Enabling Technologies and the Role of Private Firms: A Machine Learning Matching Analysis

Abstract

Investments in enabling technologies—including the fifth-generation technology standard for broadband cellular networks (5G), artificial intelligence (AI), and light detection and ranging (LIDAR) technology—are important strategic decisions for firms. This paper asks how inventions that private firms developed with (versus without) public-sector partners differ in their enabling technology trajectory. Using a novel method of machine learning matching, we compare patented technologies generated from more than 30,000 public–private relationships with comparable technologies invented by private firms alone during a 21-year period. To measure the enabling potential of a technology, we introduce a new enabling technology index. The findings show that private-firm relationships with the public sector—in particular cooperative agreements and grants with mission agencies (National Aeronautics and Space Administration and Department of Defense)—are likely starting points for enabling technology trajectories. We thus put a spotlight on organizational arrangements that combine the breadth of exploration (agreements, grants) with deep exploitation in a particular domain (mission agency). A key contribution is a better understanding of the types of private-firm efforts that are associated with enabling technologies. We also challenge the common assumption that enabling technologies have their origins only in public-sector projects and show how private firms are involved. Our significant contribution is to show how private firms can change evolution of ecosystems through technology development.