Breakthrough innovations in the U.S. biotechnology industry: the effects of technological space and geographic origin
Version of Record online: 27 FEB 2006
Copyright © 2006 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 27, Issue 4, pages 369–388, April 2006
How to Cite
Phene, A., Fladmoe-Lindquist, K. and Marsh, L. (2006), Breakthrough innovations in the U.S. biotechnology industry: the effects of technological space and geographic origin. Strat. Mgmt. J., 27: 369–388. doi: 10.1002/smj.522
- Issue online: 27 FEB 2006
- Version of Record online: 27 FEB 2006
- Manuscript Revised: 24 AUG 2005
- Manuscript Received: 25 APR 2003
- breakthrough innovations;
- technological space;
- geographic origin;
How are breakthrough innovations created? Our study suggests that the type of external knowledge sourced determines the likelihood of creation of breakthrough innovation. We characterize the external knowledge utilized on two dimensions: its technological space and geographic origin. We draw on the concepts of local search and national innovation systems to identify critical knowledge inputs. We hypothesize that external knowledge characterized by technological distance or proximity and the national or international context can have a differential impact on breakthrough innovation. This is due to the contradictory implications of its value created by distance and to absorptive capacity limitations in effectively utilizing knowledge from a different context. To test our hypotheses we use patent data from the U.S. biotechnology industry. Our findings suggest that technologically distant knowledge of national origin has a curvilinear effect and technologically proximate knowledge of international origin has a positive effect on breakthrough innovation. However, simultaneous exploration along technologically and geographic dimensions is not useful to generating breakthrough innovation; technologically distant knowledge of international origin does not have a significant impact. Copyright © 2006 John Wiley & Sons, Ltd.