This article looks at the spatial distribution of patent activity among publicly traded companies in the U.S. pharmaceutical industry. Data for two time periods show that patent introductions tend to favor the Northeast. Significant locational variations are uncovered in the innovation performance of firms in this industry. These variations are hypothesized to reflect the localized economic conditions that characterize Porter’s model of competitive advantage (the diamond paradigm). Our analysis suggests that patent counts respond positively to the degree of spatially concentrated production (density of competition). Furthermore, findings suggest that local business conditions play an important role in the innovation and financial performance of U.S. pharmaceutical companies.
Acs, Z. J., Audretsch, D. B., & Feldman, M. P. (1992). Real effects of academic research: Comment. American Economic Review, 81, 363-367.
2.
Altman, E. I. (1968). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. Journal of Finance, 23, 589-609.
3.
Anselin, L., Varga, A., & Acs, Z. (2000a). Geographic and sectoral characteristics of academic knowledge externalities. Papers in Regional Science, 79, 435-444.
4.
Anselin, L., Varga, A., & Acs, Z. (2000b). Geographic spillovers and university research: a spatial econometric perspective. Growth and Change, 31, 501-515.
5.
Birkinshaw, J., & Hood, N. (2000). Characteristics of foreign subsidiaries in industry clusters. Journal of International Business Studies, 31, 141-154.
6.
Boasson, V. W. (2001). Location, strategy and firm performance: Evidence from the pharmaceutical industry. Unpublished doctoral dissertation, University at Buffalo, Buffalo, NY.
7.
Boasson, V. W., & MacPherson, A. (2001). The role of geographic location in the financial and innovation performance of publicly traded pharmaceutical companies: Empirical evidence from the United States. Environment and Planning (A), 33, 1431-1444.
8.
Brouwer, E., Budil-Nadvorinikova, H., & Kleinnecht A. (1999). Are urban agglomerations a better breeding place for product innovation? An analysis of new product announcements. Regional Studies, 33, 541-549.
9.
Driffield, N., & Munday, M. (2000). Industrial performance, agglomeration, and foreign manufacturing investment in the UK. Journal of International Business Studies, 31, 21-38.
10.
Enright, M. J. (1994). Regional clusters and firm strategy. Paper prepared for the Prince Bertil Symposium on the Dynamic Firm: The Role of Regions, Technology, Strategy, and Organization. Stockholm School of Economics, Stockholm, Sweden.
11.
Feldman, M. P., & Florida, R. (1994). The geographic sources of innovation: Technological infrastructure and product innovation in the United States. Annals of the Association of American Geographers, 84, 210-229.
12.
Feser, E. J., & Bergman, E. M. (2000). National industry cluster templates: A framework for applied regional cluster analysis. Regional Studies, 34, 1-19.
13.
Florida, R. (2002). The economic geography of talent. Annals of the Association of American Geographers, 92, 743-755.
14.
Gray, M., & Parker, E. (1998). Industrial change and regional development: The case of the US biotechnology and pharmaceutical industries. Environment and Planning (A), 30, 1757-1774.
15.
Krugman, P. (1991). Geography and trade. Cambridge, MA: MIT Press.
16.
Malmberg, A., & Maskell, P. (2002). The elusive concept of localization economies: toward a knowledge-based theory of spatial clustering. Environment and Planning (A), 34, 429-449.
17.
Marshall, A. (1916). Principles of economics. London: MacMillan.
18.
Milner, C., & Pentecost, E. (1996). Locational advantage and US foreign direct investment in UK manufacturing. Applied Economics, 28, 605-615.
19.
Nachum, L. (2000). Economic geography and the location of TNCs: Financial and professional service FDI to the USA. Journal of International Business Studies, 31, 367-387.
20.
Porter, M. E. (1990). The competitive advantage of nations. New York: Free Press.
21.
Porter, M. E. (1996). Competitive advantage, agglomeration economies and regional policy. International Regional Science Review, 19, 85-90.
22.
Porter, M. E. (1998). Clusters and the new economics of competition. Harvard Business Review, 76, 77-90.
23.
Porter, M. E. (2000). Location, competition, and economic development: Local clusters in a global economy. Economic Development Quarterly, 14, 15-34.
24.
Roberts, P. W. (1999). Product innovation, product-market competition and persistent profitability in the US pharmaceutical industry. Strategic Management Journal, 20, 655-670.
25.
Shaver, M. J. (1998). Do foreign owned and US owned establishments exhibit the same locational pattern in US manufacturing industries?Journal of International Business Studies, 29, 469-492.
26.
Standard & Poor. (2000). Compustat (SPC) database.
