Network Effects in the Governance of Biotech Strategic Alliances
- Topics:
- Strategic Management Tools
- Tags:
- Alliance,
- Strategy,
- Networking,
- Network Effect,
- Network,
- Management,
- Investment,
- Financial Services,
- Finance,
- Equity,
- ...
- Source:
- University of Chicago
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Overview: This paper argues that the stock of prior alliances between participants in the biotechnology sector forms a network that serves as a governance mechanism in inter-firm transactions. To test how this network substitutes for other governance mechanisms, this paper examines how equity participation and pledged funding in strategic alliances vary with two features of the way alliance participants are positioned in the network of past deals: proximity, and centrality, which measures how deeply a firm is embedded in the network. As centrality and proximity increase, equity participation (measured by size and propensity) diminish, while pledged funding increases.
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Format: PDF | Size: 281KB | Date: Nov 2002 | Pages: 51
