Modes of Cooperative R&D Commercialization by Start-ups

Abstract

This study empirically examines the determinants of heterogeneous firm-level cooperative R&D commercialization strategies. While the volume of interfirm collaboration has increased dramatically in recent decades, the determinants of firm-level choices among alternate modes of such cooperative activity remain relatively understudied. We develop a conceptual model of factors determining collaborative mode choice at the organizational portfolio level. These factors include the firm-level appropriation environment, in which deal-level choices have portfolio-level spillover implications, as well as governance capabilities developed by the firm over time. Using a random sample of innovating biotechnology start-ups, we assemble a firm-year panel dataset that aggregates transaction-level collaboration data to the firm-year level, allowing us to characterize firms' portfolios of collaborative deals. We find broad empirical support for our model, suggesting that a firm's appropriation environment and governance capabilities strongly influence portfolio-level collaboration mode choices. In addition, we explore the implications of governance capability development, finding that experience with particular modes, as well as deviations from existing capabilities, impact firm valuation. ABSTRACTThis paper empirically examines the determinants of heterogeneous cooperative R&D commercialization strategies of innovating biotechnology start-ups. While the volume of inter-firm collaboration, spanning modes such as strategic alliances and technology licensing, has increased dramatically in recent decades, prior research has seldom analyzed the firm-level organizational choice between alternate modes of such cooperative activity. The organization of collaborative commercialization has important resource allocation, corporate development, and strategic implications for innovating firms, particularly in the biotechnology industry, as self-commercialization in this industry is rare. Using a random sample of over 100 biotechnology innovators, we assemble a firm-year panel dataset to examine the relative importance of organizational governance capability and transaction cost measures in explaining the variation in cooperative mode choice. We do this by aggregating transaction-level collaboration data to the firm-year level (thereby characterizing firms' portfolio of collaborative deals). In firm level analyses of collaborative choice intensities and transaction level analyses of alternate modes of organizing a deal, we find empirical support for organizational governance capability theories and mixed support for transaction cost theories. Moreover, we find that firm valuation is shaped both by experience in particular collaborative modes and by deviations from historic collaboration mode capabilities.

Embracing the Paradox of Interorganizational Value Co‐creation–Value Capture: A Literature Review towards Paradox Resolution

“…Another example is that, in our review, a total of 21 studies view trust as a factor that helps alleviate tensions between co-creating and capturing value, and thus spurring virtuous cycles (e.g. Aggarwal and Hsu 2009;Li et al 2008;Romero and Molina 2011), yet seven studies draw attention to the potential double role of trust, i.e. leading to either vicious or virtuous cycles, depending on its intensity.…”

“…Firms also rely on the protection of patents to deal with the simultaneous pursuit of value co-creation and appropriation in an IOR (Aggarwal and Hsu 2009;Bouncken et al 2018;Ceccagnoli et al 2012;Katila and Mang 2003;Leten et al 2013;Lhuillery 2006). In circumstances of strong institutional conditions, strong appropriability regimes are found to enable virtuous cycles (Gallié and Roux 2010;Henttonen et al 2016;Hurmelinna-Laukkanen et al 2012;Kasch and Dowling 2008;Kim 2004;Lhuillery and Pfister 2009).…”

“…A number of scholars argue that firms with particular organizational capabilities, such as JV experience and capabilities, partner-specific experience, downstream capabilities, commercial capital, IT capabilities and absorptive capacity, are better able to manage the tensions between value co-creation and capture (e.g. Aggarwal and Hsu 2009;Hughes-Morgan and Yao 2016;Hurmelinna-Laukkanen et al 2012;Jordan 2004;Kumar 2010;Lhuillery and Pfister 2009).…”

A Bibliometric Review of Open Innovation: Setting a Research Agenda

“…Social network theory (e.g., Burt, 1992;Uzzi, 1997) Alliance-portfolio management (e.g., Aggarwal & Hsu, 2009;Wang and Rajagopalan, 2015) What relational capabilities and governance mechanisms drive value creation and capture in open innovation networks? The user perspective…”

Firms' R&D Cooperation Behavior in a Supply Chain

“…While in the context of R&D outsourcing, Cui et al (2012) consider partner selection and its management contribution through an empirical study at Siemens. To the best of our knowledge, there are few studies that discuss how to choose a suitable cooperative mode, with the notable exceptions of Aggarwal and Hsu (2009), B€ onte and Kerlbach (2005), and Sampson (2004). Sampson (2004) examines how firms choose organizational forms by using a sample of 232 R&D alliances.…”