"The Impact of Inter-Firm Relationships on the Allocation of Control Rights in Bio-Pharmaceutical Alliances"



In this paper, I examined the impact of inter-firm relationships on the allocation of control rights in bio-pharmaceutical alliances. The relational factors examined include (1) prior alliance experience between the biotech and the pharmaceutical firms; (2) future collaborative opportunities based on biotech’s business strategy; and (3) inter-firm rivalry between the biotech and the pharmaceutical firms. The results show that biotech firms are likely to receive more control rights in drug development and commercialization, if they have prior collaboration with their partners or if they adopt a product development strategy rather than a technology service strategy. In contrast, if biotech firms have competing products or technologies with their partners, they will receive fewer control rights. The relational effect is stronger in early-stage research than in late-stage development. The results suggest that relational factors have strong impact on the allocation of control rights, especially when there are high risks of transactional hazards.
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Carolien Heintjes