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

Author

Listed:
  • Vigdis Boasson

    (Ithaca College)

  • Alan MacPherson

    (State University of New York at Buffalo)

  • Hyun-Han Shin

    (Yonsei University, Seoul, Korea)

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, 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.

Suggested Citation

  • Vigdis Boasson & Alan MacPherson & Hyun-Han Shin, 2005. "Firm Value and Geographic Competitive Advantage: Evidence from the U.S. Pharmaceutical Industry," The Journal of Business, University of Chicago Press, vol. 78(6), pages 2465-2495, November.
    • Handle: RePEc:ucp:jnlbus:v:78:y:2005:i:6:p:2465-2464
    DOI: 10.1086/497038
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    Citations

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    Cited by:

    1. J. Knoben, 2009. "Localized inter-organizational linkages, agglomeration effects, and the innovative performance of firms," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(3), pages 757-779, September.
    2. Brache, Jose & Felzensztein, Christian, 2019. "Geographical co-location on Chilean SME's export performance," Journal of Business Research, Elsevier, vol. 105(C), pages 310-321.
    3. Fernhaber, Stephanie A. & Li, Dan, 2013. "International exposure through network relationships: Implications for new venture internationalization," Journal of Business Venturing, Elsevier, vol. 28(2), pages 316-334.
    4. Manuel A. Espitia Escuer & Lucia I. Garcia Cebrian & Antonio Munoz Porcar, 2011. "Las Caracteristicas De Las Empresas Como Factores Determinantes En Su Localizacion," Revista Internacional Administracion & Finanzas, The Institute for Business and Finance Research, vol. 4(3), pages 99-111.
    5. O. V. Kuznetsova & R. O. Bobrovsky, 2022. "Location of the Largest Pharmaceutical Companies in Russia: Contribution to Regional Divergence or Convergence?," Regional Research of Russia, Springer, vol. 12(2), pages 124-132, June.
    6. Lee, Chang-Yang, 2018. "Geographical clustering and firm growth: Differential growth performance among clustered firms," Research Policy, Elsevier, vol. 47(6), pages 1173-1184.

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