IngentaConnect The Competencies of Regions - Canada's Clusters in Biotechnology

Abstract:

Knowledge-intensive industries tend to concentrate geographically, because of the many spillovers that they generate. Thus new biotechnology firms often set up in regions that have innovative firms, government laboratories and universities, which attract them to enter. In this paper we unveil some of the characteristics of Canadian clusters in biotechnology: the key regions, their relative importance, and the main firms and government laboratories that attract new entrants. Moreover, we develop the concept of regions as nexus of competencies, a notion already put forward for firms, but that may be relevant to regions within nations and, ultimately, to nations as well. Capabilities of organizations and regions vary, and a thorough study of organizational and regional capabilities should precede the analysis of knowledge spillovers.

Toronto is the main center of biotechnology in Canada, followed by Montreal, and Vancouver. The total population of the metropolitan area (a proxy for immediate market size and venture capital) explains the size, location and characteristics of most Canadian clusters. University research is also a key factor explaining the size of the biotechnology clusters, once population is held constant.

Within nations, scientific and technical competencies vary strongly among regions. Some regions within countries concentrate a disproportionate share of the capabilities of all developed and developing nations. Moreover, regions tend to concentrate competencies on a few domains of expertise. This is what literature calls "agglomeration effects": companies active in the same field of technology tend to cluster geographically. They do so in order to share a common labor pool, and to obtain ready access to research institutions such as government laboratories and universities, or to key markets and customers, such as large assemblers or government facilities (Feldman et al., 1999). The specialized literature calls these institutions and key markets/customers "entry attractors" (Swan et al., 1998).

In many types of science-based industries (SBIs), such as biotechnology, information technology and advanced materials, the major attractors are universities and government laboratories. In a few more mature SBIs, including aerospace and aircraft, large assemblers tend to naturally attract smaller producers of, components and specialized software.

In this respect Canada is similar, to other nations (Niosi, 2000). Its competencies cluster around a few large and medium-sized urban agglomerations, such as Toronto, Montreal, Vancouver, Ottawa, Edmonton, and Calgary. Specialized clusters have also developed around smaller cities. This study builds a theory of the competencies of regions using biotechnology as a case study. Government laboratories, as well as universities and a few large firms, attract entry. The goal of the paper is to examine – using quantitative data – the relative competencies of regions in biotechnology, and the role of NRC laboratories and university research.

The Competencies of Regions – Canada's Clusters in Biotechnology