The governance of innovation: Vertical integration and collaborative arrangements in the biotechnology industry

Abstract

This paper analyzes and compares the various governance structures through which new biotechnologies have been developed and commercialized over the past decade and a half. These governance structures include (1) forward vertical integration by new biotechnology firms (NBFs) from R&D into manufacturing and marketing; (2) backward integration by established firms from downstream industries into biotechnology R&D; and (3) various forms of collaboration between NBFs and established firms involving R&D, technology transfer, production, and distribution. The institutional, technological, and organizational forces affecting the incidence of these governance structures over time are discussed and examined with data from several sources.