around local industry clusters. The authors attribute this formation to information “spillover,” which is most important in knowledge-based industries.
“This study has broad implications for policymakers at not only state and local levels, but at the federal level as well,” said Sullivan. “Universities are contributors to small firm births and growth locally and nationally. Policymakers interested in sustaining an environment that supports job-creating small business should take this study into consideration,” he continued.
The Office of Advocacy, the National Commission on Entrepreneurship, and the Kauffman Center for Entrepreneurial Leadership funded the study written by BJK Associates.
For more information, visit the Office of Advocacy website at http://www.sba.gov/advo.
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Created by Congress in 1976, the Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. Appointed by the President and confirmed by the U.S. Senate, the Chief Counsel for Advocacy directs the office. The Chief Counsel advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers. Economic research, policy analyses, and small business outreach help identify issues of concern. Regional Advocates and an office in Washington, DC support the Chief Counsel’s efforts. For more information on the Office of Advocacy, visit http://www.sba.gov/advo, or call (202) 205-6533.