Interaction between researchers, firm managers and venture capitalists : the essence of biotechnology business

Abstract

The knowledge gained from the advances in biotechnology-related research is the basis from which a number of opportunities are derived. The potential of these opportunities have raised high expectations with actors, regions and entire nations. There are, however, difficulties in pursuing opportunities, which calls for increased understanding of the logics of such processes. One aim of this thesis is therefore to gain further insight into processes of opportunity-pursuits in biotechnology business.

Four studies contribute to an increased understanding of pursuits of opportunities in the areas of knowledge production, firm creation and business development. Study I, using the method of bibliometry, contributes with data on the development of knowledge production regarding publications in Sweden over a 10-year period. It shows, for example, that the area of Stockholm-Uppsala is the most active region both in terms of production of publications and collaboration. Studies II and III contribute with frames of reference with respect to firm creation and business development. Study II points out that the personal networks of founders of firms are vital for establishing contacts with venture capitalists, and that there are substantial differences in the type of added value provided by specialized venture capitalists. A possible predictor of the ways in which an early-stage venture capitalist will add value in a biotechnology venture, is the initial existence of a chief executive officer and his or her experience. Study III establishes that biotechnology firms apply network strategies that enable them to keep a flexible organization and that facilitate access to front-line research through collaboration with academia. Their strategies are divided into the concepts of intermediary and integrating firms. Study IV contributes by exploring risk issues in business development and ways in which managers in biotechnology firms may respond to these issues. The result implies that the nature of decision-processes may be opportunitydriven.

The findings from the studies, in conjunction with previous research, imply that interaction is essential to pursuits of opportunities in biotechnology business. Another aim of this thesis is therefore to create a conceptual framework clarifying the role of interaction in such processes. An analysis of interactions between researchers, firm managers and venture capitalists was performed by using the empirical data from the studies collectively. The analysis is the foundation for the development of a new conceptual framework and for a general discussion on opportunity-pursuits in biotechnology business. One insight gained from the analysis is that entrepreneurship can be understood as a relational concept. The conceptual framework shows that social capital is of utmost importance in the pursuit of opportunities. Interaction enables social capital to increase and without interaction it will die out. Interaction is thus necessary for the existence of social capital and social capital is necessary for pursuing opportunities, which leads to the proposal that interaction is essential in biotechnology business.

The logic of processes of opportunity-pursuits in biotechnology business introduced in this thesis speaks specifically for the groups from which it was derived and, hence, is applicable to them. The descriptions and explanations are therefore likely to be valuable to practitioners and policy makers who want to increase their understanding of opportunity-pursuits in the areas of knowledge production, firm creation and business development. The conceptual framework, including a model of processes of opportunity-pursuits, clarifies the role of interaction and is of value as a base for future research.