EXPLORATIONA ND EXPLOITATIONA LLIANCES IN BIOTECHNOLOGY:

ASYSTEM OF NEW PRODUCT DEVELOPMENT .FRANK T. ROTHAERMEL and DAVID

L DEEDS. Strat. Mgmt. 7., 25: 201-221 (2004)
INTRODUCTION
Research question
1. Are there mechanisms by which the Exploration alliances could predict future product
that a company wants to develop through a mechanism for determining the areas of
development and the general lines of research?
2. Are there mechanisms by which Exploitation alliances could determine new products
that a company positioned in the market and sold through a mechanism of strengthening
strategies and new marketing networks?
Key theoretical perspectives
Exploration-Exploitation framework. Developed by March 1991 and perfected by Levinthal
and March 1993, explains how companies organize their new technological investments
for the various stages of new product development. In the context of the research
presented in this paper, the authors attempt to establish the impact of alliances, both
during Exploration and Exploitation stage in the development of new products, defining a
priori that alliances in Exploration stages can be defined as more risky, given its high
degree of uncertainty and that alliances in the steps of Exploitation as less risky and which
are closest to the stage of the new product launch. In both cases, in a "normal"
approximation and a "positive" approximation.
Unaddressed puzzle, controversy, or paradox
The evidence from the literature on previous research has shown that alliances are very
important for companies because they allow reduce product development times and
reduce uncertainty by a mechanism of internalization of new knowledge available which
would have no access otherwise. Whereas considers product development phases, it can
be considered that there are different types of alliances defined for each stage where the
internalization of this new knowledge is facilitated.
Research on this topic has focused corporate alliances described in general terms and its
effect on the development of products, but not targeted for each phase of development. In
this sense, the authors attempt als showed that within firms using alliances phases of
exploration and exploitation tend to sell more products than those that do not use and at
what time use one or the other. Additionally moderator wish to demonstrate the negative
effect of the size of the company and that larger firms have more difficulty sustaining
alliances and internalize knowledge. So far this effect has not been shown to partnerships
at every stage of product development.
METHODS
Overall design
The authors use data from the biotech industry has-been Identified as the industry With
the highest frequency alliance Among several industries Characterized by high alliance
activity In this study, drug development processes were used by their degree of
uncertainty. A correlation analysis was used to study the effect of each variable. Analysis
of the variables: 1. Products on the market = / (Exploitation alliances, Controls). 2.
Exploitation alliances = / (Products in development, Controls). 3. Products in development
= / (Exploration alliances, Controls).
Data and procedures
1. 325 biotechnology firms fully dedicated to human therapeutics listed in BioScan, all
firms engaged in Developing That Were in vivo therapeutics, for Their FDA Requirements,
where the data products were obtained.
2. Firm listed in BioScan alliances where partners, processes, and products developed
areas were identified.

Statistical methods/Limit of your techniques

Correlation : X square statistic for one degree of freedom
Evaluation: Normed Fit Index (NFI); Comparative Fit Index (CFI); LISREL Goodness of Fit
(GFI); Root Mean Error of Approximation (RMSEA)
Limitations
Only one industry, Another limitation of this study is that we were only able to study
surviving alliances.
HYPOTHESES, THEIR THEORETICAL REASONING, AND RESULTS
List of hypo, their underlying theoretical reasonings
From the available evidence regarding phases of product development, impact of
partnerships in business development activities and the definition of exploration and
exploitation activities in the technological investment, the authors propose that within the
phases of product development partnerships are important because exploration of
internment by a mechanism of new knowledge to define new products in development and
that this in turn define new exploitation alliances favoring d enuevos positioning products
in the market.
Hypothesis 1: Alliances exploration define new product developments, which in turn define
exploitation alliances predict exploitation alliances and new products on the market.
Result: Figure 2, provide support for the proposed new product development path.
Hypothesis 1 is accepted.
When a company defines areas of technological investment begins to grow and acquire
more resources will tend to minimize their risks, thus favoring the projects "in house" over
external alliances in order to reduce its dependence on external strategic alliances for
marketing products.
Hypothesis 2: The product development path from exploration alliances leading to
products on the market is moderated by firm size negatively.
Result: Figure 2, Hypothesis 2 is accepted.
Why one has chosen a specific set of explanatory variables over others
Firm's products in development as a count variable of each firm's biotechnology products
in development that have successfully entered clinical trials but have not yet reached the
market for pharmaceuticals.
DISCUSSION
How does this study fundamentally change, challenge, or advance scholars
understanding?
It was shown that there is evidence to establish that the product development lines should
start with activities ranging from building alliances,, exploration through developing
products and exploitation alliances leading to position products in the market. This allows
better understand the alliances and new product development under ExplorationExploitation. Additionally it was shown that the size of the company has a negative
moderating effect on the development of new partnerships, under ExplorationExploitation, which had not been demonstrated until now.
Why is the insight interesting and important in theory and practice?
The results obtained in this paper, support the conjecture of transaction cost economics
established by Williamson in 1985 regarding the costs of internalization of externally
available information and assumptions of hierarchy structure model of optimal capital
determined for Myers 1984, regarding establishing a structure that maximizes revenue at
lower cost.
Future research

1 Specification as to what combination of exploration and exploitation is best when in the

company for superior performance, taking into account the different time horizons for
exploration and exploitation modes.
2 Determine how much of each activity Exploration and Exploitation should adopt towards
the option of developing "in house" as the search option of external alliances.
3 Investigate the factors that determine the distribution of the income generated between
the different organizations involved in the process of product development explorationexploitation
4 Investigate as might mitigate the problems arising in companies resulting from the
association in alliances for the development of new products.
5 Assess the validity of this model in various industrial environments.