Market pull and science push networked market orientation

Market pull and science push networked market orientation of biotechnology SMEs MAIJA RENKO and ALAN CARSRUD Florida International University and Turku School of Economics and Business Administration Maija. renko@fiu. edu Alan. carsrud@fiu. edu

Background n n New product introductions (innovativeness) result from an interplay between science push and market pull Finnish biotechnology: Industry leaders’ belief in advanced science as a major source of future success (science push). n science- and R&D related resources n specialization n networking Small and new high technology ventures often described as technology focused, as opposed to being market oriented. However, studies from e. g. Finland, call for a more market oriented approach in technology based new ventures

Market intelligence perspective n n n Based on three key elements: (1) intelligence generation; (2) intelligence dissemination; and (3) responsiveness. This includes: n Customer data n Competitor data n Technology, regulations, and other relevant environmental factors. Not just current needs but also future ones.

Networks and market orientation n n More effective means of establishing a presence in the market place, as opposed to an “individual market orientation” in the company per se. Being market oriented comprises not only approach to markets (customers) but also: n n supplier relationships and, research institutions, consultants, external partners, etc.

Market orientation in biotechnology “Through licensing arrangements and links with larger organizations, biotechnology firms may become market oriented but not in the conventional sense. Conventional marketing relies on a good knowledge of the customer base, as well as soundly developed products. Often, biotechnology firms have neither. (…) The market orientation methodology, however, needs to be adapted better to this particular sector [biotechnology]. ” Appiah-Adu and Ranchhod (1998)

Research questions 1) What is the nature of market orientation in the context of small, entrepreneurial, knowledge intensive biotechnology firms? 2) What is the role of interfirm networks in the market orientation of these firms? 3) What are the connections between the construct of entrepreneurial orientation (EO) and market orientation in these firms? (EO: innovativeness, proactiveness, risk taking)

Action research n n Longitudinal study applying action research approach in the context of the Finnish Pharma Cluster Data set: n n n 31 in-depth interviews among key persons from business and universities in the Cluster (20002001) mail survey (51% response rate, 2000) electronic survey (28 % response rate, 2002)

Market intelligence generation n n Collecting and systematically analyzing market information on consumers’ present and future needs, competitors, technology, regulations, and other relevant environmental factors. Within a firm n n Market research, data collection, consulting opinion leaders Within a network n May take place through joint activities involving several different members of a network (neglected!) (E. g. Biotechnology associations, small firms sourcing market data together)

Perceived Network Approaches vc vc vc entre A E A B uni cust. uni entre D B uni C vc

Market intelligence dissemination n n Intra- and interdepartmental communication and “selling” of the relevant information concerning market intelligence. Within a firm n n n Traditional view: between departments like marketing & R&D in a manufacturing firm Biotech firms: Departments less formalised? Within a network n n n Members exchange market data Formal and informal dissemination Intelligence dissemination in a network will influence its overall market orientation and market orientation of individual firms

Responsiveness to market intelligence n n Actions such as selecting target markets; new product development etc… Can also be more or less coordinated and collectively performed (E. g. joint R&D) Risk taking in R&D and decisions related to starting / killing new product development projects are packed with understanding of markets in market oriented biotechnology SMEs Links to entrepreneurial orientation construct (innovativeness, proactiveness, risk taking)

Summary: components of market orientation in biotechnology SME context Behaviouralaspect of market orientation Market intelligence generation Market intelligence dissemination Responsiveness intelligence Contribution of entrepreneurial orientation / networks Networks facilitate and enable Within a firm and a network of firms Innovativeness, proactiveness, risk taking (i. e. entrepreneurial orientation) Market research, access to databases, consulting opinion leaders Top management team interaction Taking risks after a careful assessment of (potential) markets Informal contacts, industry associations Communication within the organization, R&D / marketing interface The role of market information when starting / killing product development projects Horizontal and vertical collaborations to e. g. suppliers, downstream partners, universities Communication with partner firms Educating the marketplace Components of market orientation to market

Conclusions & Implications Industry leaders’ belief in advanced science as a major source of future success (science push) lack of external and internal market orientation in small biotech firms n The role of entrepreneur as an antecedent to a firm’s market orientation n importance of informal networks! n Formal links to partner firms / non-profit organizations n joint sourcing of market related data n complementarity of ”products” with technology partners n licensors’ contribution to SMEs’ Market Orientation n industry associations n intelligence dissemination and responsivess are interfirm phenomena n