No great shock

New ESRC-backed research from Michael Kitson and David Primost, comparing the reactions to macroeconomic shocks in the technology and research-intensive biotech and aerospace industries. For the younger biotech sector, it's no surprise to anyone who's been following the VC market over the past few years:
'To generate new finance, many biotechnology firms tried to increase revenues streams, improve efficiency and many altered their business models. Venture capitalists were, however, stymied by a lack of exit routes for their investments so they only continued to finance firms with technologies in the later stages of development - and therefore closer to market. This caused some firms to drop technology in its early stages - technology that could in the longer term have made a significant contribution to economic growth.'

The more mature aerospace industry meanwhile shows more resilience:
'There was a strong awareness of business cycles and macroeconomic changes. To avoid vulnerability, portfolios of activities driven by different business cycles were developed, and risks were reduced by changing sources of revenue from high value equipment, to an emphasis on after market service and sales. Many made a ‘virtue of necessity’ in response to world events and pushed through organisational changes such as, reducing excess capacity post 9/11. In addition, the global crisis in aviation was used as an opportunity to implement process improvements and rationalise supply chains.'

Full press release here.