NRC An Assessment of SBIR Program - National Defense Industrial ...

An Assessment of the Small Business Innovation Research Program
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Box B: What is an innovation ecosystem?
An innovation ecosystem describes the complex synergies among a variety of collective
efforts involved in bringing innovation to market. 42 These efforts include those organized
within as well as collaboratively across large and small businesses, universities, and research
institutes and laboratories, as well as venture capital firms and financial markets. Innovation
ecosystems themselves can vary in size, composition, and in their impact on other
ecosystems. By linking these different elements, SBIR strengthens the innovation ecosystem
in the United States, thereby enhancing the nation’s competitiveness.
The idea of an innovation ecosystem builds on the concept of a National Innovation System
(NIS) popularized by Richard Nelson of Columbia University. According to Nelson, a NIS
is “a set of institutions whose interactions determine the innovative performance ... of
national firms.” 43 The idea of an innovation ecosystem highlights the multiple institutional
variables that shape how research ideas can find their way to the marketplace. These
include, most generally, rules that protect property (including intellectual property) and the
regulations and incentives that structure capital, labor, and financial and consumer markets.
A given innovation ecosystem is also shaped by shared social norms and value systems—
especially those concerning attitudes towards business failure, social mobility, and
entrepreneurship. 44
In addition to highlighting the interdependencies among the various participants, the idea of
an innovation ecosystem also draws attention to their ability to change over time, given
different incentives. This dynamic element sets apart the idea of an “innovation ecosystem”
In this regard, the term “innovation ecosystem” captures an analytical approach that
considers how public policies can improve innovation-led growth by strengthening links
within the system. Incentives found within intermediating institutions like SBIR can play a
key role in this regard by aligning the self-interest of venture capitalists, entrepreneurs and
other participants with desired national objectives. 45
42 Consciously drawing on this ecosystems approach, the Council of Competitiveness’ National Innovation
Initiative (NII) report and recommendations address the need for new forms of collaboration, governance and
measurement that enable U.S. workers to succeed in the global economy. Council on Competitiveness, Innovate
America: Thriving in a World of Challenge and Change, Washington, D.C.: Council on Competitiveness, 2005.
43 See Richard R. Nelson and Nathan Rosenberg, “Technical Innovation and National Systems,” in National
Innovation Systems: A Comparative Analysis, Richard R. Nelson, ed., Oxford, UK: Oxford University Press, 1993.
44 For a survey of attitudes towards entrepreneurship, see European Commission, “Entrepreneurship—Flash
Eurobarometer Survey,” January 2004. The survey shows that Europeans have a greater fear of entrepreneurial
failure—including loss of property and bankruptcy—than do Americans. Accessed at
http://europa.eu.int/comm/enterprise/enterprise_policy/survey/eurobarometer83.htm.
45 National Research Council, Government-Industry Partnerships for the Development of New Technologies: Summary
Report, Charles W. Wessner, ed., Washington, D.C.: The National Academies Press, 2003.
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