Prefirm Activities within the Life Science Sector

Abstract

The author examines prefirm activities and firm formation within a subset of the life science sector, namely firms with a core competence in biocompatible materials. In particular, the author scrutinises whether or not prefirm activities are spatially confined, and which mechanisms are involved in such firm-formation processes. Resting the analysis on the empirical example of firms located in Sweden, Ohio, and Massachusetts, the findings indicate that, even though international components are important, the process of firm formation is indeed a geographically delimited activity. In this, experimentation is essential, the direction and volume of the science base may have large impacts, and structural characteristics in the geographical setting are important. The discussion centres on how to spur clustering of firm formation as opposed to mere colocation of new units, where mechanisms include organisational concentration, application interrelatedness, and a spatially confined search process. The firms in the three regions differ: between the firms in Sweden and Massachusetts there are synergies due to geographical proximity and interdependence, knowledge spillovers, and encouragement of innovation within the group of firms, whereas this is not the case in Ohio. Indeed, in Ohio, the mechanisms which are important in creating an innovative cluster do not seem to be as effective.