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One Political Economy, One Competitive Strategy?Comparing Pharmaceutical Firms in Germany, Italy, and the UK$
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Andrea M. Herrmann

Print publication date: 2008

Print ISBN-13: 9780199543434

Published to Oxford Scholarship Online: January 2009

DOI: 10.1093/acprof:oso/9780199543434.001.0001

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Linking Financial Market Institutions, Corporate Finance, and Competitive Strategies

Linking Financial Market Institutions, Corporate Finance, and Competitive Strategies

(p.55) 3 Linking Financial Market Institutions, Corporate Finance, and Competitive Strategies
One Political Economy, One Competitive Strategy?

Andrea M. Herrmann (Contributor Webpage)

Oxford University Press

This chapter analyses how firms can compete despite comparative disadvantages of national financial-market institutions. It first studies whether pharmaceutical firms in Germany, Italy, and the UK require different types of financing to pursue strategies of radical product innovation, incremental product innovation, and product imitation, respectively. Since quantitative analyses of corporate balance sheets show this to be the case, the chapter goes on to ask how firms can acquire the necessary financial means if their provision is limited by unfavourable national institutions. Illustrating how firms collaborate with foreign investors, it identifies international financial markets as a functional equivalent to national institutions promoting the availability of institutional (venture) capital. It concludes with reflections on how these findings contribute to the resource-based view and the competitiveness literature, and illustrates how a Schumpeterian perception of firms as creative entrepreneurs helps to explain how they compete despite comparative institutional disadvantages.

Keywords:   financing, innovation strategies, comparative disadvantages, functional equivalents, resource-based view, competitiveness theories, Schumpeter

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