Innovation Networks in the Biotechnology-Based Sectors

Andreas Pyka and Pier Paolo Saviotti

No 205, Discussion Paper Series from Universitaet Augsburg, Institute for Economics

Abstract: Technological progress in the biological sciences is now advancing across such a wide rangeand at such a pace, that, irrespective of size, no firm can hope to keep up in all the differentareas. Participating in innovation networks, bundling of competencies and capabilities,therefore, offers an alternative to extremely expensive go-it-alone strategies, whether carriedout by acquisition and mergers or by isolated R&D. This imbalance between the rate of growthof the biotechnology knowledge base and the capability of individual firms to access it canexplain the persistence of cooperative R&D in the biotechnology-based sectors at the endof the 90s. Such imbalance is not due any more only to the lack of absorptive capacity ofexisting firms, because the large pharmaceutical firms have meanwhile developedconsiderable competencies in that field. This previous competence-gap was considered tobe the reason for cooperative behaviour in the early phases of these industries in the endof the 70s and early 80s. To the extent that this was considered to be the only knowledgegap innovation networks were considered as a temporary phenomenon, which could notpersist beyond the period required by large firms to catch up with the new technology.We are then proposing that a new role, that of explorers scanning parts of the knowledgespace that LDFs (Large Diversified Firms) are capable of exploring but unwilling to committhemselves in an irreversible way, can be played by DBFs (Dedicated Biotechnology Firms)in innovation networks. Our simulation approach attempts to represent the emergence ofthese two roles as endogenous changes in the motivation for participating in innovationnetworks, allowing them to become an important and long-lasting organizational devicefor industrial R&D. Drawing on a history friendly modeling approach the decisive mechanismsresponsible for the emergence of innovation networks in these industries are figured out andcompared to real developments.

Keywords: entrepreneurship; human capital; venture capital; social networks; evolutionary economics; swarms of innovations (search for similar items in EconPapers)
JEL-codes: L10 L22 L65 O30 (search for similar items in EconPapers)
Date: 2001-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Innovation Networks in the Biotechnology-Based Sectors (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:aug:augsbe:0205

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