COMPETITIVE ADVANTAGES FROM IN-HOUSE SCIENTIFIC-RESEARCH - THE UNITED-STATES PHARMACEUTICAL-INDUSTRY IN THE 1980S

The public nature of science may lead to the simplistic conclusion that firms can at no cost avail of the scientific knowledge generated by academia or other non-profit institutions. This paper offers empirical evidence that in-house scientific research raises the ability of the firms to take advantage of "public" science. Case studies of a few large US drug manufacturers show that firms with better in-house scientific research programs have exploited more effectively outside scientific information. Statistical analysis reinforces this conclusion. Using data on the 14 largest US-based drug manufacturers between 1973 and 1986, I find that company patents are positively correlated with the scientific publications of the firms even after controlling for the scale of R&D.