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Research Article

The impact of stocks and flows of organizational knowledge on firm performance: an empirical investigation of the biotechnology industry

  1. Donna Marie DeCarolis1,*,
  2. David L. Deeds2

Article first published online: 28 SEP 1999

DOI: 10.1002/(SICI)1097-0266(199910)20:10<953::AID-SMJ59>3.0.CO;2-3

Issue

Strategic Management Journal

Strategic Management Journal

Volume 20, Issue 10, pages 953–968, October 1999

Additional Information

How to Cite

DeCarolis, D. M. and Deeds, D. L. (1999), The impact of stocks and flows of organizational knowledge on firm performance: an empirical investigation of the biotechnology industry. Strat. Mgmt. J., 20: 953–968. doi: 10.1002/(SICI)1097-0266(199910)20:10<953::AID-SMJ59>3.0.CO;2-3

Author Information

  1. 1

    College of Business and Administration, Drexel University, Philadelphia, Pennsylvania, U.S.A.

  2. 2

    The Weatherhead School of Management, Case Western Reserve University, Cleveland, Ohio, U.S.A.

*College of Business and Administration, Drexel University, 101 N. 33rd St., Philadelphia, PA 19104, U.S.A.

Publication History

  1. Issue published online: 28 SEP 1999
  2. Article first published online: 28 SEP 1999
  3. Manuscript Accepted: 13 APR 1999
  4. Manuscript Received: 27 FEB 1998

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Keywords:

  • stocks and flows of knowledge;
  • biotechnology;
  • firm performance

Abstract

The knowledge-based view of the firm is a recent approach to understanding the relationship between firm capabilities and firm performance. Specifically, this approach suggests that knowledge generation, accumulation and application may be the source of superior performance. Other research has conceptualized organizational knowledge in terms of stocks of accumulated knowledge in the firm and flows of knowledge into the firm. This paper tests the relationship between stocks and flows of organizational knowledge and firm performance in the biotechnology industry. We suggest that a firm’s geographic location, alliances with other institutions and organizations and R&D expenditures are representative of knowledge flows, while products in the pipeline, firm citations and patents are indicative of knowledge stocks. Through factor analysis, we develop an aggregated measure of location from several variables. A regression model suggests that location is a significant predictor of firm performance as are products in the pipeline and firm citations. A major contribution of this investigation is the operationalization of geographic location and its statistically significant link to firm performance. Copyright © 1999 John Wiley & Sons, Ltd.

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