'Absorptive link': an absorptive capacity and alliance approach to biotechnological product success

Abstract

As biotechnologies are increasingly specialized and interrelated, the research question posed by this study is: what determines a biotechnology firm's product performance, if the development and commercialization of drug products require multiple technologies that are not possessed by any one firm? In drawing on concepts from strategic alliance and absorptive capacity research, this study develops and empirically examines a concept of 'absorptive link' in the biotechnology industry. A firm's absorptive link underscores that a firm's ability to develop new products stems from its prior knowledge in commercializing new applications of resources held by not only the firm, but also that of its alliance partners. Such a concept generated 6 testable hypotheses to which were mostly supported in this study's Poisson regression analysis of the biotechnology industry. This study concludes by offering three key contributions to product performance research.

Putting the cart (antecedents) before the horse (absorptive capacity): the role of competitive antecedents to the absorptive capacity innovation process

“…A firm's product innovation is measured by the number of commercialized products that have completed these product development processes. This count measure of product innovation, Products-Mkt, is consistent with measures proposed in AC research (Zahra and George, 2002) and has been used in a variety of OI and AC studies (Chen and Chang, 2019;Escribano et al, 2009;Kostopoulos et al, 2011;Ng, 2011aNg, , 2011b Measures: independent variables. AC.…”

“…A firm’s mergers and acquisitions ( M&As ) were included because M&As increase a firm’s knowledge acquisition and can impact a firm’s innovation (Jo et al , 2016). The M&A variable was constructed by aggregating the number of merger and acquisition activities reported in the BioScan database (Ng, 2011a, 2011b; Ng et al , 2019). A firm’s age, Firm _ Age , is included to control for path-dependent effects (Ng, 2011a, 2011b; Xie et al , 2018).…”

“…The aggregate and diverse aspects of a firm's RAEF are measured by a firm's strategic alliances or partnerships. Strategic alliances or partnerships reflect a firm's access to external information and are commonly used in AC and OI research (Akram et al, 2020;Ferraris et al, 2020a;Ng, 2011b). To measure the aggregate aspect of a firm's RAEF, a firm's aggregate connectivity, Ag, was constructed by aggregating a firm's Licensing, R&D, Marketing, Manufacturing, Commercializing, Supply and Distribution agreements in the BioScan database (Ng, 2011b;Rothaermel and Deeds, 2004).…”

“…Strategic alliances or partnerships reflect a firm's access to external information and are commonly used in AC and OI research (Akram et al, 2020;Ferraris et al, 2020a;Ng, 2011b). To measure the aggregate aspect of a firm's RAEF, a firm's aggregate connectivity, Ag, was constructed by aggregating a firm's Licensing, R&D, Marketing, Manufacturing, Commercializing, Supply and Distribution agreements in the BioScan database (Ng, 2011b;Rothaermel and Deeds, 2004). To measure the diverse aspects of a firm's RAEF, Div, a Herfindahl index involving 1the sum of the squared shares for each of a firm's alliance agreements was constructed.…”

“…The M&A variable was constructed by aggregating the number of merger and acquisition activities reported in the BioScan database (Ng, 2011a(Ng, , 2011bNg et al, 2019). A firm's age, Firm_Age, is included to control for path-dependent effects (Ng, 2011a(Ng, , 2011bXie et al, 2018).…”