Alan MacPherson

A Comparison of Within‐Firm and External Sources of Product Innovation

This paper examines the role of internal and external research, design and development (RD&D) activity in the innovation performance of New York State manufacturing firms in the scientific instruments sector. Survey data from a sample of 204 small and medium-sized companies suggest that the incidence of successful product development is higher among firms that combine in-house RD&D with technical support from independent specialists. Significantly, firms that supplement their in-house innovation efforts with outside talent are found to exhibit better commercial performance than their counterparts that operate on the basis of either internal or external technical resources alone. The paper concludes with a brief agenda for future empirical research on the conditions that support product innovation among small and medium-sized firms.

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

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, university and industrial R&D spending, the presence of related or supporting industries, and the proximity of competitors. The empirical results lend support to our hypotheses. 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.

The role of university-based industrial extension services in the business performance of small manufacturing firms: case-study evidence from Western New York

This paper investigates the role of university-based industrial extension services in the business performance of small manufacturing firms in an economically declining region of the United States (Western New York). The outreach initiatives of a specific University at Buffalo (UB) programme are described. Particular attention is given to the activities of UBs Centre for Industrial Effectiveness (CIE), an outreach unit with a mandate to improve the product and/or process development efforts of local manufacturing firms. Our data suggest positive returns on investment for firms that have sought technical support under CIE programmes. A key finding is that CIEs services typically entail the transmission of well-established procedures rather than radically new ways of doing things. A further finding is that firms that have used CIE to develop improved products have experienced stronger investment returns than their counterparts that have focused upon process development (although the returns are positive in both instances). More broadly, our data suggest positive correlations between levels of project investment and a variety of commercial outcomes, including sales growth, job-retention, and unit-cost reduction. The implications of these results for regional economic development policy are discussed. The paper also reviews some of the weaknesses that curtail the effectiveness of university-based centres such as CIE.

U.S. Foreign Direct Investment in the London Legal Market: An Empirical Analysis

This article examines the nature and timing of U.S. foreign direct investment (FDI) in the London legal market. Evidence from a survey of thirty–eight U.S. subsidiaries suggests that FDI has taken place primarily to serve U.S. clients located within the United Kingdom. The evidence also suggests that early investors (pre–1990) belong to a core group of multinational companies with headquarters located in first–tier U.S. cities (New York, Chicago, Los Angeles). Later investors more typically hail from smaller cities. The evidence reveals a number of important differences between early versus late investors. Specifically, subsidiaries that were established prior to 1990 are more likely to enjoy local decision–making autonomy than are their counterparts that entered the London market more recently. The article concludes with a brief discussion of the implications of the survey findings for future research on FDI in professional services.

Regional Differences in the Competitive Characteristics of U.S. Machine Tool Companies

The U.S. machine tool (MT) sector has undergone substantial restructuring over the past three decades. Despite signs of a commercial rebound in recent years, however, a number of critical issues remain for this industry. Not all firms share these concerns, in that differences exist between producers located in the core manufacturing belt and those located elsewhere. This paper examines the characteristics, competitive problems, and markets of firms located in these two regions. Survey data from a sample of 104 machine tool companies reveal that significant core–periphery differences exist with regard to firm–specific difficulties and markets served. The data also show that firms in the periphery have been growing significantly faster than firms in the core. The paper concludes with a discussion of the likely reasons for regional variability in the characteristics of firms in this industry. Directions for future research are also suggested, notably with regard to the interplay between national regulatory conditions and the competitive performance of MT firms.

INDUSTRIAL INNOVATION AND TECHNICAL SERVICE LINKAGES: EMPIRICAL EVIDENCE FROM TORONTO

This paper focuses on some of the main technological associations which exist between small manufacturing firms and specialist units in the producer services. It is argued that knowledge-intensive inputs from external consultants play a major enabling role in local industrial innovation. Empirical evidence from a stratified sample of Toronto manufacturers is used to illustrate the scale, nature, and effects of current linkage arrangements. Survey data are presented which indicate that small industrial firms deliver substantial streams of income to local consultants. A major finding of the survey is that technical service inputs assist the export and innovation objectives of small Toronto firms.

Stock Returns and Geographic Innovation Index

Using surveys, on-site interviews of approximately 225 publicly-traded pharmaceutical firms in the United States, and a matching dataset with 42,849 observations of pharmaceutical patent citations, we combine both quantitative and qualitative research methods to investigate the relations between geographic proximity to innovation resources and stock returns. We develop a geographic innovation index to capture the key geographic factors that might have a positive impact on the firms knowledge creation. We then examine the stock investment performance in terms of risk-adjusted returns for companies that have greater proximity to geographic innovation resources versus those companies that have less proximity to geographic innovation resources. We find that investments in companies with greater proximity to geographic innovation resources tend to achieve better risk-adjusted returns in the stock markets.