Financial crisis and the relative productivity dynamics of the biotechnology industry: Evidence from the Asia-Pacific countries
Yung-Hsiang Lu, Shun-Ching Wang, Chih-Hung Yuanhttps://doi.org/10.17221/223/2015-AGRICECONCitation:Lu Y., Wang S., Yuan C. (2017): Financial crisis and the relative productivity dynamics of the biotechnology industry: Evidence from the Asia-Pacific countries. Agric. Econ. – Czech, 63: 65-79.
The dynamics of the corporate-level performance growth can reflect the pattern of the firms’ reaction at the financial crisis moment. We employed the generalized metafrontier Malmquist productivity index to measure the impact of the financial crisis on the productivity of the biotechnology industry by using 68 biotechnology firms in the Asia-Pacific countries during 2001–2009. The empirical results showed that the financial crisis did not significantly impact productivity changes in the biotechnology industry in the Asia-Pacific region. This was primarily due to the improvements in efficiencies of scale and factor inputs reducing the overall impact. We observed a significant decreasing trend for technical changes in developed countries after the financial crisis. Therefore, how corporations enhance their technical innovation ability is relatively critical. The technological catch-up, the potential technological relative change, and the change in technical efficiency in less-developed countries were poor after the financial crisis. This suggests that less-developed countries should improve their technical and efficiency levels to enhance productivity.Keywords:
Asia-Pacific, biotechnology, catch-up, generalized metafrontier Malmquist productivity indexReferences:
APCO Worldwide (2010): China’s 12th Five-Year Plan Beijing. Available at https://www.scribd.com/document/210684655/Chinas-12th-Five-Year-PlanBarrett C., Musso C., Padhi A. (2010): R&D after the crisis: McKinsey global survey results. Available at http://www.mckinsey.com/insights/operations/r_and_38d_after_the_crisis_mckinsey_global_survey_resultsBattese G. E., Coelli T. J. (1995): A model for technical inefficiency effects in a stochastic frontier production function for panel data. Empirical Economics, 20, 325-332 https://doi.org/10.1007/BF01205442Battese George E., Rao D. S. Prasada, O’Donnell Christopher J. (2004): A Metafrontier Production Function for Estimation of Technical Efficiencies and Technology Gaps for Firms Operating Under Different Technologies. Journal of Productivity Analysis, 21, 91-103 https://doi.org/10.1023/B:PROD.0000012454.06094.29Cao Qian, Lv Jinfeng, Zhang Jun (2015): Productivity efficiency analysis of the airlines in China after deregulation. Journal of Air Transport Management, 42, 135-140 https://doi.org/10.1016/j.jairtraman.2014.09.009BOON A (2005): Focus on biotechnology in Australia. Drug Discovery Today, 10, 85-88 https://doi.org/10.1016/S1359-6446(04)03355-0Caves D.W., Christensen L.R., Diewert W.E. (1982a): The economic theory of index numbers and the measurement of input, output and productivity. Econometrica, 50, 1393–1414.Caves D.W., Christensen L.R., Diewert W.E. (1982b): Multilateral comparisons of output, input, and productivity using superlative index numbers. Economic Journal, 92: 73–86.Chang Dong-Shang, Chen Yi-Tui, Chen Wen-Den (2009): The exogenous factors affecting the cost efficiency of power generation. Energy Policy, 37, 5540-5545 https://doi.org/10.1016/j.enpol.2009.08.018Chen K.H., Yang H.Y. (2008): Extensions of metafrontier Malmquist productivity index: an empirical study with cross-country macro-data. Taiwan Economic Review, 36: 551–588.Chen Mei Fang, Hu Jin Li, Ding Cherng G. (2005): Efficiency and productivity of Taiwan's biotech industry. International Journal of Biotechnology, 7, 307- https://doi.org/10.1504/IJBT.2005.007632Chiu Y.H., Hu J.L., Tsao C.L. (2003): Cost efficiency of biotech firms in Taiwan. Agriculture and Economics, 31: 55–78.Chuang Y.C., Hsu B.F. (1999): Productivity, rand, and intra- and inter-industry spillovers in Taiwan’s manufacturing industry. Academia Economics Papers, 27: 407–432.Curi Claudia, Lozano-Vivas Ana (2015): Financial center productivity and innovation prior to and during the financial crisis. Journal of Productivity Analysis, 43, 351-365 https://doi.org/10.1007/s11123-015-0434-2Danzon P.M., Nicholson S., Pereira N.S. (2005): Productivity in pharmaceutical–biotechnology R&D: the role of experience and alliances. Journal of Health Economics, 24: 317–339.Development Centre for Biotechnology (2008, 2009, 2010): Biotechnology Industry in Taiwan. Industrial Development Bureau, Ministry of Economic Affairs, Taipei.Dietsch Michel, Lozano-Vivas Ana (2000): How the environment determines banking efficiency: A comparison between French and Spanish industries. Journal of Banking & Finance, 24, 985-1004 https://doi.org/10.1016/S0378-4266(99)00115-6Diewert W.E. (1976): Exact and superlative index numbers. Journal of Econometrics, 4, 115-145 https://doi.org/10.1016/0304-4076(76)90009-9Duchin Ran, Ozbas Oguzhan, Sensoy Berk A. (2010): Costly external finance, corporate investment, and the subprime mortgage credit crisis. Journal of Financial Economics, 97, 418-435 https://doi.org/10.1016/j.jfineco.2009.12.008Ernst & Young (2013): Biotechnology Industry Report 2013. Available at http://www.ey.com/gl/en/industries/life-sciences/beyond-borders-matters-of-evidence-biotechnology-industry-report-2013---point-of-view-matters-of-evidenceFäre R., Grosskopf S., Norris M., Zhang Z. (1994): Productivity growth, technical progress, and efficiency change in industrialized countries. American Economic Review, 84: 66–83.Färe R, Grosskopf S, Roos P (1995): Productivity and quality changes in Swedish pharmacies. International Journal of Production Economics, 39, 137-144 https://doi.org/10.1016/0925-5273(94)00063-GFried H.O., Schmidt, S. S., Yaisawarng, S. (1999): Incorporating the operating environment into a nonparametric measure of technical efficiency. Journal of Productivity Analysis, 12: 249–267.https://doi.org/10.1023/A:1007800306752González Eduardo, Gascón Fernando (2004): Sources of productivity growth in the Spanish pharmaceutical industry (1994–2000). Research Policy, 33, 735-745 https://doi.org/10.1016/j.respol.2003.12.004Gupta Abhishek, Pawar Kulwant S., Smart Palie (2007): New product development in the pharmaceutical and telecommunication industries: A comparative study. International Journal of Production Economics, 106, 41-60 https://doi.org/10.1016/j.ijpe.2006.04.008Hashimoto, A. Haneda S. (2008): Measuring the change in R&D efficiency of the Japanese pharmaceutical industry. Research Policy, 37: 1829–1836.Hu Jin-Li, Chiu Chia-Ning, Shieh Hwai-Shuh, Huang Chia-Hui (2010): A stochastic cost efficiency analysis of international tourist hotels in Taiwan. International Journal of Hospitality Management, 29, 99-107 https://doi.org/10.1016/j.ijhm.2009.06.005Huang Jikun, Hu Ruifa, van Meijl Hans, van Tongeren Frank (2004): Biotechnology boosts to crop productivity in China: trade and welfare implications. Journal of Development Economics, 75, 27-54 https://doi.org/10.1016/j.jdeveco.2003.07.005Huang Yi-Ju, Chen Ku-Hsieh, Yang Chih-Hai (2010): Cost efficiency and optimal scale of electricity distribution firms in Taiwan: An application of metafrontier analysis. Energy Economics, 32, 15-23 https://doi.org/10.1016/j.eneco.2009.03.005Hung Shiu-Wan, Lu Wen-Min, Wang Tung-Pao (2010): Benchmarking the operating efficiency of Asia container ports. European Journal of Operational Research, 203, 706-713 https://doi.org/10.1016/j.ejor.2009.09.005Isik Ihsan, Hassan M.Kabir (2003): Financial disruption and bank productivity: The 1994 experience of Turkish banks. The Quarterly Review of Economics and Finance, 43, 291-320 https://doi.org/10.1016/S1062-9769(02)00194-1Iyer K., Rambaldi A.N., Tang K.K. (2006): Globalisation and the technology gap: regional and time evidence. In: Svizzero S., Aurifeille J.M., Tisdell C. (eds.): Leading Economic and Managerial Issues Involving Globalisation. Nova Science Publishers, New York: 213–227.Jongsthapongpanth Annitra, Bagchi-Sen Sharmistha (2007): US-Asia Interdependencies: A Study of Business and Knowledge Links. Journal of the Asia Pacific Economy, 12, 215-249 https://doi.org/10.1080/13547860701252546Liang S.-K., Jiang J.-L., Lai C.-T. (2008): Effects of integrative strategies on the production efficiency of biotech firms: a data envelopment analysis. International Journal of Management, 25: 140–148,199.Yu-Ying Lin Eugene, Chen Ping-Yu, Chen Chi-Chung (2013): Measuring green productivity of country: A generlized metafrontier Malmquist productivity index approach. Energy, 55, 340-353 https://doi.org/10.1016/j.energy.2013.03.055Löthgren Mickael, Tambour Magnus (1999): Productivity and customer satisfaction in Swedish pharmacies: A DEA network model. European Journal of Operational Research, 115, 449-458 https://doi.org/10.1016/S0377-2217(98)00177-5Lu L.-T. (2015): Performance and efficiency evaluations of international hotels in Taipei. International Journal of Economics and Finance, 7: 64–73.Chen Ku-Hsieh, Chen K.-H., Wu C.-C. (): Cross-country analysis of efficiency and productivity in the biotech industry: an application of the generalized metafrontier Malmquist productivity index. Agricultural Economics (Zemědělská ekonomika), 61, 116-134 https://doi.org/10.17221/75/2014-AGRICECONMeng Q., Jia L. (2011): Research on total factor productivity of Shanghai services and its influence factors. Paper presented at the IET International Conference on Smart and Sustainable City, Shanghai, July, 6–8, 2011.Moon Sunung, Jeon Yongil (2009): How valid are long-term government plans? Technological forecasting of the Korean biotechnology industry. Journal of Policy Modeling, 31, 891-902 https://doi.org/10.1016/j.jpolmod.2009.08.007O’Donnell Christopher J., Rao D. S. Prasada, Battese George E. (2008): Metafrontier frameworks for the study of firm-level efficiencies and technology ratios. Empirical Economics, 34, 231-255 https://doi.org/10.1007/s00181-007-0119-4Orea L. (2002): Parametric decomposition of a generalized Malmquist productivity index. Journal of Productivity Analysis, 18: 5–22.https://doi.org/10.1023/A:1015793325292Pasiouras Fotios, Tanna Sailesh, Zopounidis Constantin (2009): The impact of banking regulations on banks' cost and profit efficiency: Cross-country evidence. International Review of Financial Analysis, 18, 294-302 https://doi.org/10.1016/j.irfa.2009.07.003Pedroso Marcelo Caldeira, Nakano Davi (2009): Knowledge and information flows in supply chains: A study on pharmaceutical companies. International Journal of Production Economics, 122, 376-384 https://doi.org/10.1016/j.ijpe.2009.06.012Rao D.S.P. (2006): Metafrontier frameworks for the study of firm-level efficiencies and technology gaps. Paper presented at the Productivity and Efficiency Seminar, Taipei, March 10, 2006.Rhee Keun Hee, Pyo Hak K. (2010): Financial crisis and relative productivity dynamics in Korea: evidence from firm-level data (1992–2003). Journal of Productivity Analysis, 34, 111-131 https://doi.org/10.1007/s11123-010-0177-zRothaermel Frank T., Thursby Marie (2007): The nanotech versus the biotech revolution: Sources of productivity in incumbent firm research. Research Policy, 36, 832-849 https://doi.org/10.1016/j.respol.2007.02.008Samut P.P., Cafrı R. (2015): Analysis of the efficiency determinants of health systems in OECD countries by DEA and panel Tobit. Social Indicators Research, 129: 1–20.Saranga H (): Multiple objective data envelopment analysis as applied to the Indian Pharmaceutical Industry. Journal of the Operational Research Society, 58, 1480-1493 https://doi.org/10.1057/palgrave.jors.2602280Sheng T.-C., Liu K.-P., Yang Y.-L. (2012): Estimating the three-stage cost Malmquist productivity index in the Taiwan biotech and biopharmaceutical industry. Journal of Modern Accounting and Auditing, 8: 679–687.Staikouras Christos, Mamatzakis Emmanuel, Koutsomanoli-Filippaki Anastasia (2008): Cost efficiency of the banking industry in the South Eastern European region. Journal of International Financial Markets, Institutions and Money, 18, 483-497 https://doi.org/10.1016/j.intfin.2007.07.003Thoraneenitiyan Nakhun, Avkiran Necmi K. (2009): Measuring the impact of restructuring and country-specific factors on the efficiency of post-crisis East Asian banking systems: Integrating DEA with SFA. Socio-Economic Planning Sciences, 43, 240-252 https://doi.org/10.1016/j.seps.2008.12.002Tsai K.-H., Wang J.-C. (2004): R&D productivity and the spillover effects of high-tech industry on the traditional manufacturing sector: the case of Taiwan. World Economy, 27: 1555–1570.Wang C.-N., Chang Y.-L., Huang Q.-H., Wang C.-H. (2011): Assessment on intellectual capital management for Taiwanese pharmaceutical industry: using GRA and MPI. African Journal of Business Management, 5: 2950–2958.Watkinson Nicola (2008): Australia – the premier Asia-Pacific hub for biotech investment. Drug Discovery Today, 13, 192-197 https://doi.org/10.1016/j.drudis.2008.01.007Yang C.H., Chen J.R. (2002): R&D, patents and productivity – evidence from Taiwanese manufacturing firms. Taiwan Economic Review, 30: 27–48.Yang C.H., Chen K.H. (2009): Are small firms less efficient? Small Business Economics, 32: 375–395.