Technology Complexity and Open Organization: Foreign Innovation Projects in the Biopharmaceutical Sector in China

Abstract

High-technology enterprises are increasingly developing their technological advantages in foreign countries. In doing so, they need to make the decision whether to organize the R and D activity inside the organization or outside through alliance. The perceived assumption suggests that technological complexity dictates the internal organization of the R and D activity. However, emerging evidence suggests that technological complexity induces external alliance for the transformation of the organizational knowledge to new product. We test this proposition that there is a positive correlation between technological complexity and the external alliance of the firm. The hypotheses find support that complexities of (i) Scale, (ii) Scope, (iii) Intra-clusters and (iv)Inter-cluster of the patent claims predict external alliance. However, the odds of the external alliance are not in a linear manner. Rather, the odds of these predictors are high, low and high again. The article discusses theoretical and practical implications.