Exploring the internal and external venturing of large R&D‐intensive firms

Abstract

We explore the realized strategies of large R&D‐intensive firms through a venturing lens, focusing on two industries: pharmaceuticals and high‐technology equipment manufacturing. Specifically, we examine changes in strategy over time along two critical dimensions: (1) focus of venturing, i.e., internally vs externally oriented, and (2) learning orientation i.e., explorative vs exploitative. Our empirical analysis is based on news stories relating to six large, R&D‐intensive firms over a 6‐year period. The findings suggest the following: (1) exploration is more prevalent than exploitation in both pharmaceuticals and high‐technology equipment manufacturing, but pharmaceuticals have a greater preference for internal venturing than high‐technology equipment manufacturing; (2) three firm‐level venturing strategy types can be discerned, which are independent of the specific industry; and (3) change in realized strategy is a dynamic capability facilitated by firm‐level factors. These results, albeit explorative, emphasize venturing in R&D industries as a dynamic capability that is influenced by firm‐level characteristics rather than industry membership.