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High-growth firms in changing competitive environments: the US pharmaceutical industry (1963 to 2002)

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  • Mariana Mazzucato

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  • Stuart Parris

Abstract

Firms across sectors and regions are highly skewed in their ability to engage with innovation and even more skewed in their ability to translate investments in innovation into higher growth. Recent attention has been placed on the importance of ‘high-growth firms’ (HGF) for innovation policy. Our paper explores under what conditions HGF matter for translating R&D investments into economic growth and how this depends on firm-specific and industry-specific factors. We use quantile regression techniques to study the R&D–growth relationship in HGF compared to low-growth firms. Unlike previous studies, we pay particular attention to whether this relationship depends on the particular period in the industry’s life cycle. We focus on the US pharmaceutical industry from 1963 to 2002 and find that the R&D–growth relationship is sensitive to the changing competitive environment over the industry’s history, which suggests that innovation policy must focus not only on firm attributes but also competitive structures. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Mariana Mazzucato & Stuart Parris, 2015. "High-growth firms in changing competitive environments: the US pharmaceutical industry (1963 to 2002)," Small Business Economics, Springer, vol. 44(1), pages 145-170, January.
  • Handle: RePEc:kap:sbusec:v:44:y:2015:i:1:p:145-170
    DOI: 10.1007/s11187-014-9583-3
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    1. ARATA Yoshiyuki & ONOZAKI Tamotsu, 2017. "A Compositional Data Analysis of Market Share Dynamics," Discussion papers 17076, Research Institute of Economy, Trade and Industry (RIETI).
    2. repec:spr:joevec:v:28:y:2018:i:1:d:10.1007_s00191-016-0486-0 is not listed on IDEAS
    3. repec:kap:jtecht:v:43:y:2018:i:2:d:10.1007_s10961-017-9570-3 is not listed on IDEAS
    4. Olubunmi Ipinnaiye & Declan Dineen & Helena Lenihan, 2017. "Drivers of SME performance: a holistic and multivariate approach," Small Business Economics, Springer, vol. 48(4), pages 883-911, April.
    5. M. Grazzi & C. Piccardo & C. Vergari, 2019. "Concordance and complementarity in Intellectual Property instruments," Working Papers wp1127, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. repec:eee:respol:v:48:y:2019:i:1:p:234-247 is not listed on IDEAS
    7. Brixy, Udo & Murmann, Martin, 2016. "The growth and human capital structure of new firms over the business cycle," IAB Discussion Paper 201642, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Stefano Bianchini & Federico Tamagni & Gabriele Pellegrino, 2016. "Innovation strategies and firm growth," Working Papers 2016/10, Institut d'Economia de Barcelona (IEB).
    9. Amitrajeet A. Batabyal & Hamid Beladi, 2015. "The importance of creative capital for economic growth in the presence of learning by doing," Regional Science Policy & Practice, Wiley Blackwell, vol. 7(4), pages 187-197, November.
    10. Alex Coad & Nanditha Mathew & Emanuele Pugliese, 2017. "What's good for the goose ain't good for the gander: cock-eyed counterfactuals and the performance effects of R&D," LEM Papers Series 2017/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    11. repec:eso:journl:v:47:y:2016:i:2:p:213-245 is not listed on IDEAS
    12. Coad, Alex & Segarra, Agustí & Teruel, Mercedes, 2016. "Innovation and firm growth: Does firm age play a role?," Research Policy, Elsevier, vol. 45(2), pages 387-400.
    13. Caterina Santi & Pietro Santoleri, 2017. "Exploring the link between innovation and growth in Chilean firms," Small Business Economics, Springer, vol. 49(2), pages 445-467, August.
    14. repec:ksa:szemle:1695 is not listed on IDEAS
    15. repec:rom:mancon:v:11:y:2017:i:1:p:617-632 is not listed on IDEAS
    16. Teresa Krasnicka & Wojciech Glod, 2016. "Determinants of High-Growth Enterprises in Poland (Determinanty szybkiego wzrostu przedsiebiorstw w Polsce)," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 14(62), pages 49-67.

    More about this item

    Keywords

    High-growth firms; Research and development; Competitive environment; Quantile regression; Pharmaceutical industry; L22; L25; L26; O30; O32;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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