Exploration and exploitation alliances in biotechnology: a system of new product development

Abstract

We link the exploration–exploitation framework of organizational learning to a technology venture's strategic alliances and argue that the causal relationship between the venture's alliances and its new product development depends on the type of the alliance. In particular, we propose a product development path beginning with exploration alliances predicting products in development, which in turn predict exploitation alliances, and that concludes with exploitation alliances leading to products on the market. Moreover, we argue that this integrated product development path is moderated negatively by firm size. As a technology venture grows, it tends to withdraw from this product development path to discover, develop, and commercialize promising projects through vertical integration. We test our model on a sample of 325 biotechnology firms that entered 2565 alliances over a 25‐year period. We find broad support for the hypothesized product development system and the moderating effect of firm size. Copyright © 2004 John Wiley & Sons, Ltd.

Vertical alliance networks: The case of university–biotechnology–pharmaceutical alliance chains

“…In other words, biotechnology firms are understood to be originators of technology, which is then eventually brought to the marketplace by strategic alliance partners with extensive marketing organizations and experience in managing the clinical trials process (e.g., Barley et al, 1992;Rothaermel, 2001;Rothaermel and Deeds, 2004;Robinson and Stuart, 2007). This is a fair characterization of many alliances in the industry.…”

Entrepreneurial Cognition

“…Exploration focuses the attention of individuals on seeking something novel by constantly scanning the environment for indications of wealth-generating opportunities (Brown and Eisenhardt 1997;. In contrast, exploitation focuses the attention of individuals on current opportunities and on the capabilities required to take advantage of them (Rothaermel and Deeds 2004). The degree of attention a manager focuses on specific opportunity-advancement stages affects the relative speed of decision making for a particular potential opportunity based on three characteristics: experience (Levitt and March 1988;Ocasio 1997), standard operating procedures (Cyert and March 1963;Gavetti et al 2007;Ocasio 1997), and confidence (Levitt and March 1988;March and Shapira 1987).…”

Attention and Entrepreneurial Cognition

“…Exploration focuses the attention of individuals on seeking something novel by constantly scanning the environment for indications of wealth-generating opportunities (Brown and Eisenhardt 1997;McGrath 1999). In contrast, exploitation focuses the attention of individuals on current opportunities and on the capabilities required to take advantage of them (Rothaermel and Deeds 2004). The degree of attention a manager focuses on specific opportunity-advancement stages affects the relative speed of decision making for a particular potential opportunity based on three characteristics: experience (Levitt and March 1988;Ocasio 1997), standard operating procedures (Cyert and March 1963;Gavetti et al 2007;Ocasio 1997), and confidence (Levitt and March 1988;March and Shapira 1987).…”