The role of alliance formation in new business development

Abstract

New science based firms face the challenge of obtaining necessary complementary resources for successful business development. Such a firm will be motivated, in order to gain access to the resources and competences that a firm has not in-house, to enter an alliance with another firm that has these resources. As different phases of the innovation process ask for different complementary resources, it would make sense that the type of alliances (R&D alliance or a commercial alliance) reflect this. In this paper the role of alliances in successive stages of new business development is researched. From the results, obtained for 218 surviving new ventures in the Dutch life sciences industry, over the period 2002-2005, the following conclusions have been drawn. Commercial alliances play an important and positive role in the pre-market phase, but have a negative influence in the market phase. R&D alliances boost revenues but not profits in both phases. Help from a parent in the form of commercial capital helps new business development but technological support is never a good thing. Another important factor that negatively influences business development is the diversity of the management team in both the pre-market and the market phase.