R&D and financial resources and capabilities development in life science ventures: a dynamic capabilities perspective

Life science firms compete in rapidly changing environments that demand substantial resources and capabilities. Nevertheless, there are a growing number of small life science firms, and these firms are having a profound impact on innovation in the industry. However, little is known on how these firms overcome resource constraints to finance and develop R&D resources and capabilities. Consequently, the purpose of this thesis is to empirically explore how small life science firms develop R&D and financial resources and capabilities. A closely related area that this research is also fundamentally concerned with is how R&D and financial resources and capabilities affect firms‟ early growth. The central aim of this research is to unearth insights on the motivations, assets and processes that lead to the development of R&D and financial resources and capabilities. To accomplish this, the research draws on the resource-based view and dynamic capabilities. The resources-based view is interested in the resources from which firms derive competitive advantages. Whilst dynamic capabilities focus on how firms in rapidly changing environments – especially high technology environments – configure and reconfigure their assets and capabilities to develop competitive advantages. Because this research is concerned with the development of key resources and capabilities of firms in rapidly changing environments, a resource-based view influenced dynamic capabilities framework is used to isolate the development of R&D and financial resources and capabilities of life science firms. An in depth case study approach is used to examine the research questions. It draws on longitudinal data collected from six life science firms. Data has been collected from twenty interviews and over 3000 pages of secondary data. The interview data is abstracted using four techniques: 1) identifying repetitions, 2) looking for transitions, 3) identifying similarities and differences and 4) cutting and sorting notable quotes. Following Miles and Huberman (1994), the data is then analysed using a multiple step abstraction and condensing process. A unique triangulation technique is used at the end of the study where the key informants are surveyed on the results of the qualitative analysis. Results from the study indicate that a unique set of past decisions, future opportunities, assets, capabilities and routines leads to the development of R&D and financial resources and capabilities. It is evident in all of the case firms in this study that scientific breakthroughs, partnership opportunities, the founders‟ experience and the firm‟s ability to integrate resources and learn from earlier paths are vital to the development of R&D and financial resources and capabilities. The study makes several contributions to the practice and scholarship of management. It provides insights on how small life science firms develop the R&D and financial resources to compete in a highly dynamic industry. From a scholarly perspective, it extends the dynamic capabilities framework and offers empirical support to several categories of dynamic capabilities. It also offers support to R&D and financial capabilities as categories of complementary assets. This thesis identifies details of the aforementioned aspects, discusses the importance of the findings in relation to the literature, and offers future research directions.