The Evolution of Biotechnology as a Knowledge Industry:
Network Movies and Dynamic Analyses of Emergent Structure
• Walter W. Powell
Stanford University
Douglas R. White
UC Irvine
Kenneth W. Koput
University of Arizona
Slides by Douglas R. White
•
Biotechnology as a knowledge-based industry involves extensive reliance on
organizational learning. This occurs through networks of dense collaborative
ties among organizations. We model the emergence of the industry network of
contractual collaborations from 1988-99 in relation to both firm-level
organizational and financial changes.
Network Movie: 1988-99
• The following twelve slides show the evolution of
collaborative contracts within the biotech industry
• Green ties =Finance
• Red ties
=Res&Dev
»
»
»
»
»
»
Grey
LiteBlue
Yellow
Orange
DarkBrown
Pink
=Finance
=Biotech
=Pharmaceuticals
=Res.Labs and Universities
=Government (e.g., NIH)
=Miscellaneous
1988: Lots of
Finance,
little R&D
1989: Nucleus of
R&D attracts
more Finance
1990: Massive
investment
in R&D
1991: The phase
transition
is complete
1992: …and then
it stops
1993:
1994:
1995:
1996:
1997:
1998:
1999:
Figure 1: Levels of Network Cohesion:
Tricomponents (within dark/red circles) embedded in
Bicomponents (circled in medium/green) within
Components (in light/yellow circles)
Figure 2: Slow Transitions to Giant Components,
1990-1994
1800
1600
1400
1-comp
1200
1-mode
1000
482edges
800
edges
600
2-mode
3112edges
400
200
0
1983
1985
1987
1989
1991
1993
1995
1997
1999
Figure 3: Rapid Phase Transition in Bicomponent
Growth
700
600
R&D
500
Lic
400
300
Finance
200
Comm
100
R&D/Lic
/Com
edge frq
0
1988
1990
1992
1994
1996
1998
Figure 4: Degree(+1) Distributions for the 1-Mode Data
1000
frequency
100
10
1
1
DBF degree 10 (482 biotech firms)
100
Figure 5 a: Degree(+1) Distributions for the 2-Mode Data
# Organizations
10000
1000
482dbf
100
partners
10
1
1
10
# Links (plus 1)
100
Figure 5 b : Degree(+1) Distributions for the 2-Mode Data
(removing zero frequency counts)
# Organizations
10000
1000
482dbf
100
partners
10
1
1
10
# Links (plus 1)
100
Figure 5 c: Exponential for DBFs' degree choosing partners;
power-law for partners degree chosen by DBFs
10000
1000
482dbf
partners
100
dbf*.85
part^0.9
10
1
0
5
10
15
20
25
30
35
Figure 6: Scatterplot of Biotech degree as chosen by other
Biotechs (1-Mode) and as chosers of 2-Mode Partners
(v2log=.55+0.52v1og; R-Square=0.15)
Degree Correlation for Biotech Firms
2-m ode
100
10
1
1
10
1-m ode
100
Figure 7: The Sexta-component of R&D and Finance Contracts in the Biotech Industry
Blue=Biotech,
Size of nodes reflects number of finance ties.
Brown=government
Orange=Research Institutes and Universities
Yellow=Pharmaceuticals
(f=DBF p=partners)
Figure 7: The Sexta-component of R&D and Finance Contracts in the Biotech Industry
Blue=Biotech,
Size of nodes reflects number of finance ties.
Brown=government
Orange=Research Institutes and Universities
Yellow=Pharmaceuticals
(f=DBF p=partners)
Figure 8: 1988
Figure 8: 1989
Figure 8: 1990
Figure 8: 1991
Figure G1: Time Series of Growth Parameters: Mean Growth by Tie Activity,
Separately for Form of Partners.
0.12
0.25
0.1
0.2
0.08
0.15
0.06
0.1
0.04
0.05
0.02
0
0
-0.02
-0.05
-0.04
-0.1
1
2
3
4
5
6
7
8
9
10
11
-0.06
0.12
0.4
0.1
0.35
1
2
3
4
5
6
7
8
9
10
11
1
2
3
4
5
6
7
8
9
10
11
0.3
0.08
0.25
0.06
0.2
0.04
0.15
0.02
0.1
0
0.05
-0.02
0
-0.04
-0.05
1
2
3
4
5
6
7
8
9
10
11
0.25
0.2
0.15
0.1
0.05
0
-0.05
-0.1
1
2
3
4
5
6
7
8
9
10
11
Figure G2: Time Series of Growth Parameters: Mean Growth by Partner Form,
Separately for Type of Activity.
0.4
0.25
0.35
0.2
0.3
0.15
0.25
0.1
0.2
0.05
0.15
0.1
0
0.05
-0.05
-0.1
0
1
2
3
4
5
6
7
8
9
10
11
0.12
-0.05
1
2
3
4
9
8
7
6
5
10
11
0.25
0.1
0.2
0.08
0.15
0.06
0.1
0.04
0.05
0.02
0
0
-0.02
-0.05
-0.04
1
2
3
4
5
6
7
8
9
10
11
-0.1
1
2
3
4
5
6
7
8
9
10
11
Figure G2: Time Series of Growth Parameters: Mean Growth by Partner Form,
Separately for Type of Activity.
0.4
0.25
0.35
0.2
0.3
0.15
0.25
0.1
0.2
0.05
0.15
0.1
0
0.05
-0.05
-0.1
0
1
2
3
4
5
6
7
8
9
10
11
0.12
-0.05
1
2
3
4
9
8
7
6
5
10
11
0.25
0.1
0.2
0.08
0.15
0.06
0.1
0.04
0.05
0.02
0
0
-0.02
-0.05
-0.04
1
2
3
4
5
6
7
8
9
10
11
-0.1
1
2
3
4
5
6
7
8
9
10
11
Figure G1: Time Series of Growth Parameters: Mean Growth by Tie Activity,
Separately for Form of Partners.
300
100
250
50
200
0
150
100
-50
50
-100
0
-50
1
2
3
4
5
6
7
8
9
10
11
-150
1
2
3
4
5
6
7
8
9
10
11
•
Left Figure Plots Coefficient of Variation over time for Modal Combinations: Magenta = R&D to
Universities and NonProfits, Red = R&D to Government, Green= Finance to Financial, Cyan =
Commercial to Biotech, Blue = Commercial to Pharmaceutical and Other For- Profit.
•
Right Figure Plots Coefficient of Variation for all remaining combinations with no color legend.
Figure 9: Cycles of Learning and Organizational Returns
(Powell et al. 1999)
Legend
1. Ovals represent network properties, rectangles are performance and outcome measures,
while rounded rectangles can be treated as either firm characteristics or outcomes.
2. Shadowed components carry over from Powell et al. (1996).
Figure 10 a: Finance and R&D networks of 2219 organizations
1988-1991
Figure 10 b: Finance and R&D networks of 2219 organizations
1992-1995
Figure 10 c: Finance and R&D networks of 2219 organizations
1996-1999
Figure 11: Distance from NIH: R&D and Finance