The International Consortium on Agricultural Biotechnology Research (ICABR)
The Structure of the European Agro-food Biotechnology Industry: Are
Strategic Alliances Here to Stay?
W. Bruce Traill, the University of Reading, UK
Bringing to market products incorporating new biotechnology, particularly genetic engineering based, requires a range of capabilities. Downstream capabilities are associated with regulatory approval and marketing as well as manufacturing; upstream skills are associated with the hard science undertaken typically in dedicated biotechnology firms (DBFs) which emerged in the last two decades, predominantly in the US. These have not acquired the skills in regulatory approval, marketing or manufacture that would move them to fully-fledged agro-food companies. The complementary capability base of the small, science and technology driven DBFs and the multinational life science companies explains the high incidence of alliances, both within and across national borders.
Alternative theoretical explanations for the observed structural pattern of the industry include: transactions cost economics, would view biotech alliances as highly liable to opportunistic behaviour and therefore a transitory step towards vertical integration (Pisano 1991); Lavoie and Sheldon (2000) use a real option model that again appears to suggest that alliances are transitory; Graff, Rausser and Small (1999) suggest complementary intellectual assets to be an explanation for what they observe to be a consolidation process (particularly with respect to life science and seed companies in North America); a related theory from the business strategy literature known as dynamics capabilities suggests that in industries characterised by dynamic technological change such as biotechnology, alliances would be a lasting feature of industrial structure (Teece, Pisano and Shuen, 1997).
The aim of this paper is to review and attempt a preliminary explanation of developments in the European Agro-food biotechnology sector in the light of these theories, particularly complementary assets and dynamic capabilities.
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