Operational complexity of foreign innovation projects and the inter-organisational alliance in the biopharmaceutical industry in China

Abstract

ABSTRACTContrary to the perceived assumption that operational complexity of innovation projects predicts operations inside the organisation, we propose the opposite argument that operational complexity of foreign innovation projects increases the inter-organisational alliance formation. The evidence from the clinical trials innovation projects in the biopharmaceutical sector supports the operational complexity-alliance (OCA) proposition in China at three levels: institutional (legal and cultural), technological (purpose and methodology) and dispositional (organisation type and its experience). Institutional complexity shows that the legal difference between the home and host country positively predicts the inter-organisational alliance. Similarly, in national cultural differences, power distance, uncertainty and long-term orientation support the OCA proposition. Technological complexity reveals that explorative purpose and complex methodologies support the OCA proposition. The organisation’s disposition reveals that the industrial firm predicts the inter-organisational alliance more than the non-industrial organisation does. Concerning the organisation’s experience, it negatively predicts the inter-organisational alliance. Therefore, it appears that organisational discretion from the operational complexities leads to the structural change to reduce the cost of operations through externalisation rather than internalisation.