The degree of integration in strategic alliances in biotechnology

This paper looks at the spectrum of strategic alliances in biotechnology in the late 1980s from the point of view of whether the alliance was of a contractual type or, at the other end of the spectrum how integrated the two companies of the alliance were. It uses an ordered probit model to test for any systematic association between alliances within industrial sectors and of different size types, and the type of alliance that occurred. The paper finds that more contractual, less integrated types of alliance were concentrated in the healthcare sectors of therapeutics and diagnostics and where at least one of the firms was small in size. More integrated types of alliance prevailed in the agriculture and chemicals sectors and between two large companies. It relates these results to conditions of appropriability, tile impact of the new technologies on existing competencies and absorptive capacity within the different industrial sectors at that time. It compares the situation of the late 1980s with more recent developments in corporate strategy towards alliance formation.