Network failure: Biotechnology firms, clusters and collaborations far from the world superclusters

This article traces the trajectory of biotechnology firms, clusters and collaborations in Australia between 2003 and 2014. Combining descriptive analyses, network visualizations and statistical modelling of longitudinal data collected from multiple sources, we investigate Australian firms’ ability to overcome the three challenges characterizing biotechnology: first, accessing new knowledge and intellectual property; second, raising early-stage funding for timely product development; and third, bringing products to market. Like biotechnology firms worldwide, Australian firms adopt a network approach to success, relying on different types of collaborative ties with diverse partners to access complementary resources and facilitate learning and innovation. The aspiration here is a virtuous cycle, where networks promote innovation and innovation promotes networks, as occurs in the world superclusters. In contrast, our analyses show that the collaborations of Australian biotechnology firms produce not so much a virtuous cycle, as a dead end. Specifically, local collaborations with public research organizations generate network effects in meeting the challenges of new knowledge and early-stage funding, but do not extend to the challenge of bringing products to market. We link this 'network failure' to the limitations of public research organizations as anchor tenants with the capability to catalyze collaborations with distant partner organizations directed towards commercialization, in particular giant multinational pharmaceutical corporations. Our study enriches the substantial literature on networked innovation, which is biased towards celebrating the benefits of networks and collaborations for innovation and performance, particularly in biotechnology.