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Why do firms change? Sequences of opportunity and changes in business models and capabilities in bioscience firms

Conference paper
Authors Johan Brink
Magnus Holmén
Published in RIDE working paper series
Issue 84426-015
Pages 47
Publication year 2007
Published at
Pages 47
Language en
Keywords Business model, Capabilities, Bioscience
Subject categories Economics and Business, Business Administration, Technology and social change

Abstract

Our paper sets out to explain how firms change and acts upon additional opportunities by analysing the development of three young bioscience firms by focusing on the relationship between experimentation of their business models and the capabilities that these firms gradually develop over time. We show that only by combining the initial technological capability with a more generic business capability, these firms were able to fully develop and pursue the initially perceived opportunity. Our analysis of these bioscience firms also reveal that the linkages between the initial technological capabilities that these companies develop are only indirectly related to subsequent opportunities acted upon. As the initial opportunity increasingly becomes economically or technologically irrelevant, the more recently acquired generic capabilities provided the firms with the ability to act upon new technological opportunities. That is, the initial technological capability of the firm is frequently not directly linked to the second pursued opportunity. We infer that as these initial capabilities generally are very technologically based they are also rather specific. Instead the link is by the necessary creation of the additional, and indeed more generic, capability within the firm. As these firms develop they are hence continuously leveraging only parts of their accumulated capabilities, meaning that they are both path-dependent and path-breaking in their development. The paper argues that a firm-based analysis of the development of capabilities and business models is warranted as a complement to the numerous sector-level studies of the biosciences. The internalist perspective of the co-evolution of capabilities and business models developed here cannot be substituted by industry or environmental explanations.

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