Interrelationships between Exploration and Exploitation in Complementary Domains of Knowledge: An Empirical Study of Co-operative Agreements in the UK Biotechnology Sector

Filiou, Despoina (2007). Interrelationships between Exploration and Exploitation in Complementary Domains of Knowledge: An Empirical Study of Co-operative Agreements in the UK Biotechnology Sector. Unpublished.

Abstract

Within the knowledge-based view firms co-operate because they are motivated either by a desire to access or to acquire capabilities. This paper combines these two aspects by drawing on the literature on distributed innovation processes as well as that on dynamic capabilities. It contends that firms co-operate because they are motivated by the desire to gain access to complementary capabilities and to match internal explorative and exploitative search with their external counterparts that are present in complementary domains of knowledge. The contention is examined empirically within the UK's biotechnology sector. Specifically, it is suggested that dedicated biotechnology firms co-operate primarily because they wish to exploit technological capabilities that are matched with exploration of knowledge in demand. Established firms co-operate primarily because they seek first to exploit demand capabilities, and second to engage in the exploration for, and the beneficial use of technological knowledge. The findings help our understanding not only of the motives behind inter-firm co-operation, but also of the way in which co-operative agreements can be initiated and managed in their nascent phases.

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