This literature review started by examining why the biotech sector is a unique context for examining strategy and by describing a perceived problem with the biotech sector as viewed by its accumulated losses, and examining the potential causes. The strategic management literature bearing directly on commercialisation strategy in the biotech sector was examined and was found wanting in terms of actionable advice for
practitioners. Shortfalls in the literature were framed within the greater debate about the gap between academic theory and management practice.
Traditional strategic management research approaches would impede an examination of commercialisation strategies in biotech start-ups for three key reasons. Firstly, strategic management theory has tended to focus on large, established firms rather than start-ups, which are predominantly the domain of the entrepreneurship field. Biotech firms are relatively unique in that the product development cycle for drugs is roughly 15 years, and many firms remain in the ‘start-up’ phase for up to two decades or even longer. Research and development, and commercialisation, are the strategic focuses of these firms throughout this time. Secondly, strategic management research often focuses on strategy at the industry level rather than at the firm level. Thirdly, the biotech sector is a unique setting for commercialisation strategy – the participants face high levels of
scientific uncertainty and regulatory burden and often lack the complementary assets they require for commercialisation resulting in high levels of collaboration.
Strategy process research offers the opportunity to view commercialisation strategy as a stream of decisions that are made over time. How strategy is devised and revised is as important as a strategy’s content. It is impossible to derive a complete understanding of biotech commercialisation strategy in a way that can be prescriptive in every situation. A subset of strategy process research looks at ‘decision aids’. In contrast to those researchers with a rational, systematic approach to strategy formulation (typical of IO economics), researchers in this area view strategy formulation as problematic and believe decision aids are useful in structuring decision processes to analyse strategic alternatives. According to Huff (1987) the work on decision aids recognizes that coming up with new strategic ideas and a framework within which to understand them is not easy. A ‘commercialisation options strategy model’ specific to biotech start-ups will provide a framework within which to consider strategic ideas and choices, and will suggest processes that may support the development and selection of options (to exercise or terminate) during the long commercialisation process.
There is a need for improvement in the commercialisation strategies of biotech firms as evidenced by the massive losses in the industry to date. A review of the strategic management theory has uncovered only a little useful theory on commercialisation strategy (e.g. competition vs cooperation, institutional factors). By and large there seems to be a chasm between academic theory and the needs of practitioners in the biotech sector. The reason for this is that most strategy theory is abstracted so as to be generalisable across industries or circumstances. During the process of abstraction the relationships between strategies and elements of context may become blurred or lost. I argue that in order for theory about commercialisation to be useful to practitioners it needs to be highly contextual – it needs to address their specific strategic issues in a way that they will find actionable. Useful existing theoretical frameworks (ROR, dynamic capabilities) were described in this literature review but they require translation into substantive theory specific to biotech commercialisation. The methodology employed in doing this is described in the next chapter.
4
Methodology
“There are neither good or bad methods but only methods that are more or less effective under particular circumstances in reaching objectives on the way to a distant goal.” George Homans (1949, p330 as quoted by Pettigrew 1998 pg 285).
The objective of this chapter is to describe and justify the epistemological approach and research design used in answering this thesis’ central research question - how do biotech firms do commercialisation strategy, and how can they do it better?
Two key outcomes are sought. Firstly, to further empirical knowledge in management studies through an analysis of the relationship between the strategic issues faced by biotech companies and their choice of business model. Secondly, to propose a processual model of biotech commercialisation strategy that will be useful to biotech practitioners and to management academics and that will take a step toward addressing the disjuncture between academy and practice that has been discussed earlier in this thesis.
One of the ways to ensure that theory is applicable to practice is to build the theory inductively, by gathering facts pertinent to the research question through observations of the real world (Cooper and Locke, 2000). This is in contrast to the more popular
method of theory building that begins with inventing a theory, making deductions (hypothesis) from it, and then testing it. The use of an inductive research approach in this project is discussed in section 4.2 under the sub-title of case data analysis and theory development.
As Pettigrew says (1990, p 285) “… the choice of methodology is contingent on the problems and questions under study and the state of development of any body of knowledge.” The methodological approach described below is appropriate considering the scant body of academic knowledge targeted at commercialisation strategy and a goal of synthesizing both academic and practitioner knowledge regarding commercialisation strategy within the biotech sector.
The first section of this chapter outlines my epistemological perspective in this thesis, and overviews several key theoretical approaches that have shaped the research design. The research design is then described, including the methodology employed in case study and analysis and theory development and refinement. This chapter concludes with commentary on the inherent ethical issues and a summary of the overall research design.