Absorptive capacity and openness of small biopharmaceutical firms – aEuropeanUnion–UnitedStates comparison

Abstract

The complementarities between internal capabilities and external linkages have been widely acknowledged in the open innovation literature, yet little is known about the extent to which internal capabilities affect firms' openness within different institutional contexts. This paper therefore empirically explores the relationship between absorptive capacity (ACAP) and openness in the United States and European biopharmaceutical sectors. Based on analysis of data from a large-scale international survey of 349 biopharmaceutical firms inthe United States, the United Kingdom, France and Germany, the results suggest that exploratory openness depends more strongly on the research and development (R&D) aspect of firms' potential absorptive capacity, whereas exploitative openness is more conditional on firms' realized absorptive capacity (RACAP). The results also highlight the major differences between firms' openness and ACAP in the United States and Europe -in the United States, firms' skill levels prove more significant in contributing to firms' engagement with exploratory relationships, whereas in Europe, continuity of R&D proves more important. Engagement with exploitative relationships, however, is more conditional on firms' RACAP in Europe only. Absorptive capacity and openness of small pharmaceutical firms

Capturing value from alliance portfolio diversity: The mediating role of R&D human capital in high and low tech industries

“…Therefore, managers should develop high internal capabilities to integrate external knowledge beyond established industry boundaries and enhance potential absorptive capacity for future knowledge transfer and knowledge sharing (Enkel and Heil, 2014). Organisations should consider their external relationships structure as a capability enhancing process (Xia, 2013) that will allow their employees to develop broader skills in the future. This is particularly relevant for low-tech firms, which are constrained in their ability to collaborate with highly diverse alliance portfolios due to their limited absorptive capabilities.…”

Collaborative relationships with customers: generation and protection of innovations

“…At this point, the framework of absorptive capacity (Cohen & Levinthal 1990, Zahra & George 2002) is useful, but not complete, for answering them. The literature on embedded ties between customer and supplier (Dyer & Sing, 1998;Dyer and Nobeoka, 2000) and some empirical studies published Landeta, 2010 and2013;Charterina et al 2015;Nordhoff et al 2011, Valdés-Llaneza & García-Canal, 2015 similarly fail to provide conclusive answers. This study therefore opts to use a qualitative methodology based on in-depth interviews with executives from companies that base improvement of their innovative capacity on building embedded ties with customers, as a means of inferring or exploring responses based on the experience of the actors involved.…”

“…An exception to this relative vagueness as to the processes of knowledge absorption is the conceptual study by Zahra and George (2002), which differentiates between acquisition, assimilation, transformation and exploitation capabilities, and groups the first two into the potential absorptive capacities (PACAP) subset, and the last two into the realized absorptive capacities (RACAP) subset. This further concretion of the model of absorptive capacity has been extensively used in conceptual and empirical studies on bio-pharmaceutical SMEs (Xia 2013), automotive supplier firms (Leal & Roldán, 2013), scientific university parks (McAdam et al 2010), academic spin-offs (Taheri & van Geenhuizen, 2010), industrial firms (Camisón & Forés, 2010) and financial firms (Jansen et al 2003).…”

R&D Failure and Second Generation R&D: New Potentialities

“…Open innovation is important for high-tech product development, yet small firms face a tension in that they need to manage the link between their internal capabilities and their external relationships (Xia, 2013). In the biopharmaceutical industry, which primarily comprises small firms, new product development is typically "long, resource intensive and risky" (Xie, 2013: 333).…”

“…Open innovation is innovation that sources inputs from any source, especially those outside of the boundaries of the firm; closed innovation models typically source inputs from within the boundaries of the firm (Xia, 2013). Open innovation is important for high-tech product development, yet small firms face a tension in that they need to manage the link between their internal capabilities and their external relationships (Xia, 2013).…”