When firms embrace science: University alliances and firm drug development pipeline

Abstract Traditional model of closed innovation has been challenged, and firms in biomedical sciences are teaming up with universities to advance scientific discoveries and publish their research results in scholarly journals. This study examines the contingent nature of the relationship between university‐industry alliances and a firm's follow‐on contribution to open science in the context of therapeutic biotechnology. It integrates insights from organizational learning theory and sociology of science to explore boundary conditions of the efficacy of the organizational learning mechanism across the realms of business and academic science. Specifically, our contention is that, under certain circumstances, for‐profit firms are likely to learn from their university alliance partners how to harness the dynamics of the open system of scientific knowledge exchange and embrace open science. Our contingency model elucidates the moderating role of a firm's R&D pipeline of drug candidates in clinical development and a firm's R&D expertise diversity across therapeutic categories. The empirics are based on a longitudinal analysis of a sample of therapeutic biotechnology firms in the United States over the period 2003–2010. We estimate negative binomial models to test our predictions. In support of our hypotheses, our findings indicate that reaching out to university alliances is positively related to firms’ publishing with academic co‐authors when firms develop stronger R&D pipeline and more diverse R&D expertise across therapeutic categories. The results of our study point to complementarities between collaborations with universities and a firm's investments in strengthening and diversifying its drug development pipeline in the process of public knowledge creation.