Developing Capabilities: An Analysis of Biotechnology in two Regions in Australia and Sweden

Abstract

This article analyses whether regions develop capabilities in terms of scientific, technological and business activities within specific biotechnology areas. We take a broad definition of biotechnology, and identify four industry areas: (1) core biotechnology; (2) drugs; (3) medical technologies; (4) agriculture. Capabilities and specialization-diversification are analysed for the regions of Gothenburg in western Sweden, and Brisbane in Queensland, Australia, for the period 1997–2001. These regions are relatively ordinary, and not well-studied, biotech mega-centres. The results suggest there are positive feedback mechanisms that occur in co-located activities developing regional capabilities. Regional success within biotechnology, then, is related to the existence of all or most of the different value adding activities within a sector, as well as being reasonably diversified within related sectors. This is true for all measured industry areas, although regional capability development within core biotechnology shows signs of a relatively more disruptive pattern.

Acknowledgements

This project was carried out in association with the RIDE research centre at the Department of Technology Management and Economics, Chalmers University of Technology, under the auspices of IMIT. The authors would like to acknowledge the financial support from the project “The Economic Dynamics of Knowledge in the Bio-Sciences” financed by VINNOVA and strategic money from the Vice-Chancellor of Chalmers University of Technology. They also thank three anonymous reviewers, Lars Coenen, Mark Lorenzen, Vincent Mangematin, Annika Rickne and seminar participants at the workshops in Turin and Gothenburg for useful comments on earlier drafts. The usual caveats apply.

Notes

1. Hence, describing a trajectory as moving towards “less efficient” technological choices relies on an understanding that technological choices and selections are frequently determined by the interplay between technological and social levels. Institutions may mould economic behaviour into social and institutional structures, which give “first mover advantage” to some technical solutions and thus to some regions.

2. Within that set, each of the activities can be classified as relatively more regional, national and/or global (Dahlander & McKelvey, 2005). The extent to which different types of activities are relatively more one or an other, or several simultaneously, is an empirical question.

3. By regions, we mean the area that includes a main metropolitan area and the hinterland of the city, thus corresponding with work in the diversification varsus specialization debate.

4. The definition and the five categories were developed in ad hoc meetings. They can be found explicitly on the OECD homepage under “definition of biotechnology” and under electronic documents. The OECD (2001a) document that resulted from these meetings does not include this exact wording, but it is based on these discussions.

5. Agriculture is defined as various non-medical applications of biological knowledge within sectors such as forestry, pulp and paper, food technologies and environmental technologies.

6. See, for example, some chapters in Senker (1998).

7. This group drew on the expertise within the relevant science and engineering disciplines, and on the assistance of one of the authors who has an MSc in Bioengineering.

8. Expanding this category of medicinal across the search activities was rejected as patents are unavailable in medicinal, and clinical practices and new activities are realized without the foundation of private firms, especially within the Swedish institutional context.

9. The starting-point of 1977 was chosen partially for data availability reasons, but also based on the establishment and initial impact of modern biotechnology in the mid-1970s as a result of the breakthrough research by Cohen and Boyer in 1973 and Kohler and Millstein in 1975.

10. The tradition of paper publication in the scientific community makes bibliometric study suited to the measurement of scientific activities. Clearly, a large part of the R&D activity inside private firms is not made public through journals, although firms do publish, especially in biotechnology related disciplines. The bibliometric study revealed that much basic research activity was occurring at universities, institutes and in university–industry collaborations. The dataset used was the ISI Web of Knowledge database provided by Thompson Scientific.

11. As with publications and citations, patents are an accepted indicator of technological knowledge, or at least of technological activities. Patents are a time-limited monopoly awarded to the owner. A patent has to be novel to the world and reflect technological activities. The USPTO database is often used as a type of global indicator of technological activities. Given the cost and resources for a non-US based inventor to apply for an American patent, the assumption is that such applications represent somewhat more major and/or more commercializable ideas from non-American inventors (Pavitt, 1985; Soete & Wyatt, 1983)

12. Business activities were measured through a new database of all relevant firms in the regions. As with publications/citations and patents, company data are a traditionally used measure of industrial activities. Some analyses focus mainly on start-up firms while others analyse the overall activities within an industrial sector, based on existing firms, exits and entries (Suarez & Utterback, 1995). The authors compiled data about each firm in each region. The inclusion criterion for our database was at least one employee and some kind of biotechnology related R&D within the firm. It is not possible to access business activities from comprehensive and internationally comparable data gathered by a third party nor is it comparable with a global average. Therefore, to measure business activities the authors built a new database, to include all firms in the four fields and regions that existed in 2001, and which entered the categories in the past 25 years.

13. Naturally, classification of journals, patents and firms depends on judgments and evaluation, but Brink et al. (2004) argue that the methodology presented here develops non-overlapping indicators as well as reasonable judgment for each classification.

14. International comparisons also suggest that differences in patenting activity across countries occur, e.g. the Japanese propensity to patent is higher than that of other countries in many industries. This implies that RSA and RTA need to be complemented with the absolute number of outputs in each region.

15. During the 25 year period we observed, both these national contexts have changed. The Australian economy and institutional system has undergone drastic changes and several economic reforms since 1983 (Kelly, 1992). These changes include the lowering of trade protection, introduction of mandatory superannuation and expansion of the education and healthcare/welfare systems. The Swedish economy since the beginning of the 1990s has also experienced institutional and industrial changes such as membership in the European Union, change to a floating currency, restructuring of pension systems and reduction of employment opportunities in the manufacturing industries.

16. The two countries represent rather well developed “wealthfare” systems, although, in principle, they are very different (Castles & Brennan, 2002).

17. OECD (2001a) argues that in the OECD countries, the “absolute number of USPTO and EPO [European Patent Office] biotechnology patents has grown substantially compared to the total number of patents in the period 1990 to 2000”. For our study this is only true for the Brisbane region.

Additional information

Notes on contributors

Maureen Mckelvey

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