nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2006‒09‒03
two papers chosen by
Bernardo Batiz-Lazo
Bristol Business School

  1. Research Strategies in Science-based Start-ups - Effects on performance in Danish and Swedish biotechnology By Finn Valentin; Henrich Dahlgren; Rasmus Lund Jensen
  2. Strategic Unemployment By Julia Angerhausen; Christian Bayer; Burkhard Hehenkamp

  1. By: Finn Valentin; Henrich Dahlgren; Rasmus Lund Jensen
    Abstract: Although biotech start-ups fail or succeed based on their research few attempts have been made to examine if and how they strategize in this core of their activity. Popular views on Dedicated Biotech Firms (DBFs) see the inherent uncertainty of research as defying notions of strategizing, directing instead the attention to the quality of their science, or the roles of boards, management, and collaborative networks etc. Using a unique comprehensive dataset on Danish and Swedish biotech start-ups in drug discovery this paper analyzes their research strategies. Adopting a Simonean point of departure we develop a contingency view on complex problem solving which structures the argument into three steps: 1) Characterising the problem architectures addressed by different types of DBFs; 2) Testing and confirming that DBFs form requisite research strategies, by which we refer to problem solving approaches developed as congruent responses to problem architectures; 3) Testing and confirming that financial valuation of firms is driven by achievements conforming to requisite research strategies. These strategies, in turn, require careful combination of multiple dimensions of research. Findings demonstrate that Shonhoovens classical argument that “strategy matters” is valid not only for the larger high-tech firms covered by her study, but also for small research-based start-ups operating at the very well springs of knowledge where science directly interacts with technologies. Even though a lot more research is needed along these lines, these findings offer new implications for the understanding, management, and financing of these firms.
    Keywords: Biotechnology; research strategy; discovery fields; valuation; performance measures
    JEL: L25 L65 O32
    Date: 2006
  2. By: Julia Angerhausen; Christian Bayer; Burkhard Hehenkamp
    Abstract: We propose a dynamic model that explains why individuals may be reluctant to pick up work although the wage is above their reservation wage. Accepting low paid work will put them in an adverse position in future wage bargaining, as employers could infer the individual.s low reservation wage from his working history. Employers will exploit their knowledge o¤ering low wages to this individual in the future. Therefore, employees with low reservation wage strategically opt into unemployment to signal a high reservation wage.
    Date: 2006–07

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