IDEAS home Printed from https://ideas.repec.org/a/bla/jomstd/v45y2008i8p1354-1376.html
   My bibliography  Save this article

Tapping Deep Pockets: The Role of Resources and Social Capital on Financial Capital Acquisition by Biotechnology Firms in Biotech–Pharma Alliances

Author

Listed:
  • Shanthi Gopalakrishnan
  • Joanne L. Scillitoe
  • Michael D. Santoro

Abstract

Strategic alliances with pharmaceutical firms allow small biotechnology firms to acquire needed financial capital in exchange for sharing new, cutting‐edge technologies. This study draws from aspects of resource‐based view and social capital theory to examine the factors that influence the extent of financial capital biotech firms acquire when forming an alliance with pharmaceutical firms. Using a sample of 184 alliances from the period 1995–2000, we found that alliances where the pharmaceutical firm has greater management control are associated with greater acquisition of financial capital by the biotech firm. We also found that the credibility of the pharmaceutical firm is positively associated with the extent of financial capital acquired by the biotechnology firm and that the number of patents that the biotech firm has is negatively associated to the financial capital the biotech firm receives. We discuss the implications of our findings for theory, research, and management practice.

Suggested Citation

  • Shanthi Gopalakrishnan & Joanne L. Scillitoe & Michael D. Santoro, 2008. "Tapping Deep Pockets: The Role of Resources and Social Capital on Financial Capital Acquisition by Biotechnology Firms in Biotech–Pharma Alliances," Journal of Management Studies, Wiley Blackwell, vol. 45(8), pages 1354-1376, December.
    • Handle: RePEc:bla:jomstd:v:45:y:2008:i:8:p:1354-1376
    DOI: 10.1111/j.1467-6486.2008.00777.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-6486.2008.00777.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-6486.2008.00777.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ranjay Gulati, 1999. "Network location and learning: the influence of network resources and firm capabilities on alliance formation," Strategic Management Journal, Wiley Blackwell, vol. 20(5), pages 397-420, May.
    2. repec:bla:jfinan:v:43:y:1988:i:3:p:567-91 is not listed on IDEAS
    3. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-486, April.
    4. McConnell, John J & Nantell, Timothy J, 1985. "Corporate Combinations and Common Stock Returns: The Case of Joint Ventures," Journal of Finance, American Finance Association, vol. 40(2), pages 519-536, June.
    5. repec:bla:jindec:v:46:y:1998:i:2:p:125-56 is not listed on IDEAS
    6. Peter Moran, 2005. "Structural vs. relational embeddedness: social capital and managerial performance," Strategic Management Journal, Wiley Blackwell, vol. 26(12), pages 1129-1151, December.
    7. Donna Marie DeCarolis & David L. Deeds, 1999. "The impact of stocks and flows of organizational knowledge on firm performance: an empirical investigation of the biotechnology industry," Strategic Management Journal, Wiley Blackwell, vol. 20(10), pages 953-968, October.
    8. Janney, Jay J. & Folta, Timothy B., 2006. "Moderating effects of investor experience on the signaling value of private equity placements," Journal of Business Venturing, Elsevier, vol. 21(1), pages 27-44, January.
    9. Deeds, David L. & Decarolis, Dona & Coombs, Joseph E., 1997. "The impact of firmspecific capabilities on the amount of capital raised in an initial public offering: Evidence from the biotechnology industry," Journal of Business Venturing, Elsevier, vol. 12(1), pages 31-46, January.
    10. Rothaermel, Frank T., 2001. "Complementary assets, strategic alliances, and the incumbent's advantage: an empirical study of industry and firm effects in the biopharmaceutical industry," Research Policy, Elsevier, vol. 30(8), pages 1235-1251, October.
    11. Gautam Ahuja, 2000. "The duality of collaboration: inducements and opportunities in the formation of interfirm linkages," Strategic Management Journal, Wiley Blackwell, vol. 21(3), pages 317-343, March.
    12. Janney, Jay J. & Folta, Timothy B., 2003. "Signaling through private equity placements and its impact on the valuation of biotechnology firms," Journal of Business Venturing, Elsevier, vol. 18(3), pages 361-380, May.
    13. Hertzel, Michael G & Smith, Richard L, 1993. "Market Discounts and Shareholder Gains for Placing Equity Privately," Journal of Finance, American Finance Association, vol. 48(2), pages 459-485, June.
    14. Timothy B. Folta & Jay. J. Janney, 2004. "Strategic benefits to firms issuing private equity placements," Strategic Management Journal, Wiley Blackwell, vol. 25(3), pages 223-242, March.
    15. T. K. Das & Bing‐Sheng Teng, 1996. "Risk Types And Inter‐Firm Alliance Structures," Journal of Management Studies, Wiley Blackwell, vol. 33(6), pages 827-843, November.
    16. Bharat N. Anand & Tarun Khanna, 2000. "Do firms learn to create value? The case of alliances," Strategic Management Journal, Wiley Blackwell, vol. 21(3), pages 295-315, March.
    17. Russell W. Coff, 1999. "When Competitive Advantage Doesn't Lead to Performance: The Resource-Based View and Stakeholder Bargaining Power," Organization Science, INFORMS, vol. 10(2), pages 119-133, April.
    18. John Hagedoorn & Jos Schakenraad, 1994. "The effect of strategic technology alliances on company performance," Strategic Management Journal, Wiley Blackwell, vol. 15(4), pages 291-309, May.
    19. Bessy, Christian & Brousseau, Eric, 1998. "Technology licensing contracts features and diversity1," International Review of Law and Economics, Elsevier, vol. 18(4), pages 451-489, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lo Nigro, Giovanna & Perrone, Giovanni & Chiapparrone, Silvia, 2012. "Governance forms drivers in bio-pharmaceutical inter-firm relationships," International Journal of Production Economics, Elsevier, vol. 140(2), pages 604-613.
    2. repec:pab:wpbsad:16.01 is not listed on IDEAS
    3. Yisook Lim & Chan S. Suh, 2019. "Where is my partner? The role of gender in the formation of entrepreneurial businesses," Small Business Economics, Springer, vol. 52(1), pages 131-151, January.
    4. Miguel Meuleman & Andy Lockett & Sophie Manigart & Mike Wright, 2010. "Partner Selection Decisions in Interfirm Collaborations: The Paradox of Relational Embeddedness," Journal of Management Studies, Wiley Blackwell, vol. 47(6), pages 995-1019, September.
    5. Shakeri, Roya & Radfar, Reza, 2017. "Antecedents of strategic alliances performance in biopharmaceutical industry: A comprehensive model," Technological Forecasting and Social Change, Elsevier, vol. 122(C), pages 289-302.
    6. Gleadle, Pauline & Parris, Stuart & Shipman, Alan & Simonetti, Roberto, 2014. "Restructuring and innovation in pharmaceuticals and biotechs: The impact of financialisation," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(1), pages 67-77.
    7. Mohammad Saleh Farazi & Ana Pérez-Luño & Shanthi Gopalakrishnan, 2016. "How Can Knowledge Structuration Serve Strategic Goals? A Theory For Technology Firms," Working Papers 16.01, Universidad Pablo de Olavide, Department of Business Organization and Marketing (former Department of Business Administration), revised Jun 2016.
    8. Anindya Ghosh & Thomas Klueter, 2022. "The Role of Frictions due to Top Management in Alliance Termination Decisions: Insights from Established Bio‐Pharmaceutical Firms," Journal of Management Studies, Wiley Blackwell, vol. 59(5), pages 1315-1353, July.
    9. Farazi, Mohammad Saleh & Chiambaretto, Paul & Fernandez, Anne-Sophie & Gopalakrishnan, Shanthi, 2024. "Unbundling the impact of current and future competition on cooperation in coopetition projects for innovation," Research Policy, Elsevier, vol. 53(6).
    10. Robson, Matthew J. & Katsikeas, Constantine S. & Schlegelmilch, Bodo B. & Pramböck, Barbara, 2019. "Alliance capabilities, interpartner attributes, and performance outcomes in international strategic alliances," Journal of World Business, Elsevier, vol. 54(2), pages 137-153.
    11. Subramanian, Annapoornima M. & Lim, Kwanghui & Soh, Pek-Hooi, 2013. "When birds of a feather don’t flock together: Different scientists and the roles they play in biotech R&D alliances," Research Policy, Elsevier, vol. 42(3), pages 595-612.
    12. Kevin Morrell & Ian Clark, 2010. "Private Equity and the Public Good," Journal of Business Ethics, Springer, vol. 96(2), pages 249-263, October.
    13. Subramanian, Annapoornima M. & Bo, Wang & Kah-Hin, Chai, 2018. "The role of knowledge base homogeneity in learning from strategic alliances," Research Policy, Elsevier, vol. 47(1), pages 158-168.
    14. Ghosh, Anindya & Klueter, Thomas, 2022. "The role of frictions due to top management in alliance termination decisions: Insights from established bio-pharmaceutical firms," Other publications TiSEM 9faa19d2-d1a8-4490-befb-d, Tilburg University, School of Economics and Management.
    15. Garcia-Perez-de-Lema, Domingo & Madrid-Guijarro, Antonia & Martin, Dominique Philippe, 2017. "Influence of university–firm governance on SMEs innovation and performance levels," Technological Forecasting and Social Change, Elsevier, vol. 123(C), pages 250-261.
    16. Shameen Prashantham & Charles Dhanaraj, 2010. "The Dynamic Influence of Social Capital on the International Growth of New Ventures," Journal of Management Studies, Wiley Blackwell, vol. 47(6), pages 967-994, September.
    17. Soh, Pek-Hooi & Subramanian, Annapoornima M., 2014. "When do firms benefit from university–industry R&D collaborations? The implications of firm R&D focus on scientific research and technological recombination," Journal of Business Venturing, Elsevier, vol. 29(6), pages 807-821.
    18. Eric Gedajlovic & Benson Honig & Curt B. Moore & G. Tyge Payne & Mike Wright, 2013. "Social Capital and Entrepreneurship: A Schema and Research Agenda," Entrepreneurship Theory and Practice, , vol. 37(3), pages 455-478, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Devarakonda, Ramakrishna & Reuer, Jeffrey J. & Tadikonda, Harsha, 2022. "Founder social capital and value appropriation in R&D alliance agreements," Research Policy, Elsevier, vol. 51(4).
    2. Zheng, Yanfeng & Liu, Jing & George, Gerard, 2010. "The dynamic impact of innovative capability and inter-firm network on firm valuation: A longitudinal study of biotechnology start-ups," Journal of Business Venturing, Elsevier, vol. 25(6), pages 593-609, November.
    3. Folta, Timothy B. & Cooper, Arnold C. & Baik, Yoon-suk, 2006. "Geographic cluster size and firm performance," Journal of Business Venturing, Elsevier, vol. 21(2), pages 217-242, March.
    4. Patzelt, Holger & Shepherd, Dean A. & Deeds, David & Bradley, Steven W., 2008. "Financial slack and venture managers' decisions to seek a new alliance," Journal of Business Venturing, Elsevier, vol. 23(4), pages 465-481, July.
    5. Rothaermel, Frank T. & Deeds, David L., 2006. "Alliance type, alliance experience and alliance management capability in high-technology ventures," Journal of Business Venturing, Elsevier, vol. 21(4), pages 429-460, July.
    6. Andreas Al-Laham & Terry L. Amburgey, 2010. "Who Makes You Central?," Management International Review, Springer, vol. 50(3), pages 297-323, June.
    7. Agarwal, Rajshree & Croson, Rachel & Mahoney, Joseph T., 2007. "Decision Making in Strategic Alliances: An Experimental Investigation," Working Papers 07-0108, University of Illinois at Urbana-Champaign, College of Business.
    8. Colombo, Massimo G. & Grilli, Luca & Piva, Evila, 2006. "In search of complementary assets: The determinants of alliance formation of high-tech start-ups," Research Policy, Elsevier, vol. 35(8), pages 1166-1199, October.
    9. Coombs, Joseph E. & Mudambi, Ram & Deeds, David L., 2006. "An examination of the investments in U.S. biotechnology firms by foreign and domestic corporate partners," Journal of Business Venturing, Elsevier, vol. 21(4), pages 405-428, July.
    10. Mouri, Nacef & Sarkar, M.B. & Frye, Melissa, 2012. "Alliance portfolios and shareholder value in post-IPO firms: The moderating roles of portfolio structure and firm-level uncertainty," Journal of Business Venturing, Elsevier, vol. 27(3), pages 355-371.
    11. Stienstra, Miranda, 2020. "The determinants and performance implications of alliance partner acquisition," Other publications TiSEM 7fdee0c2-d4d2-4f5b-95e3-2, Tilburg University, School of Economics and Management.
    12. Fabio Sorrentino & Francesco Garraffo, 2012. "Explaining performing R&D through alliances: Implications for the business model of Italian dedicated biotech firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(3), pages 449-475, August.
    13. Carayannopoulos, Sofy & Auster, Ellen R., 2010. "External knowledge sourcing in biotechnology through acquisition versus alliance: A KBV approach," Research Policy, Elsevier, vol. 39(2), pages 254-267, March.
    14. Hagedoorn, John & Lorenz-Orlean, Stefanie & Kranenburg, Hans, 2007. "Inter-firm technology transfer: Partnership-embedded licensing or standard licensing agreements?," MERIT Working Papers 2007-006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    15. Casanueva, Cristóbal & Gallego, Ángeles & Sancho, María, 2013. "Network resources and social capital in airline alliance portfolios," Tourism Management, Elsevier, vol. 36(C), pages 441-453.
    16. Fariss–Terry Mousa & Richard Reed, 2013. "The Impact of Slack Resources on High–Tech IPOs," Entrepreneurship Theory and Practice, , vol. 37(5), pages 1123-1147, September.
    17. Richards, Malika & De Carolis, Donna Marie, 2003. "Joint venture research and development activity: an analysis of the international biotechnology industry," Journal of International Management, Elsevier, vol. 9(1), pages 33-49.
    18. Janney, Jay J. & Folta, Timothy B., 2006. "Moderating effects of investor experience on the signaling value of private equity placements," Journal of Business Venturing, Elsevier, vol. 21(1), pages 27-44, January.
    19. Frank T. Rothaermel & Andrew M. Hess, 2007. "Building Dynamic Capabilities: Innovation Driven by Individual-, Firm-, and Network-Level Effects," Organization Science, INFORMS, vol. 18(6), pages 898-921, December.
    20. Brinster, Leonhard & Tykvová, Tereza, 2021. "Connected VCs and strategic alliances: Evidence from biotech companies," Journal of Corporate Finance, Elsevier, vol. 66(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jomstd:v:45:y:2008:i:8:p:1354-1376. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-2380 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.