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

Vigdis Boasson, Alan MacPherson and Hyun-Han Shin
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Vigdis Boasson: Ithaca College
Alan MacPherson: State University of New York at Buffalo
Hyun-Han Shin: Yonsei University, Seoul, Korea

The Journal of Business, 2005, vol. 78, issue 6, 2465-2495

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.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jnlbus:v:78:y:2005:i:6:p:2465-2464

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