Ingredients in the Early Development of the U.S. Biotechnology Industry

This paper explores the ingredients that stimulated the development of the biotechnology industry in the US and contrasts conditions with those in Europe. It examines relationships between established firms and new start-ups; the financing and managerial environment and the organizational environment, whereby firms were able to set up networks of alliances. Its main findings are that: 1) The funding of the medical science research base has been substantially more generous in the U.S. than Europe. It is the funding of the science base rather than of the biotechnology industry directly that has provided the foundations for start-ups to be created out of the science base. 2) It has been easier for U.S. academics to found start-ups, close to their research establishment, and to retain their academic posts and status as well as be involved in a commercial enterprise. In Europe, the scientific/academic and commercial worlds have a wider divide. 3) Start-ups have been concentrated in the therapeutics and agricultural fields, with strong scientific research inputs into their commercialization, in contrast to other sectors where downstream processing innovations have been more important, which have been undertaken in-house by the large incumbent companies. 4) Financing and managerial conditions have been significantly easier in the U.S. for start-ups, in terms of access to venture capital specialising in high technology, ability to use the stock market to raise capital, and access to people able to forge links between scientists and entrepreneurs, and to introduce managerial expertise into new companies. 5) There has been a greater facility in the U.S. than in Europe for alliances to be formed between incumbent companies and indigenous U.S. start-ups; European start-ups have not found similar backing from European incumbent companies.     

Britain's Economic Performance: The Strategic Dimension

Today it is widely recognised that manufacturing industry has a vital role to play if economic recovery in Britain is to be sustained, raising issues for policy of both its competitiveness and its size. This article argues that both are fundamentally linked by innovation; it identifies various weaknesses in the innovative potential of the manufacturing base, before examining the scope for improving the record in the more specific area of science based innovation, where Britain retains considerable strength. The article concludes by arguing that only through a coherent industrial policy can manufacturing play its desired role.     

The role of informal institutions in corporate governance: Brazil,Russia, India,and China compared

This paper argues that the role of informal institutions as well as formal ones is central to understanding the functioning of corporate governance. We focus on the four largest emerging economies: Brazil, Russia, India, and China—commonly referred to as the BRIC countries. Our analysis is based on the Helmke and Levitsky framework of informal institutions and focuses on two related aspects of corporate governance: firm ownership structures and property rights; and the relationship between firms and external investors. We argue that for China and some states of India, “substitutive” informal institutions, whereby informal institutions substitute for and replace ineffective formal institutions, are critical in creating corporate governance leading to enhanced domestic and foreign investment. In contrast, Russia is characterized by “competing” informal institutions whereby various informal mechanisms of corporate governance associated with corruption and clientelism undermine the functioning of reasonably well set-out formal institutions relating to shareholder rights and relations with investors. Finally Brazil is characterized by “accommodating” informal institutions which get around the effectively enforced but restrictive formal institutions and reconcile varying objectives that are held between actors in formal and informal institutions.     

The Dynamics of Industrial Clustering in Biotechnology

This paper is a study of the process by which industrial clusters form. It identifies the forces of attraction to new companies to a cluster in biotechnology in the U.S. as it grows. It uses a model of entry of new firms into the industry to measure the degree of attraction to those new firms of the presence of an existing cluster at a particular location. The paper finds that the main agent of attraction to new firms to enter the biotechnology industry is the presence of a strong science base at that location. This provides a greater magnet than the strength of any particular sector of the industry. In terms of attraction between different sectors within the industry, the paper finds that there is positive attraction and feedback between a group of sectors in the biotechnology industry – namely the therapeutics, diagnostics and the equipment/research tools sector. However in other sectors of the industry – chemicals, food and to some extent agriculture – there is much less attraction and interaction between them. This implies that clusters of firms tend to develop only in particular sectors of the industry and positive feedback mechanisms do not extend to other parts of the industry.     

The degree of integration in strategic alliances in biotechnology

This paper looks at the spection of strategic alliances in biotechnoloy in the late 1980s from the point of view of whether the alliance was of a contractual type or, at the other end of the spectrum, have integrated the two companies of the alliance were. It uses an ordered probit model to test for any systemalic association between alliances within indeustrial sectors and of different size types, and the type of alhance that occurred. The paper find that more contractual, less integrated types of alliance were concentrated in the healtheare secters of thenapeutics and diagnostics and where at least one of the firms was small in size. More integrated types of alliance revailed in the agriculature and cheicals sectors and between two lage companies. It relates these results to conditions of appropriability, the impact of the new lechnologies on existing compelencies and absorptwe capacity within the different industrial sectors at that time. It compares the situation of the late 1980s with more recnt developments in corporate strategy lowards allliance formation.     

The degree of integration in strategic alliances in biotechnology

This paper looks at the spection of strategic alliances in biotechnoloy in the late 1980s from the point of view of whether the alliance was of a contractual type or, at the other end of the spectrum, have integrated the two companies of the alliance were. It uses an ordered probit model to test for any systemalic association between alliances within indeustrial sectors and of different size types, and the type of alhance that occurred. The paper find that more contractual, less integrated types of alliance were concentrated in the healtheare secters of thenapeutics and diagnostics and where at least one of the firms was small in size. More integrated types of alliance revailed in the agriculature and cheicals sectors and between two lage companies. It relates these results to conditions of appropriability, the impact of the new lechnologies on existing compelencies and absorptwe capacity within the different industrial sectors at that time. It compares the situation of the late 1980s with more recnt developments in corporate strategy lowards allliance formation.     

UK biotechnology: institutional linkages, technology transfer and the role of intermediaries

One prominent feature of biotechnology in the UK is the close relationship between the public-sector science base and industry. Using information from interviews, the system for technology transfer is examined and four main institutional actors are identified: sponsors (both public and private, which fund research), hosts (which provide an environment in which research takes place), users (which commercialize research) and intermediaries (which act as agents in the technology transfer process). Models of the process of technology transfer are developed which incorporate knowledge flows between these institutions and the accompanying contractual, and financial/ economic relations. The direction, scale and formality of these interactions is examined and it is suggested that institutional approaches can capture important feedbacks and relationships which are overlooked in traditional stage and activity models of innovation.
In particular, intermediaries are highlighted, and it is suggested that they play an important role in contractual and financial/economic linkages in three ways: (i) by acting as agents between institutions in the presence of an imperfect knowledge market, (ii) by performing a liaison function for firms sourcing external know-how, and (iii) by providing access to complementary assets for development of technologies internally.
In the conclusion, we argue that institutional models can (a) help to define optimal linkage structures for specific technological areas at national and supranational levels (e.g. between members of the European Union) and (b) highlight the presence of inter-agency tensions and help identify the appropriate management options for resolving these.     

A survey on institutions and new firm entry: How and why do entry rates differ in emerging markets?

This paper considers the impact of institutions on new firm entry in emerging markets. In particular, it surveys the findings of a 2-year research project on the sources of success in terms of entry rates and conditions (including gross entry rates, exit rates and therefore net entry rates) across the BRIC countries (Brazil, Russia, India, China). These emerging market economies display widely varying entry and exit rates and a framework is developed to capture the interaction between key aspects of formal institutions, how those institutions play out in practice, and their impact on entry and exit rates. The country case studies reveal that, whilst different contingencies affect the relationships between institutions and entry in each country, there are some empirical regularities in the determinants of successful entry and conversely in its constraints. One such regularity is the critical interaction between formal rules and informal mechanisms. There is also variation in whether these works so as to compensate for deficiencies in formal institutions, as in China and India, or whether deficiencies in formal mechanisms are compounded by poor informal mechanisms, as is sometimes true in Brazil. Indeed, relatively good formal rules and structures can be undermined by informal mechanisms deterring or blocking entry, as is largely the case in Russia.