TY - JOUR AU - Zucker,Lynne G. AU - Darby,Michael R. AU - Armstrong,Jeff TI - Intellectual Capital and the Firm: The Technology of Geographically Localized Knowledge Spillovers JF - National Bureau of Economic Research Working Paper Series VL - No. 4946 PY - 1999 Y2 - April 1999 UR - http://www.nber.org/papers/w4946 L1 - http://www.nber.org/papers/w4946.pdf N1 - Author contact info: Lynne G. Zucker Departments of Sociology & Public Policy UCLA Box 951551 Los Angeles, CA 90095-1551 Tel: 310/825-9155 Fax: 310/454-2748 E-Mail: zucker@ucla.edu Michael R. Darby John E. Anderson Graduate School of Management University of California, Los Angeles 110 Westwood Plaza, Box 951481 Los Angeles, CA 90095-1481 Tel: 310/825-4180 Fax: 310/454-2748 E-Mail: michael.r.darby@anderson.ucla.edu AB - We examine the effects of university-based star scientists on three measures of performance for California biotechnology enterprises: the number of products in development, the number of products on the market, and changes in employment. The `star' concept which Zucker, Darby, and Brewer (1994) demonstrated was important for birth of U.S. biotechnology enterprises also predicts geographically localized knowledge spillovers at least for products in development. However, when we break down university stars into those who have collaborated on publications with scientists affiliated with the firm and all other university stars, there is a strong positive effect of the linked stars on all three firm-performance measures and little or no evidence of an effect from the other university stars. We develop a new hypothesis of geographically localized effects of university research which is consistent with market exchange: Geographically localized effects occur for scientific discoveries characterized by natural excludability, those which can be learned only by working with discoverers or others who have received the knowledge through working together in the laboratory. Natural excludability results in intellectual capital, a transitory form of human capital, embodied in particular scientists whose services must be employed in order to practice the discovery. Contractual and/or ownership relationships occur between firms and the university scientists with intellectual capital and importantly determine firm productivity and growth. ER -