Positioning strategies and prospects for success of emerging high-technology firms: the case of US biotechnology

Abstract

This study estimates the relative contribution of strategy and a number of contextual factors to the prospects for success of newly created firms in the emerging stage of biotechnology. The focus is on an empirical analysis of the relative weight of patterns of positioning strategy (i.e. how a firm chooses to build over time its competitive position) as a factor contributing to the strength of a firm's position for future success, during the commercialisation stage of industry evolution. Our theoretical viewpoint draws on an asset-based view of the firm. The research is based on a sample of 80 new US biotechnology firms created between 1971 and 1984. This particular field setting was characterised by two distinctive features; most of the firms were operating at a loss, and most of the products with significant commercial impact were some years away from market introduction. The contributions are primarily two. First, positioning strategy in emerging high-technology firms does make a difference in firms' prospects for success. Second, timing is a critical factor in identifying superior patterns of strategic choice (focus on technology driven vs. downstream activities, and the extent and nature of external collaboration) in the study of the strategy-performance relationships in rapidly changing environments.