Relational governance, communication and the performance of biotechnology partnerships

Abstract

Purpose

Emerging biotechnology firms rely on a network of socio‐economic partnerships that can be classified as “interimistic” or close, collaborative but relatively short‐lived. Few studies have assessed the importance of relational governance to the performance of these partnerships. The purposes of this research were to determine the effect of relational governance on the performance of financial partnerships and to compare biotechnology manager assessments of their financial and non‐financial partnerships.

Design/methodology/approach

Interviews were conducted with managers of emerging biotechnology companies and lead investors in Canada, France and Germany. Relational governance was assessed by relational norms such as flexibility, information sharing, solidarity and fairness. Performance was assessed by overall effectiveness and partnership benefits. First, the contribution of relational governance to partnership effectiveness and benefits was examined. Second, for the financial partnerships, the perceptions of both biotech managers and lead investors were compared. Third, the biotech manager perceptions of their financial and non‐financial partnerships were compared.

Findings

Relational governance is positively associated with performance. Communication (information sharing) was most predictive of partnership performance. Biotech managers view their financial partnerships as being less relational than do their lead investors. Also, biotech managers view their financial partnerships to be less relational than those with their non‐financial partners.

Originality/value

The findings extend our knowledge of the positive influence of relational governance from longer lasting exchanges to “interimistic” technology partnerships. The communication of pertinent and timely information is particularly relevant for both biotech managers and lead investors and can allay fears of opportunistic behaviour and develop trust and commitment.

Citation

Ferguson, R.J., Paulin, M., Möslein, K. and Müller, C. (2005), "Relational governance, communication and the performance of biotechnology partnerships", Journal of Small Business and Enterprise Development, Vol. 12 No. 3, pp. 395-408. https://doi.org/10.1108/14626000510612303