High Growth Firms, Innovation and Competition: The Case of the US Pharmaceutical Industry

45 Pages Posted: 24 Feb 2016

See all articles by Mariana Mazzucato

Mariana Mazzucato

University of York - Social Policy Research Unit (SPRU); University of Sussex

Stuart Parris

The Open University

Date Written: November 29, 2013

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 (pharma) 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.

Suggested Citation

Mazzucato, Mariana and Parris, Stuart, High Growth Firms, Innovation and Competition: The Case of the US Pharmaceutical Industry (November 29, 2013). SWPS 2013-16, Available at SSRN: https://ssrn.com/abstract=2736857 or http://dx.doi.org/10.2139/ssrn.2736857

Mariana Mazzucato (Contact Author)

University of York - Social Policy Research Unit (SPRU) ( email )

United Kingdom

HOME PAGE: http://www.sussex.ac.uk/spru/people/peoplelists/person/111262

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

Stuart Parris

The Open University ( email )

Walton Hall
Milton Keynes, MK6 7AA
United Kingdom

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