Gaining from Scientific Knowledge: The Role of Knowledge Accumulation and Knowledge Combination

Abstract

This paper investigates the effect of scientific knowledge on the performance of biotechnology and pharmaceutical companies. While sourcing knowledge from scientific community is a common strategy of open innovation, biotechnology and pharmaceutical companies show particularly strong dependence on scientific knowledge than companies in other industries. In such strong science-linkage regime, the relation between science linkage and firm financial performance is more complex than what is generally assumed. From the perspective of absorptive capacity, we argue that knowledge accumulation and knowledge combination preference both affect a firm’s ability to gain higher commercial benefits from scientific knowledge. We use patent citation data to empirically test our hypotheses. The results indicate that science linkage alone has positive effect on firm performance. The positive effect will be increased when firms have knowledge combination preference on more self-citation and longer technology cycle time. How...