Value creation strategies for science-based business: A study of advanced materials ventures

Abstract

Science-based businesses have become the main drivers of commercialization for radical technological advances, but face high technology uncertainty over long time frames, the need for significant complementary assets and require substantial financing. Advanced materials ventures are a sparsely studied type of science-based business, though sufficiently different from others, such as biotech, to merit individual study. What strategies do advanced materials ventures use to overcome their daunting commercialization challenges? To address this question, this paper draws on literature on value creation and advanced materials commercialization, and presents new evidence from a sample of 43 advanced materials ventures from three countries. Through a hierarchical cluster analysis, the sample is subdivided into nanomaterials, performance materials, and fuel cell ventures and sub-group commercialization characteristics are described and compared. We find empirical support for an earlier model of value creation by advanced materials ventures, and identify successful commercialization strategies according to sub-group. Our findings suggest that embracing uncertainty enhances value creation for nanomaterials and performance materials ventures but can diminish value creation for ventures commercializing fuel cell technologies. Successful firms commercializing nanomaterials and performance materials leveraged the generic nature of their technologies to achieve higher value creation, but tailored the technology to each target market. In contrast, successful fuel cell firms integrated further forward along their value chains and standardized their products across target markets.