EXPLOITING INNOVATION OPTIONS - AN EMPIRICAL-ANALYSIS OF R-AND-D-INTENSIVE FIRMS

This paper examines the mechanisms adopted by R&D-intensive firms to a ppropriate value from research capabilities. New technical opportuniti es, innovation options, can be exploited through internal development or through their exchange in intermediate knowledge markets. An analys is of biopharmaceutical research projects demonstrates that transactio n cast hazards manifest themselves in both the internal and market-med iated alternatives. The impact of information asymmetry conditions is found to be contingent on firm capabilities; firms with high levels of development-related resources demonstrate a negative relationship bet ween information asymmetry conditions and reliance on market exchange, while firms with low levels of such resources demonstrate a positive relationship. (C) 1998 Elsevier Science B.V.