Strategic Alliances between Large and Small Research Intensive Organizations : Experiences in the Biotechnology Industry

Studies strategic alliances between small and large North American biotechnology firms. A strategic alliance (SA) is defined as a short- or long-term collaboration between firms, involving partial or contractual ownership. The most common SA is between small and large firms: large firms have the resources to give small, innovative firms the competitive advantage they need, and small firms have specialized knowledge to provide to large firms a "window on new technology." SAs are often established to combat increasing international competition, though alliances are also being made between Japanese, European, and American companies. To examine SAs among research-intensive firms, questionnaires were mailed to senior executives of selected North American companies: 42 out of 144 dedicated biotechnology companies (DBCs) and 21 out of 70 large biotechnology firms responded. Additionally, in-depth interviews with some 30 large and small companies investigated SA networks, success rate, establishment process and negotiation. According to this research, SAs were most often initialized in the early stages of the innovation process as a means of gaining resources. The most important SAs for large firms were technology based, while small firms initiated SAs to gain financial advantages. For example, a case study on T-Cell Sciences shows that its alliance with Pfizer, a large pharmaceutical company, funds product development and market access, so that the company is able to expand its proprietary technology base. The study concludes that SAs vary with the life cycle of the company, but typically continue to be beneficial among small and large firms willing to spend the time and effort to establish and sustain them. (CJC)