A decision-making perspective on business integration and inter-firms agreements in biotechnology industry

Abstract

The aim of this paper is to discuss the issue of corporate structure and business models for managing new modular and complementary biotechnology innovations according to a decision-making perspective. Corporate structure and business models of large diversified firms (LDFs) and dedicated biotechnology firms (DBFs), in fact, are at the heart of the scientific research and of the practice in the management field. We focus our attention on the trade-off between vertical integration and inter-firms agreements aimed to control biotech innovation, a trade-off which is related to collaborations’ content, business planning, investment constraints and intellectual capital. DBFs specific features will be presented along with the strategic options developed by operators. The contributions of the transaction cost theory and of the resource-based view will be underlined and, as a consequence, we will elaborate on the fundamental variables for decision making purposes. Data on the US and European integrative strategies trends in the biotech industry will be presented in the conclusive section.