Exploring what predicts success in public-sector innovation challenges when firms compete

Innovation competitions—such as those run by Impact Canada, XPRIZE, NASA’s Centennial Challenges, and ChallengeWorks—have long been used to spur breakthroughs in technical and social fields. Increasingly, governments are also using these competitions to support small and medium-sized companies. Yet little is known about what drives company success in these competitions, as prior research has largely focused on individual participants.

To address this gap, we analyzed administrative data from 684 Canadian companies that participated in Impact Canada Challenges between 2018 and 2021, comparing them with 3,455 similar non-participants to account for the decision to enter these competitions. Here, traditional predictors of success—topic expertise, knowledge diversity, and gender diversity—did not predict success very well. Instead, research and development (R&D) spending emerged as a more consistent predictor.

Two actionable insights arise from the finding that company-centred challenges tend to select for higher R&D spending. First, these challenges can help identify companies with significant innovation capacity—data that is typically hidden within confidential reports. Second, offering R&D resources as a non-financial support could help lower-capacity companies compete more effectively.

This work is part of a broader Impact Canada research agenda examining how innovation competitions drive economic performance, and how their design can support entrepreneurship policy.

For further information on our research contact iiu-uii@pco-bcp.gc.ca.