High Technology Governance and Institutional Adaptiveness

The German economy has widely been seen as failing to develop commercial innovation competencies necessary to compete in biotechnology, information technology, and other emerging new industries. Starting in the mid-1990s the German government has instituted a series of new technology policies designed to orchestrate the development of small entrepreneurial technology firms. These policies have fostered several hundred new entrepreneurial start-ups in Germany, many of which have adopted strategies that differ dramatically from those commonly associated with small and medium sized German firms. Developments in Germany represent an interesting challenge to prevailing institutional theory as applied to the study of advanced industrial economies, which tends to view the characteristics of organizations as strongly constrained by the orientation of a number of key national institutional frameworks. Focusing on biotechnology, this article examines the relative importance of national institutional frameworks as opposed to sector-specific policies that are presently pervasive in Germany. Analysis of the new firms demonstrates that Germany’s new technology policies have facilitated important extensions within the business system that have, for the first time, allowed the systematic promotion of entrepreneurial technology companies. However, the dominant strategies of market specialization and company organizational patterns found within these companies have been strongly influenced by incentives and constraints created by long-established national institutional structures.