Modes of Cooperative R&D Commercialization by Start-Ups

39 Pages Posted: 25 Jul 2006

See all articles by Vikas A. Aggarwal

Vikas A. Aggarwal

INSEAD - Entrepreneurship and Family Enterprise

David H. Hsu

University of Pennsylvania - Management Department

Date Written: July 19, 2006


This paper empirically examines the determinants of heterogeneous cooperative R&D commercialization strategies of innovating biotechnology start-ups. While the volume of inter-firm collaboration, spanning modes such as strategic alliances and technology licensing, has increased dramatically in recent decades, prior research has seldom analyzed the firm-level organizational choice between alternate modes of such cooperative activity. The organization of collaborative commercialization has important resource allocation, corporate development, and strategic implications for innovating firms, particularly in the biotechnology industry, as self-commercialization in this industry is rare. Using a random sample of over 100 biotechnology innovators, we assemble a firm-year panel dataset to examine the relative importance of organizational governance capability and transaction cost measures in explaining the variation in cooperative mode choice. We do this by aggregating transaction-level collaboration data to the firm-year level (thereby characterizing firms' portfolio of collaborative deals). In firm level analyses of collaborative choice intensities and transaction level analyses of alternate modes of organizing a deal, we find empirical support for organizational governance capability theories and mixed support for transaction cost theories. Moreover, we find that firm valuation is shaped both by experience in particular collaborative modes and by deviations from historic collaboration mode capabilities.

Keywords: Strategic alliances, corporate development, entrepreneurship, biotechnology

JEL Classification: M14, O32

Suggested Citation

Aggarwal, Vikas A. and Hsu, David H., Modes of Cooperative R&D Commercialization by Start-Ups (July 19, 2006). Available at SSRN: or

Vikas A. Aggarwal

INSEAD - Entrepreneurship and Family Enterprise ( email )

F-77305 Fontainebleau Cedex

David H. Hsu (Contact Author)

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-746-0125 (Phone)
215-898-0401 (Fax)

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