Commercialization Strategies: Cooperation versus Competition

Abstract

This chapter presents a framework for evaluating commercialization strategies available to start-up innovators operating in high-technology industries. We consider strategies ranging from head-on competition with incumbent firms to cooperation. Cooperation can manifest in a variety of alliances, including licensing, OEM relationships, R&D contracts, and joint ventures. We then relate the use of these strategies to alliance transaction costs, the need for complementary assets, and the firm’s intellectual property position. This chapter draws heavily on recent research showing that patterns of cooperation and competition vary markedly across industry sectors, with some form of cooperation with incumbents almost assuredly necessary in healthcare/medical technology. We emphasize the endogenous, dynamic nature of firm choices, and we illustrate the major principles with two case studies of start-up innovators commercializing university-based inventions. One company has developed several medical devices and the other electronics hardware and software. We follow the companies over a 10-year period, showing the evolution of strategy from cooperation to competition.

Citation

Stenard, B.S., Thursby, M.C. and Fuller, A. (2016), "Commercialization Strategies: Cooperation versus Competition", Technological Innovation: Generating Economic Results (Advances in the Study of Entrepreneurship, Innovation and Economic Growth, Vol. 26), Emerald Group Publishing Limited, Leeds, pp. 289-308. https://doi.org/10.1108/S1048-473620160000026010