External partnering as a response to innovation barriers and global competition in biotechnology

Abstract The frequency with which US biotechnology firms have entered into external partnerships to obtain the complementary assets needed to exploit their technologies has increased dramatically in the 1980s and early 1990s. Further, the search for external partners increasingly crosses international boundaries. In this paper a framework is presented for explaining the choices biotechnology firms make in securing the complementary assets needed to commercialize their biotechnologies. We first examine the extent to which external partnering is a response to a range of specific environmental and firm-related barriers which impose transaction costs on the organization. We then examine the current perceptions of US biotechnology firms as to their primary global competitors and explore whether partnering choices can be motivated and explained by factors in the global competitive environment. Firms' decisions to acquire complementary assets through external partnering in a global environment is explored for four innovation activities. This empirical analysis is based on a survey of 244 US biotechnology firms currently involved in exploiting biotechnologies for commercial use.