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Firms in Scottish High Technology Clusters: software, life sciences, microelectronics, optoelectronics and digital media – preliminary evidence and analysis on firm size, growth and optimality

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  • Reid, Gavin C
  • Ujjual, Vandana

Abstract

This paper reports on: (a) new primary source evidence on; and (b) statistical and econometric analysis of high technology clusters in Scotland. It focuses on the following sectors: software, life sciences, microelectronics, optoelectronics, and digital media. Evidence on a postal and e-mailed questionnaire is presented and discussed under the headings of: performance, resources, collaboration & cooperation, embeddedness, and innovation. The sampled firms are characterised as being small (viz. micro-firms and SMEs), knowledge intensive (largely graduate staff), research intensive (mean spend on R&D GBP 842k), and internationalised (mainly selling to markets beyond Europe). Preliminary statistical evidence is presented on Gibrat’s Law (independence of growth and size) and the Schumpeterian Hypothesis (scale economies in R&D). Estimates suggest a short-run equilibrium size of just 100 employees, but a long-run equilibrium size of 1000 employees. Further, to achieve the Schumpeterian effect (of marked scale economies in R&D), estimates suggest that firms have to grow to very much larger sizes of beyond 3,000 employees. We argue that the principal way of achieving the latter scale may need to be by takeovers and mergers, rather than by internally driven growth.

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Bibliographic Info

Paper provided by Scottish Institute for Research in Economics (SIRE) in its series SIRE Discussion Papers with number 2008-41.

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Date of creation: 2008
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Handle: RePEc:edn:sirdps:54

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Keywords: High technology; Scottish firms; Gibrat’s Law; the Schumpeterian Hypothesis;

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  1. F. M. Fisher & P. Temin, 1971. "Returns-to-Scale in Research and Development: What Does the Schupeterian Hypothesis Imply?," Working papers 74, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Loeb, Peter D & Lin, Vincent, 1977. "Research and Development in the Pharmaceutical Industry-A Specification Error Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 26(1), pages 45-51, September.
  3. Kaufmann, Alexander & Todtling, Franz, 2001. "Science-industry interaction in the process of innovation: the importance of boundary-crossing between systems," Research Policy, Elsevier, vol. 30(5), pages 791-804, May.
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  5. Gavin C Reid & Pamela A Siler & Julia A Smith, 1994. "Quality of Patenting in the UK Scientific Instruments Industry: Database Construction," CRIEFF Discussion Papers 9412, Centre for Research into Industry, Enterprise, Finance and the Firm.
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  8. Peters, Bettina & Lööf, Hans & Janz, Norbert, 2003. "Firm Level Innovation and Productivity: Is there a Common Story Across Countries?," ZEW Discussion Papers 03-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. James Love & Stephen Roper, 2002. "Internal Versus External R&D: A Study of R&D Choice with Sample Selection," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(2), pages 239-255.
  10. Richard N. Langlois, 2002. "Schumpeter and the Obsolescence of the Entrepreneur," Working papers 2002-19, University of Connecticut, Department of Economics.
  11. Arnoud Lagendijk, 1999. "The Emergence of Knowledge-Oriented Forms of Regional Policy in Europe," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 90(1), pages 110-116, 02.
  12. Benfratello, Luigi & Sembenelli, Alessandro, 2002. "Research joint ventures and firm level performance," Research Policy, Elsevier, vol. 31(4), pages 493-507, May.
  13. Romijn, Henny & Albaladejo, Manuel, 2002. "Determinants of innovation capability in small electronics and software firms in southeast England," Research Policy, Elsevier, vol. 31(7), pages 1053-1067, September.
  14. Freel, Mark S., 2003. "Sectoral patterns of small firm innovation, networking and proximity," Research Policy, Elsevier, vol. 32(5), pages 751-770, May.
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