Working Paper: NBER ID: w24724
Authors: Joshua R. Bruce; John M. De Figueiredo; Brian S. Silverman
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.
Keywords: Public Contracting; Private Innovation; Government Expertise; Decision Rights; Performance Outcomes
JEL Codes: H11; H57; L14; L24; L33; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Personnel expertise ratio (M50) | Contract form (cooperative agreement) (P13) |
| Contract form (cooperative agreement) (P13) | Innovative output (patent generation) (O36) |
| Contract form (grant) (Y20) | Innovative output (patent generation) (O36) |
| Relevant government personnel stretched too thin (H12) | Performance of cooperative agreements (F53) |