Early Academis Science and the Birth of Industrial Research Laboratories in the U.S. Pharmaceutical Industry

58 Pages Posted: 9 Aug 2005 Last revised: 30 Oct 2014

See all articles by Megan MacGarvie

Megan MacGarvie

Boston University School of Management; National Bureau of Economic Research (NBER)

Jeffrey L. Furman

Boston University - Department of Strategy & Policy; National Bureau of Economic Research (NBER)

Date Written: July 2005

Abstract

The establishment and growth of industrial research laboratories is one of the key organizational innovations affecting technological progress in the United States in the 20th century. In this paper, we investigate the rise of industrial research laboratories in the U.S. pharmaceutical industry between 1927 and 1946. Our evidence suggests that institutional factors, namely the presence of universities dedicated to research, played a significant role in the establishment and diffusion of private pharmaceutical research laboratories. Specifically, we document that the growth of industrial pharmaceutical laboratories between 1927 and 1946 is positively and significantly correlated with the extent of local university research, after controlling for other observable factors likely to influence the geographic distribution of industrial research. We supplement our core results with case histories illustrative of early university-industry interaction and an examination of the determinants of university-industry research cooperation. Our qualitative historical evidence and analyses of the birth of chemical engineering programs suggest that industry also played a role in influencing university research agendas. We correct for feedback effects from industry to universities using instrumental variables. Overall, our analyses suggest that while the presence of industrial facilities helped shape the direction of university research programs, there was a significant, positive, and causal effect running from university research to the growth of pharmaceutical research laboratories in the first half of the twentieth century in the United States.

Suggested Citation

MacGarvie, Megan and Furman, Jeffrey L., Early Academis Science and the Birth of Industrial Research Laboratories in the U.S. Pharmaceutical Industry (July 2005). NBER Working Paper No. w11470. Available at SSRN: https://ssrn.com/abstract=755706

Megan MacGarvie (Contact Author)

Boston University School of Management ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jeffrey L. Furman

Boston University - Department of Strategy & Policy ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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