Scientific foundation, organization structure, and performance of biotechnology and pharmaceutical firms

• Published in: Journal of high technology management research Vol. 22; no. 2; pp. 81 - 93
• Main Authors: Watts, Allison D., Hamilton, Robert D.
• Format: Journal Article
• Language: English
• Published: Greenwich Elsevier Inc 2011; Elsevier Science Ltd
• Subjects: Absorptive capacity; Biotechnology; Biotechnology industry; Organizational structure; Pharmaceutical; R&D; Science; Studies; TCE; Transaction costs; R&D; Biotechnology; Absorptive capacity; Pharmaceutical; TCE
• ISSN: 1047-8310; 1879-1638
• DOI: 10.1016/j.hitech.2011.09.001

Technologists seek to advance practical applications of science while scientists seek to advance knowledge which may or may not have a practical application. Firms with a stronger basic science focus, e.g. biology and chemistry, seek to advance their scientific knowledge foundation in addition to developing and selling innovative products. Firms with a more highly applied science foundation (medicine, engineering, etc.) prioritize the development and sale of innovative products. Combining an Absorptive Capacity (AC) approach with Transaction Cost Economics (TCE) this study explores and explains how firms gain knowledge and perform given their scientific focus. Findings indicate that firms with a stronger basic science orientation are less profitable than firms with a stronger applied science orientation. Applied science firms had more acquisitions and cooperative organizations but both types of firms were more likely to acquire other firms in their quest to build knowledge stores rather than partner. Partnerships with universities were more prevalent among basic science firms than with applied science firms.