Sources of Medical Technology Universities and Industry (1995) / Chapter Skim
Currently Skimming:
8 THE DIVISION OF INNOVATIVE LABOR IN BIOTECHNOLOGY
8 THE DIVISION OF INNOVATIVE LABOR IN BIOTECHNOLOGY
Pages 188-206
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 188... ...
Instead, we submit that networks and strategic alliances are best viewed as important special cases of the more general phenomenon of a division of innovative labor. To highlight the use of general and abstract knowledge in innovation, we focus here upon one sector of the increasingly diverse "biotechnology industry," the human diagnostics and therapeutics sector, often referred to as "biopharmaceuticals" (Burrill, 1989~.
|
From page 189... ...
We then analyze the factors that determine the value that a firm can derive from its external linkages, and the light that throws upon the nature of division of innovative labor. The penultimate section discusses whether the division of innovative labor is socially desirable and the final section provides our conclusion.
|
From page 190... ...
For instance, the synthesis of the nucleic acid sequence, originally performed at the City of Hope Medical Center, led to the large scale production of rDNA insulin. This was developed, produced, and commercialized by a joint venture between Genentech and Eli Lilly.
|
From page 191... ...
These opportunities have been exploited by the institutions performing the research, by NBFs through their academic ties, or by NBFs or other companies taking advantage of the knowledge generated by public research. Finally, the United States has followed an aggressive policy of defining and strengthening intellectual property rights.
|
From page 192... ...
Moreover, as we saw, economic forces have reinforced this trend by pushing both the NBFs to take advantage of the downstream capabilities of large firms, and the large firms to avail themselves of the upstream research skills of the NBFs. 3The total turnover of many NBFs is, indeed, still composed for the most part of research contracts to larger firms rather than actual product sales.
|
From page 193... ...
The agreements with universities tend to focus on more basic research objectives. Large firms finance research activities performed by academic laboratories to acquire, by interacting with university scientists, some familiarity with the basic knowledge in this field.
|
From page 194... ...
Eli Lilly is one of the most research-intensive pharmaceutical companies worldwide, and was an early entrant in biotechnology research. It sought to complement its generalized expertise in biotechnology with know-how in monoclonal antibodies, wherein Hybritech had specialized capabilities.
|
From page 195... ...
The agreements with universities provide the large firms with access to basic scientific knowledge. Minority participation enables them to acquire familiarity with the internal research activities of the NBF.
|
From page 196... ...
To be sure, transaction costs are important, but technological knowledge is a special type of good. It requires a great deal of specialized knowledge and skill to successfully utilize technological information.
|
From page 197... ...
The willingness of a firm to invest in such a linkage will depend first and foremost on whether it has the requisite development competencies in the particular therapeutic area, and on whether it has underutilized downstream capabilities for successful commercialization. A slightly different way of putting it is to note that firms' commercialization capabilities are fixed in the short run and are to some extent specific to particular therapeutic areas.
|
From page 198... ...
The measures of the ability to utilize information are positively related to the number of external linkages, and the measure for scientific capability is negatively related to the number of linkages.l6 These results also help us clarify an important point. Our discussion might have unintentionally suggested that within the division of innovative labor in the biotech industry, research is performed by NBFs, while large firms provide only downstream capabilities.
|
From page 199... ...
As the results discussed in the previous section would suggest, firms have therefore become more discerning in their choice of partners, and hence form fewer but potentially more valuable alliances. A final question is whether a division of innovative labor in biotechnology is socially desirable.
|
From page 200... ...
This increased universality in the form of information eases information exchange for innovation, and encourages specialization and division of labor according to comparative advantage.21 Biotechnology exemplifies the increasing use of general and abstract knowledge for innovation, and the consequent possibilities that have arisen for a new division of labor in inventive activity. This perspective leads us to suspect that the division of labor in biotechnology will prove to be more enduring than traditional Chandlerian or transaction-cost perspectives would suggest.
|
From page 201... ...
Consistent with our analysis of comparative advantage, NBFs have found "go-it-alone" strategies easier in the less lucrative market for diagnostic kits, especially in-vitro kits, because the development and regulatory procedures are simpler. Even in such markets, however, complementary assets such as the ability to supply diagnostic equipment and previous experience in dealing with hospitals have proved to be of great importance for established companies such as Abbott.
|
From page 202... ...
The division of innovative labor that we have studied is taking place in the context of a noticeable increase in the use of general and abstract knowledge in innovation. The breadth of applicability of universal principles offers the possibility of subdivision of the innovation process 23In this context, it is interesting to note that, while Centocor and the other biotech firms mentioned above seek partnerships for resources and expertise downstream, Eli Lilly is moving in the other direction.
|
From page 203... ...
We argued that "buying" technological information requires a great deal of prior competence and capabilities, very similar to those required for generating new technological information. The nature of the "market" for information and its functioning, and their implications for the organization and rate and direction of innovation, are not fully understood and remain important areas of future research.
|
From page 204... ...
1987. Firm and industry characteristics influencing publications of scientists in large American companies.
|
From page 205... ...
1988. Academic Scientists and the Pharmaceutical Industry.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.