EXTERNAL PARTNERING AS A RESPONSE TO INNOVATION BARRIERS AND GLOBAL COMPETITION IN BIOTECHNOLOGY

The frequency with which US biotechnology firms have entered into exte rnal partnerships to obtain the complementary assets needed to exploit their technologies has increased dramatically in the 1980s and early 1990s. Further, the search for external partners increasingly crosses international boundaries. In this paper a framework is presented for e xplaining the choices biotechnology firms make in securing the complem entary assets needed to commercialize their biotechnologies. We first examine the extent to which external partnering is a response to a ran ge of specific environmental and firm-related barriers which impose tr ansaction costs on the organization. We then examine the current perce ptions of US biotechnology firms as to their primary global competitor s and explore whether partnering choices can be motivated and explaine d by factors in the global competitive environment. Firms' decisions t o acquire complementary assets through external partnering in a global environment is explored for four innovation activities. This empirica l analysis is based on a survey of 244 US biotechnology firms currentl y involved in exploiting biotechnologies for commercial use.