Technological discontinuities and interfirm cooperation: what determines a startup's attractiveness as alliance partner?

Incumbent firms often face severe challenges when confronted with technological discontinuous change. However, interfirm cooperation between incumbents and new entrants has been suggested as one way that incumbents can adapt to radical technological change. In particular, the authors are interested in the question of how incumbent pharmaceutical firms go about selecting alliance partners from the population of new biotechnology firms, in their quest to commercialize a discontinuous innovation. The authors propose that a startup’s new product development, economies of scale, public ownership, and geographic location in a regional technology cluster are positively associated with the startup’s attractiveness as an alliance partner. The authors find broad support for their model.