Cluster Performance Reconsidered: Structure, Linkages and Paths in the German Biotechnology Industry, 1996–2003

Abstract

We examine the evolution of biotechnology clusters in germany between 1996 and 2003, paying particular attention to their composition in terms of venture capital, basic science institutions, and biotechnology firms. drawing upon the significance of co-location of "money and ideas", the literature stressing the importance of a cluster's openness and external linkages, and the path dependency debate, we analyze how certain cluster characteristics correspond with each cluster's overall performance. after defining different cluster types, we explore and compare the clusters' internal and external interconnectivity, and investigate the extent to which the clusters' structural composition has changed over time. our results indicate that the structure, i.e., the type of cluster, and the cluster's openness towards receiving external knowledge provide merely unsystematic indications of a cluster's overall success. the cluster's ability to modify its composition to a more balanced ratio of science and capital over time, in contrast, turns out to be a key explanatory factor. Jel-classification: l22, o18, o32.

The diminishing signaling value of patents between early rounds of venture capital financing

“…A popular investment target for VCFs is young firms in high technology areas such as biotechnology. These firms offer investors a potential for high returns (Carpenter and Petersen, 2002) but also high risk as they grapple with highly complex scientific problems associated long research cycles and challenging legal environments (DiMasi and Grabowski, 2007;Häussler and Zademach, 2007). Because of such conditions and because of their young age, firms in such sectors may find it difficult to generate current cash flows or establish a record of future cash flows.…”

Pathways to Success: The Interplay of Industry and Venture Capital Clusters in Entrepreneurial Company Exits

“…Specialization in certain technologies can increase local bias (Chen et al 2010). Others highlight the imbalance between ideas and money, emphasizing the need for co-location (Häussler and Zademach 2007). Overall, existing literature focuses extensively on the physical distance between startups and their financial backers.…”

Effect of Financial Clusters on Startup Mergers and Acquisitions

“…Cumming and Dai (2011) found that more experienced VCs have shown less local bias due to their larger networks although specialization in technology areas tended to increase local bias. Häussler and Zademach (2007)examined cluster performance and suggested that money and ideas co-locate. Hochberg et al (2010) indicate that VCs with strong local networks restrict entry by other VCs from outside the area.…”

“…We isolate the effect of the VC vs a startup being in a VC Cluster (financing clusters) by testing the effect of each on the exit success separately. Various studies have shown that startup firms co-locate with VC investor and that helps to improve the probability of successful exit (Häussler and Zademach 2007;Kolympiris et al 2011). While on other hand Chen et al (2010) document that wellestablished VCs also invest non-locally and some of the most successful investments are the non-local ones.…”