Author:

Keywords:

Basic Research, Industrial Innovation, Pharmaceutical Industry

Abstract:

This paper evaluates the impact of basic research on the technological performance of firms. We improve on existing research by distinguishing between, and jointly analyzing, self-performed basic research (internal basic research) and the exploitation of external basic research findings (external basic research) in firms’ technology activities. We hypothesize that firms that engage in internal basic research increase their technological performance, in particular when these activities are undertaken in collaboration with universities. In addition, a positive impact of the exploitation of external basic research findings is expected. Finally, we argue that internal basic research and the usage of external basic research are complementary activities in the sense that internal basic research provides firms with the skills and methods to exploit external basic research more effectively in their technology activities. Using improved measures for internal and external basic research, we find empirical support for all these hypotheses in a fixed-effect panel data (1995-2002) analysis of the patent and publication activities of 33 of the largest R&D spending American, European and Japanese pharmaceutical firms in the world.