Modes of Cooperative R&D Commercialization by Start-ups

Abstract

This paper empirically examines the determinants of heterogeneous cooperative R&D commercialization strategies of innovating biotechnology start-ups. While the volume of inter-firm collaboration, spanning modes such as strategic alliances and technology licensing, has increased dramatically in recent decades, prior research has seldom analyzed the firm-level organizational choice between alternate modes of such cooperative activity. The organization of collaborative commercialization has important resource allocation, corporate development, and strategic implications for innovating firms, particularly in the biotechnology industry, as self-commercialization in this industry is rare. Using a random sample of over 100 biotechnology innovators, we assemble a firm-year panel dataset to examine the relative importance of organizational governance capability and transaction cost measures in explaining the variation in cooperative mode choice. We do this by aggregating transaction-level collaboration data to the firm-year level (thereby characterizing firms' portfolio of collaborative deals). In firm level analyses of collaborative choice intensities and transaction level analyses of alternate modes of organizing a deal, we find empirical support for organizational governance capability theories and mixed support for transaction cost theories. Moreover, we find that firm valuation is shaped both by experience in particular collaborative modes and by deviations from historic collaboration mode capabilities.