Network prominence and innovation: An empirical analysis of corporate backed biotech spin-offs
Daniele Mascia
Department of Hygiene and Public Health, Università Cattolica del Sacro Cuore, Rome, Italy
Mats Magnusson
Department of Innovation Engineering and Management, Chalmers University of Technology, Göteborg, Sweden
Americo Cicchetti
Department of Hygiene and Public Health, Università Cattolica del Sacro Cuore, Rome, Italy
PP: 7 - 22
Abstract
With increasing dynamics and complexity in the biotechnology industry, pharmaceutical companies are forced to broaden the scope of their R&D operations, increasingly relying on external sources of new knowledge. In this context, corporate venturing emerges as an interesting means to exploit new entrepreneurial sources of innovation.
By investing in academic spin-offs, and thereby establishing relationships with academic R&D actors, knowledge dispersed in scientific and academic networks can be accessed by the pharmaceutical companies. In this way, equity investments in academic spin-offs present a potential to improve the investors' innovation performance.
Based on a study of 97 corporate-backed academic spin-offs in the biotech field, this paper investigates how structural characteristics of these spin-offs' R&D networks influence the innovativeness of big pharmaceutical companies that provide venture capital to the spin-offs. In particular, the effect of a spin-off's prominence in its knowledge network is analyzed, using different network centrality measures.
The results obtained show that investments in academic spin-offs holding prominent positions in their R&D networks significantly contribute to the innovativeness of their investors, in terms of the number of patents resulting from these collaborations.
Keywords
biotechnology pharmaceuticals, external sources, academic spin-offs, R&D networks, investor performance, patents
References
Acs ZJ, Audretsch DB and Feldman MP (1992) Real effects of academic research: Comment, American Economic Review 81: 363-367.
Acs ZJ, Audretsch DB and Feldman MP (1994) R&D Spillovers and Innovative Activity, Managerial and Decision Economics 15: 131-138.
Allen TJ (1977) Managing the flow of technology
. Cambridge: The MIT Press.
Anderson P and Tushman ML (1990) Technological discontinuities and dominant designs: A cyclical model of technological change, Administrative Science Quarterly 35: 604-633.
Anselin L (1988) Spatial Econometrics: Methods and Models. Dordrecht: Kluwer Academic Publishers.
Autio E, Sapienza HJ and Almeida J (2000) Effects of age at entry, knowledge intensity and imitability on international growth, Academy of Management Journal 43: 909-924.
Baum JAC, Calabrese T and Silverman BS (2000) Don't go it alone: Alliance network composition and start-up's performance in Canadian Biotechnology, Strategic Management Journal 21: 267-294.
Borgatti S and Cross R (2003) A relational view of information seeking and learning in social networks, Management Science 49: 432-445.
Capello R (2001) Urban Innovation and Collective Learning: Theory and Evidence from Five Metropolitan Cities in Europe. In Fischer M and Fröhlich J (eds) Knowledge, Complexity and Innovation Systems. Berlin: Springer-Verlag.
Carey J, Freundlich N, Flynn J and Gross N (1997) The biotech century. Business Week 3517: 78-90.
Chesbrough HW (2000) Designing corporate ventures in the shadow of private venture capital, California Management Review 42: 31-49.
Cohen WM and Levinthal DA (1990) Absorptive capacity: A new perspective on learning and innovation, Administrative Science Quarterly 35: 128-152.
Davis GF (1991) Agents without principles: The spread of the poison pill through the inter-corporate network, Administrative Science Quarterly 36: 583-613.
Doz YL and Hamel G (1998) Alliance Advantage: The Art of Creating Value Through Partnering. Boston: Harvard Business School Press.
European Commission (1999) Corporate Venturing in Europe. Bruxelles: Enterprise Directorate-General Innovation Policy Unit.
Fontes M (1998) 'The role of entrepreneurial firms in the transfer of public research to the productive sector, Frontiers of Entrepreneurship Research'. Paper presented at Babson College/Kauffman Foundation Entrepreneurship Research Conference, Gent (Belgium).
Fischer MM and Varga A (2002) Spatial Knowledge Spillovers and University Research: Evidence from Austria, Forthcoming in Annals of Regional Science.
Freeman LC (1977) A set of measures of centrality based on betweeness, Sociometry 40: 35-41.
Gompers P and Lerner J (1999) Can corporate venture capital succeed?: Organizational Structure, Complementarities and Success. In Morck R (ed) Concentrated Corporate Ownership. Chicago: University of Chicago Press for the National Bureau Research.
Granovetter MS (1973) The strength of weak ties, American Journal of Sociology 78: 1360-1380.
Greis NP, Dibner MD and Bean AS (1995) External partnering as a response to innovation barriers and global competition in biotechnology, Research Policy 24: 609-630.
Hansen EL (1995) Entrepreneurial network and the new organization growth, Entrepreneurship Theory and Practice 19: 7-20.
Hansen MT (1999) The search-transfer problem: The role of weak ties in sharing knowledge across organizational subunits, Administrative Science Quarterly 44: 82-112.
Jaffe AB (1989) Real effects of academic research, American Economic Review 79: 53-75.
Kiesler S and Cummings J (2002) What do we know about proximity and distance in work group? In P Hinds and Kiesler S (eds) Distributed Work. Cambridge, MA: MIT Press.
Kogut, B (1989) The stability of joint ventures: Reciprocity and competitive rivalry, Journal of Industrial Economics, 38: 183-198.
Koza M and Lewin AY (1998) The co-evolution of strategic alliances, Organization Science 9: 255-264.
Kraut R, Egido C and Galegher J (1990) Patterns of contact and communication in scientific research collaboration. In J Galegher, Kraut R and Egido C (eds) Intellectual Teamwork: Social and Technological Foundations of Cooperative Work: 149-171. Hillsdale NJ: Lawrence Erlbaum.
Lane PJ and Lubatkin M (1998) Relative absorptive capacity and interorganizational learning, Strategic Management Journal 19: 461-477.
Lincoln JR (1982) Intra-(and inter-) organizational networks, Research in the Sociology of Organizations 1: 1-38.
Lundvall B (1992) National Systems of Innovation. London: Pinter Publishers.
Lindholm-Dahlstrand Å (1997) Growth and incentiveness in technology based spin-off firms, Research Policy 26: 331-345.
Mackewicz & Partner (1998) Venture capital and corporate venture capital: Financing alternatives for innovative start-ups and young technological companies in Germany. Munich: Mackewicz & Partner.
March J (1991) Exploration and Exploitation in Organizational Learning, Organization Science 2: 71-87.
McEvily B and Zaheer A (1999) Bridging ties: A source of firm heterogeneity in competitive capabilities, Strategic Management Journal 20: 1133-1156.
McKelvey M (1996) Discontinuities in genetic engineering for pharmaceuticals? Firm jumps and lock-in systems of innovation, Technology Analysis & Strategic Management 8: 107-116.
McKelvey M, Alm H and Riccaboni M (2003) Does co-location matter for formal knowledge collaboration in the Swedish biotechnology-pharmaceutical sector? Research Policy 32: 483-501.
McNally K (1994) Corporate venture capital investment in the UK: Objectives, strategies and future prospects. Southampton: Department of Geography, University of Southampton.
McNally K (1995) External equity finance for technology-based firms in the UK: The role of corporate venture capital. Southampton: Department of Geography, University of Southampton.
McNally K (1997) Corporate Venture Capital: Bridging the Equity Gap in the Small Business Sector. London: Routledge.
Mitchell W and Singh K (1996) Survival of businesses using collaborative relationships to commercialize complex goods, Strategic Management Journal 17: 169-196.
Mustar P (1995) 'The creation of enterprises by researchers: conditions for growth and the role of Public Authorities'. Paper presented at the High Level Workshop on SMEs: Employment, Innovation and Growth, Washington.
Orsenigo L (1989) The emergence of biotechnology: Institutions and markets in industrial innovation. London: Pinter Publisher.
Powell W (1998) Learning from Collaboration: Knowledge and networks in the biotechnology and pharmaceutical industries, California Management Review 40: 228-240.
Powell W, Koput K and Smith-Doerr L (1996) Interorganizational collaboration and the locus of innovation: Networks of learning in biotechnology, Administrative Science Quarterly 41: 116-145.
Powell W, Koput KW, Smith-Doerr L and Owen-Smith J (1999) Network Position and Firm Performance: Organizational Returns to Collaboration, in the Biotechnology Industry, Research in the Sociology of Organizations 16: 129-159.
Rowley T, Beherens D and Krackhardt D (2000) Redundant governance structures: An analysis of structural and relational embeddedness in the steel and semiconductor industries, Strategic Management Journal 21: 369-387.
Smilor RW, Gibson DV and Dietrich GB (1990) University spin-out companies: Technology start-ups from UT-Austin, Journal of Business Venturing 5: 63-77.
Stankiewicz R (1994) University firms, spin-off companies from Universities, Science and Public Policy 21: 99-107.
Swann P, Prevezer M and Stout D (1998) The Dynamics of Industrial Clustering: International Comparisons in Computing and Biotechnology, Oxford: Oxford University Press.
Teece DJ (1986) Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy, Research Policy 15: 285-305.
Tichy NM, Tushman ML and Fombrun C (1979) Social network analysis for organizations, Academy of Management Review 4: 507-519.
Tichy NM and Fombrun C (1979) Network analysis in organizational settings, Human Relations 32: 923-965.
Tushman M (1977) Special boundary roles in the innovation process, Administrative Science Quarterly 22: 587-605.
Uzzi B (1996) The sources and consequences of embeddedness for the economic performance of organizations, American Sociological Review 61: 674-698.
Venture Economics (1993) The state of corporate venturing, Venture Capital Journal, June.
Walker G, Kogut B and Shan W (1997) Social Capital, Structural Holes and the Formation of an Industry Network, Organization Science 8: 109-125.
Wasserman S and Faust K (1994) Social Network Analysis. Cambridge: Cambridge University Press.
Wiig H and Wood M (1995) What Comprises a Regional Innovation System? An Empirical Study, Working Paper R-01, STEP, Oslo.
Withers (1997) Window of technology: Corporate venturing in practice. London: Withers Solicitor.
Yli-Renko H, Autio E and Sapienza HJ (2001) Social capital, knowledge acquisition, and knowledge exploitation in young technology-based firms, Strategic Management Journal 22: 587-613.
Zaho L and Aram JD (1995) Networking and grow of young technology-intensive ventures in China, Journal of Business Venturing 10: 349-371.
Zahra SA, Ireland RD and Hitt MA (2000) International expansion by new venture firms: international diversity, mode of market entry, technological learning and performance, Academy of Management Journal 43: 925-950.
eContent Home
