Institutional diversity, internal search behaviour, and joint-innovations: evidence from the U.S. biotechnology industry

Purpose – The purpose of this paper is to investigate the innovation performance of R&D collaborations from an institutional perspective. Design/methodology/approach – The authors conduct an empirical analysis based on 487 joint-inventions developed by 50 US biotechnology firms from 1985 to 2002. Findings – The authors find that institutional diversity between the partners, as reflected by firm-university partnerships, positively affects the value of their joint-innovation. This effect is reinforced by the firm’s behaviour in searching for knowledge broadly (scope) and in the non-commercial realm (science-based nature). Conversely, as the firm searches for knowledge in few domains areas (depth), the positive effect of institutional diversity is reduced. Research limitations/implications – The study contributes to literature on partner selection, university-industry collaborations, balance between exploration and exploitation, as well as to research on the interdependence between firm’s external and internal resources. Practical implications – The study reveals that when firms innovate together with universities, this promotes the development of high valuable innovations. In addition, it emerges that to fully capture the benefits of these collaborations, firms have to develop a wide set of competencies supported by a scientific approach in problem solving. Originality/value – The study sheds new light on the dynamics favouring the joint development of valuable innovations by focusing on the impact exerted by partners’ institutional differences, as revealed by how norms and rules shape innovation’s modes.