Innovation is a vital element in organizational growth. In fact, most managers regard innovation as the differentiating factor between organizations when it comes to competitiveness. Innovation and technology go hand-in-hand. As a way of appreciating the role that innovative technology plays in the economy of the United States in general, the government has taken various initiatives in supporting companies that are investing in innovative technology activities (Leyden & Link, 2002). This is usually done through giving Research and Development tax breaks, subsidies, protection of intellectual property rights, and implementing effective economic policies and regulations.
Government subsidies also play a vital role in supporting and enhancing innovativeness in companies. In this case, the government supports companies through partially funding innovative technology projects. Undoubtedly, certain innovative technology projects require tremendous amount of funds, which discourages companies from venturing into such projects. Therefore, the government chips in by offering a certain percentage of the projected investment funds or establishing partnership with the private sector in undertaking such projects (Leyden & Link, 2002).
Besides, the government offers its support through ensuring intellectual property rights of companies undertaking innovative technology projects are well maintained. As such, the companies are assured of enjoying the returns of their innovation not only in the short-run, but also in the long-term. Lastly, the creating a conducive environment for innovation, through implementing effective economic policies and regulations is yet another way that the government indirectly supports innovativeness in companies (PricewaterhouseCoopers, 2012). Better economic conditions propagates demand for products and services, which in turn motivates companies to invest more on Research and Development on how to address the demand. If the potential market returns are attractive, companies will always be willing to invest more on innovation technology(Leyden & Link, 2002).
Currently, the government is sponsoring various programs that enhance technology innovation in the private sector. One of such programs is the Small Business Innovation Research (SBIR). The program was created to inspire local small businesses to participate in federal research/research and development (R&D) with a commercialization potential. It encourages technological innovation to realize Federal R&D needs by a program based on competitive awards. The Energy Regional Innovation Cluster (E-RIC) is another program that encourages innovation technology. The program, which was established in 2010 by the Obama administration, was meant to offshoot economic growth regionally whereas promoting construction of energy efficient buildings. Particularly, the program concentrates on encouraging development new technologies that could enhance energy-efficient building systems (Northeastern University, 2013).
The programs have had various positive effects on technology innovation in the private sector. The most significant positive effect is increased funding. The government offers funding for the private organizations taking part in innovative projects under these programs. As mentioned above, companies are given an opportunity to compete in coming up with and implementing innovation technology programs, and they are rewarded in terms of financial incentives for their undertakings (PricewaterhouseCoopers, 2012).
Lack of government sponsorship of technology and innovation could be a big setback not only in the private sector, but also in promoting economic development in the country. As mentioned above, most innovation technology activities require an enormous amount of resources, which could be a limitation for most organizations in the private sector to undertake (PricewaterhouseCoopers, 2012). Therefore, lack of government sponsorship could contribute to a slow development in such activities. However, this does not imply that innovation would not occur. Innovation would still occur, but at a very slow rate due to lack of motivation. Through the collaboration of the government and international agencies, the rate of technology and innovation growth within the private sector in the country is likely to be facilitated (Block, & Keller, 2011).
In conclusion, technology and innovation go hand-in-hand. They play a significant role in the growth of both private and public sectors. The government has a big role to play in supporting technology and innovation in the private sector. It uses various options in offering this support; including R&D tax breaks, subsidies, and sponsorship programs. Among these alternatives, R&D tax break is the commonly used alternative. It entails reducing the amount of tax paid by companies undertaking various technology and innovation projects, which allows them to invest more funds in the same projects. It is also imperative to note that without government sponsorship, innovation could still take place. However, it is evident that the rate of innovation, without the sponsorship, could be too slow and it could be difficult to address the market demands. Hence, it is government participation in technology and innovation development is necessary.
Block, F. L., & Keller, M. R. (2011). State of innovation: The U.S. government's role in technology development. Boulder, CO: Paradigm Publishers.
Leyden, D. P., & Link, A. N. (2002). Government's role in innovation. Dordrecht [u.a.: Kluwer Acad. Publ.
Northeastern University. (2013). Government Relations. Retrieved from http://www.northeastern.edu/governmentrelations/research/innovation/
PricewaterhouseCoopers (2012). Innovation: Government’s many roles in fostering innovation. Retrieved from http://www.pwc.com/gx/en/technology/pdf/How-governments-foster innovation.pdf