Population ecology models are elegant in form and adequate in describing aggregate data, but poor in telling stories and predicting the location of growth. Fundamentals models emphasizing the variables central to resource mobilization, such as intellectual human capital, can predict where and when biotechnology enterprises emerge and agglomerate. Density dependence and previous founding dependence proxy many underlying processes; the legitimation and competition interpretation is more conjectural than empirically tenable. We argue and demonstrate for biotechnology that an alternative model based on the fundamentals related to resource reallocation and mobilization provides a stronger frame to explore industry formation. Fundamentals models outperform population ecology models in the estimations, while a combined model driven by fundamentals but incorporating weak population dynamics does best. In repeated dynamic simulations, the population ecology model predictions are essentially uncorrelated with the panel data on biotechnology entry by year and region while the combined model has correlation coefficients averaging above 0.8.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
6414.
Length: Date of creation: Feb 1998 Date of revision: Handle: RePEc:nbr:nberwo:6414
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Find related papers by JEL classification: R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography) O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
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