AGRAWAL, MADHU; PHD

                         MICHIGAN STATE UNIVERSITY, 1995

                         BUSINESS ADMINISTRATION, MARKETING (0338); HEALTH SCIENCES, PHARMACY (0572);
                         BUSINESS ADMINISTRATION, MANAGEMENT (0454)
 

                         This study presents a theoretical and empirical investigation of the determinants of global competitive
                         advantage in the ethical pharmaceutical industry. Two major research questions investigated in the study
                         are: (1) Which country factors stimulate or inhibit a nation's pharmaceutical industry to be globally
                         innovative? and (2) Which country factors stimulate or inhibit diffusion of pharmaceutical innovations into
                         its markets? The motivation for doing the study derives from the growing concern in the past decade
                         regarding national competitiveness issues in the new global economy. The global pharmaceutical
                         industry is especially suitable for examination of country factors that affect competitiveness. Two path
                         models - the Global Innovation Model (GIM) and the Global Diffusion Model (GDM) were tested using EQS
                         - a structural equation modeling program on the mainframe. Data was obtained from secondary sources,
                         mainly from the Scrip League Tables and United Nations publications. A sample of twenty-seven
                         countries was used in the analysis. Besides a review of the literature, talks with industry experts and
                         responses from a small-scale industry survey were also used as inputs in the study design. Several
                         significant results were obtained. A country's economic, regulatory and market/industry environments
                         were found to have significant effects on the ability of the industry to innovate. Diffusion was found to be
                         significantly related to a country's environment for innovation. Industrialized and Developing countries
                         were found to differ significantly with respect to the effects of various factors affecting competitiveness of
                         the pharmaceutical industries in those countries. The study makes several contributions to the
                         theoretical, empirical, managerial and public policy literature on global competitiveness; competitiveness
                         in the pharmaceutical industry; economic development issues; and global strategic management issues.

Social Systems Simulation Group P.O. Box 6904 San Diego, CA  92166-0904 Roland Werner, Principal Phone/FAX  (619) 660-1603