The ability of small businesses to drive innovation is critical to U.S. competitiveness. In recognition of the invaluable role small businesses play in the United States innovation ecosystem, the U.S. Small Business Administration (SBA) launched the Regional Innovation Cluster (RIC) Initiative in September 2010. This initiative promotes and supports industry clusters—geographically concentrated groups of interconnected businesses, suppliers, service providers, and related institutions in a particular industry or field—that have been associated with increased regional economic growth. Since the inception of the RIC Initiative, SBA has prioritized the robust evaluation of its cluster investments and pioneered performance measurement of federally funded cluster initiatives. As the third edition and year of this evaluation, this report details promising trends and outcomes, particularly the growth in cluster membership and economic activity. In many cases, the economic activity associated with SBA-supported clusters exceeds (sometimes considerably) corresponding benchmarks. For example, between Years 2 and 3, the average total employment and the average revenue of small businesses that participate in the clusters grew at an annualized rate of 6.9%, at least twice the rate of benchmark firms; average monthly payroll in cluster small businesses grew at an annualized rate of 14.1%, exceeding benchmarks by 11 percentage points.
The seven clusters participating in the Initiative during the third year include Advanced Power Cluster, Geospatial Cluster, FlexMatters, TechRich (formerly Huntsville Defense Cluster), Smart Grid, Energy Storage Cluster, and the San Diego Defense Cluster. While the industry focus of the clusters varies, spanning geospatial, fuel-cell, and smart-grid technology industries as well as flexible electronics, and autonomous and reconnaissance systems, their core activities are similar: they act as networking hubs to convene a number of resources to help navigate funding, procurement, and supply-chain opportunities. Through technical and legal assistance, these cluster networks also work to help innovators commercialize promising technologies needed by government and industry buyers.
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