Carnegie Mellon University
March 19, 2019

Government Experiments Mean More Funding for Small Companies

By Adam Dove

State governments that offer resource, policy and infrastructure support to help aid technological innovation provide important resources for young companies, even if the technologies the companies are developing aren't a sure thing. But it is not enough for governments to offer this funding - especially if companies are unaware what is available.

Daniel Armanios, assistant professor of engineering and public policy at Carnegie Mellon University, along with Ph.D. student Dian Yu and co-author Lauren Lanahan of the University of Oregon, have compiled a database of resources using reporting from the State Science and Technology Institute (SSTI). They have detailed their methodology in a recent paper published in the journal of the Academy of Management Discoveries.

"We term this phenomenon as 'government experimentation,'" the team explained in the paper. "Scholarship has tended to examine national efforts, yet local governments are in an ideal position to tailor programs to the local market context given their proximity."

To help companies understand and make use of public funding, the aim of their research is two-fold. First, it outlines the method by which they compiled their database. Second, it analyzes this local government experimentation, comparing each state's policy portfolio, and separating the different ways in which state governments seek to support such experimental efforts into four distinct categories - hub specialists, public entrepreneurs, industry architects and ecosystem designers. These four categories are used to describe the ways local governments experiment through what aspects of technology-based economic development they are trying to enhance and by what specific sectors they are trying to support.

"Most prior approaches either simply counted the number of ways a state experiments or aggregated the total experimentation at the national level," Armanios said. "What we found from our results is that this misses important distinctions between states. Even more problematic, aggregating to national levels may actually lead to differing - and potentially misleading - assumptions as to how states experiment."

For entrepreneurs and small companies, this database will clarify what sort of technological developments their state is interested in supporting, thereby helping them better frame and target their technology initiatives to current government priorities. In particular, this database helps highlight what sectors their state seeks to involve in technology-based economic development, and around what aspects: training and human capital, physical infrastructure, or innovation in a broad or narrow set of technologies.

Empowered with this knowledge, the team said they hope that future entrepreneurs and small companies will feel further empowered to seek funding from the ever-expanding pool of public-sector funds and not just the private sector such as venture capitalists or angel investors.

Entrepreneurs, small business owners, and policymakers seeking to use the database can find it at:

Funding support for this work was provided by the Ewing Marion Kauffman Foundation.