Canadian biotechnology start-ups, 1991-1997: The role of incumbents' patents and strategic alliances in controlling competition

Fligstein (1996) contends that organizations act to exploit the institution al context in which they are embedded so as to stabilize the competition th ey face. Drawing on Fligstein's theoretical analysis, we conceptualize incu mbent biotechnology firms' patenting and alliance-building activities as at tempts to stabilize and control potential competition and analyze how these activities shape rates of founding in the Canadian biotechnology industry. We find that increases in the level and concentration of incumbents' paren ting discourage founding, particularly in human application sectors of the industry where development and approval processes are more costly and time consuming. Incumbents' horizontal alliances depress start-ups: vertical all iances stimulate start-ups. Our findings highlight how technology appropria tion and strategic alliances structure the competitive dynamics and evoluti on of high-technology, knowledge-intensive industries. (C) 2000 Academic Pr ess.