Firm Value and Geographic Competitive Advantage: Evidence from the U.S. Pharmaceutical Industry

49 Pages Posted: 5 Dec 2007

See all articles by Vigdis Boasson

Vigdis Boasson

Central Michigan University; Central Michigan University

Emil Boasson

Central Michigan University

Alan MacPherson

State University of New York

Hyun-Han Shin

Yonsei University

Abstract

This paper examines the effects of geographic sources of competitive advantage on firm value among publicly-traded pharmaceutical companies in the United States. A central argument is that firm value responds positively to geographic factors. We hypothesize that firm value is influenced by the degree of industry clustering, the availability of specialized business services, the presence of related or supporting industries, university and industrial R&D spending, and local demand. The empirical results lend support to our hypotheses. Specifically, the data show that companies located within major production clusters exhibit higher firm value than their counterparts located elsewhere. Even after controlling for the firm value determinants used by Fama and French (1998), geographic variables explain a significant part of the cross-sectional variation in firm value.

Keywords: Firm Value, Geographic Competitive Advantage

JEL Classification: G10, G30, L10, O18, O32, O33

Suggested Citation

Boasson, Vigdis and Boasson, Emil and MacPherson, Alan and Shin, Hyun-Han, Firm Value and Geographic Competitive Advantage: Evidence from the U.S. Pharmaceutical Industry. Journal of Business, Vol. 78, No. 6, 2005, Available at SSRN: https://ssrn.com/abstract=1044501

Vigdis Boasson (Contact Author)

Central Michigan University ( email )

Mount Pleasant, MI 48859
United States

Central Michigan University ( email )

Department of Finance and Law, College of Business
Central Michigan University
Mt. Pleasant, MI 48858

Emil Boasson

Central Michigan University ( email )

Mt. Pleasant, MI 48858
United States

Alan MacPherson

State University of New York ( email )

12 Capen Hall
Buffalo, NY 14260
United States

Hyun-Han Shin

Yonsei University ( email )

50 Yonsei Ro
Seodaemoon Gu
Seoul
Korea, Republic of (South Korea)
82-2-21235466 (Phone)

HOME PAGE: http://https://ysb.yonsei.ac.kr/faculty.asp?mid=n02&sOpt=&uid=32

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