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University of California, Irvine An Emergence of a Biotechnology Cluster: Knowledge, Practice and Culture of the San Diego Biotechnology Community DISSERTATION Submitted in partial satisfaction of the requirements of the degree of DOCTOR OF PHILOSOPHY in Planning, Policy and Design by Kim, Sang-Tae Dissertation Committee: Professor Scott A. Bollens, Chair Professor Martha S. Feldman Assistant professor Yan Gong 2011 © 2011 Sang-Tae Kim DEDICATION To my brother Sang-Sik, Who filled my heart and soul with wonder and love. ii TABLE OF CONTENTS LIST OF FIGURES v LIST OF TABLES vi ACKNOWLEDGEMENTS vii CURRICULUM VITAE ix ABSTRACT OF THE DISSERTATION xii CHAPTER 1: INTRODUCTION 1 CHAPTER 2: LITERATURE REVIEW 9 2-1. Industrial Districts: Ingredients and Development 10 2-2. Role of Research Universities in Formation of Industrial Clusters 20 2-2-1. Research Universities and Regional Economic Development 20 2-2-2. Mechanisms and Processes of Knowledge Transfer 26 2-2-3. Social Structures and Academia-Industry Interactions 31 2-3. Economic Activity and Knowledge Transfer as Embedded 35 Practices 2-4. Social Structures, Practices and Learning 46 CHAPTER 3: RESEARCH METHODOLOGY 59 3-1. Overview on Research Approach: Interpretive Study 59 3-2. Collecting and Analyzing Data 64 3-2-1. Archival Data 68 3-2-2. Semi-Structured Interviews 72 3-2-3. Field Observations 78 3-2-4. More Notes on Analysis and Writing 81 iii CHAPTER 4: GENESIS AND EVOLUTION OF THE COMMUNITY 85 4-1. Early Economic Landscape of the San Diego Region 85 4-2. From the Scripps Institution of Oceanography to UC San Diego 89 4-3. Expansion of Scientific Base on Mesa 96 4-4. The University Community Plan: Invention and Evolution of 102 Land Use Planning 4-5. Genesis of the Biotechnology Industry in San Diego 111 4-6. Coming of a New Perspective 121 4-7. CONNECT, the Organizer of Community 126 4-8. Growth of Biotechnology Industry in San Diego 135 CHAPTER 5: LEARNING IN COMMUNITIES 144 5-1. Practices of Biotechnology Entrepreneurship 145 5-2. Formations of Entrepreneurs’ Groups and Spin-offs 170 5-3. Learning to be Entrepreneurs 191 5-4. Creation of Resources by Learning and Practicing 218 5-4-1. Venture Capital Firms and Angel Investors 218 5-4-2.Specialized Services: Legal and PR Practitioners 224 5-4-3. Shaping a Culture of Collaboration 227 CHAPTER 6: DEVELOPING RELATIONSHIPS 238 6-1. Barriers to Knowledge Transfer 239 6-2. Institutions Governing Industry-University Relations 252 6-3. Historical Evolution of Industry-University Relations of UCSD 262 6-4. Development of Practices at Non-Profit Research Institutions 273 6-5. Building Understanding and Relationships 278 CHAPTER 7: THEORETICAL AND POLICY IMPLICATIONS 298 7-1. Contributions to the Literature 299 7-2. Policy Implications 305 INTERVIEWS CONDUCTED 313 REFERENCES 316 iv LIST OF FIGURES Page Figure 4-1. Military presence during World War II 88 Figure 4-2. Scripps Institution of Oceanography, 1911 91 Figure 4-3. Scientific and Research Zone in the 1983 plan 107 Figure 4-4. Scientific and Research Zone in the 1987 plan 108 Figure 4-5. Aerial view of research institutions on Torrey Pines Mesa 111 Figure 4-6. Unemployment rates of San Diego compared to the U.S. 138 Figure 4-7. Historical changes of per capita personal income compared to 141 California Figure 4-8. Locations of biotechnology companies in San Diego 143 Figure 5-1. Partners and collaborators for biotechnology business 164 Figure 5-2. Spin-offs of Hybritech 172 Figure 5-3. Developing knowledge and practices in communities 209 Figure 6-1. Three-way relations between individual scientists, industry and 249 university v LIST OF TABLES Page Table 4-1. Historical NIH appropriations 100 Table 4-2. NIH Funding granted to primary research institutes in San Diego 102 Table 4-3. Venture capital investments in the biotech industry in San Diego, 120 1995-2009 Table 4-4. Average annual employment, 1990 and 1996: San Diego regional 139 employment clusters Table 5-1. Drug discovery process 150 Table 5-2. Capitalized preclinical and clinical period and costs per 152 investigational biopharmaceutical compound Table 5-3. Sources of financial resources 157 Table 5-4. Skills and practices for founding and running a biotechnology 159 company Table 5-5. Specialty pharmaceutical companies founded by Cam Garner and 182 his colleagues Table 5-6. Four groups of entrepreneurs and their business practices 191 Table 6-1. Drug discovery and development process 244 Table 6-2. Differences between academic research and commercializing 251 activity Table 6-3. Sources for R&D expenditures of UCSD (1972-2008) 264 vi ACKNOWLEDGMENTS Like any human endeavor, this research was an incremental, iterative and interactive process, which involved many people's insights and inputs. This research project was harder and longer than I had expected. I often became anxious and exhausted in the process. What kept me moving and moving were my interviewees and fieldtrips to San Diego. Whenever I got into my car and on the way to San Diego, either for an interview or a field observation, I gained a new stream of motivation and energy to move forward. Every interview made a big difference for this dissertation, and, indeed, me. Still, I cannot believe the kind of people I interviewed and with whom I interacted. In my case, they not only gave information that constitutes the body of this research, but they also impressed and inspired me to continue this journey. What I gained from every interview was not only data, but truly invaluable mentoring, advice and encouragement that will stay throughout my life. I will never forget every moment and every account with my interviewees. My heart will be with the San Diego community for a long time. My interviewees, you are truly my mentors. Thank you! I could not believe how much support I had from my adviser and committee. I am not able to describe the support I have received from my academic advisers appropriately. At interviews, many entrepreneurs told me there is nothing more important than having extraordinary mentors and advisers around them. They emphasized the power of such communities in overcoming difficulties and continuing entrepreneurial endeavors. I, personally, have experienced the power of a supporting community in the process of interacting with my adviser and committee members. Knowing that my adviser, Scott Bollens, would read whatever I wrote and give the advice of the best scholar has been instrumental to completing this dissertation. He taught me to write better and to think more, which I have to practice throughout my career. Scott is my role model. I want to be a scholar or a practitioner like Scott. He is ready to go to any city in conflicts, and he comes back with a lot of sympathy and excitement. I learned from Scott what makes our life valuable and memorable: devotion to students and commitment to our work. Without Martha Feldman, I would have never reached this point. She is more than an advisor, teacher or supporter; Martha was a magician. Frustrated and disheartened, I always leaned on Martha. A talk with her for ten minutes or one hour, and a hug changed everything. After coming back to my office, I found myself engrossed in the joy of learning. One time, I came to her and complained about the anxiety and hardship involved in living as a researcher, who is constantly harassed and frustrated by inquiries. I continued to say that I would rather find a job having no such anxiety and stress. Listening to me, she asked me to inform her if I could find such a job, so she could leave vii her professorship to work there. Even though the job is hard to live, she said, "we, now, could take a shower every day." From that moment on, every shower at night became a special ritual to me: it is the best reward from everyday work. Yan Gong has been very special to me. I don't know why he supported me during the last two years. He was concerned about my financial situation and my family. I still clearly remember a field trip to San Diego together with Yan. On the way to and back from San Diego, we talked a lot about developing countries: Korean and China, which have been struggling to catch up the developed countries, but still have a long and bumpy way to go. Yan was always collegial and passionate. I am appreciative to Professor Luis Suarez-Villa, who led this research project during the early years. He suggested that I do research about CONNECT and the biotechnology cluster in San Diego. Heather Seagle, a Ph.D. student in my department, helped me write better through kindly mentoring. In collecting archival data, I had to draw on many people. Among those, I am, especially, thankful to Mr. Michael Mishler, archivist at the La Jolla Historical Society. He allowed me to access the institution's precious archives. Mr. Russell Gibbon, business development manager at the City of San Diego, sent me files of the University Community's planning documents of the 1960s and 1970s. Mr. Jason Anderson, vice president of business development at the San Diego Economic Development Corporation, had to spend some time to find and send a document of the 1990s. I am always thankful to my family. My wife, Hyo-Seon, has been an incredible listener. At this point, I am sorry for having kept you listening to my interests, inspirations and ideas related to my research virtually every day. It was the conversations with Hyo-Seon that turned any emerging ideas into logics and concepts.