Inter-organizational collaboration in the biotechnology industry

This paper examines the key factors that promote inter-organizational collaboration in the biotechnology industry, a field where research breakthroughs are so broadly distributed that no single firm has all the necessary capabilities. The science of biotechnology has brought extensive changes to research universities and multinational pharmaceutical companies, as well as generated hundreds of small science-based entrepreneurial companies, located mostly in the U.S. In this industry there are severe limitations to market transactions and disincentives to vertical integration. Instead, through a combination of mutual need, repeated interaction, and membership in a common technological community, networks of collaborative ventures serve as the primary institutional arrangement governing exchange and production.