Building on Diversity: Institutional Foundations of Hybrid Strategies in Toronto's Life Sciences Complex

Abstract Lowe N. J. and Gertler M. S. Building on diversity: institutional foundations of hybrid strategies in Toronto's life sciences complex, Regional Studies. Geographical studies of innovation typically examine the impact of regional institutions on new product and process development. This study considers the influence of these institutional systems on business strategy and firm-level responses to competitive challenges. The paper examines case of Toronto's life science complex and the growing prevalence of a business strategy of hybridization. Toronto's hybrid firms combine core strengths in biotechnology and biomedical technologies with service activities like contract research and manufacturing, blood bank and data management, and device repair and distribution. This strategy is often viewed as a response to lengthy product development cycles, impatient financiers, and the pressure to identify secondary sources of revenue. However, this explanation overlooks an equally compelling rationale stemming from the larger institutional context that shapes and constrains their strategic choices. Lowe N. J. et Gertler M. S. Développer la notion de diversité: les fondements institutionnels des stratégies hybrides du Centre des sciences de la vie à Toronto, Regional Studies. Comme d'habitude, les études géographiques sur l'innovation examinent l'impact des instances régionales sur le développement des nouveaux produits et des nouveaux procédés. La présente étude considère l'influence de ces systèmes institutionnels sur la stratégie commerciale et les réponses aux défis compétitifs sur le plan des entreprises. On considère comme étude de cas le center des sciences de la vie à Toronto et la fréquence croissante d'une stratégie commerciale de d'hybridation. Les entreprises situées à Toronto combinent les principales forces de la biotechnologie et des technologies biomédicales avec des services, tels la recherche ou la production industrielle contractuelles, la gestion des banques du sang et des données, et la réparation et la distribution des dispositifs. Souvent une telle stratégie est considérée une réponse aux cycles de développement longs des produits, aux financiers impatients, et à la nécessité d'identifier des sources de revenu secondaires. Cependant, cette explication ne considère pas une raison d'être tout aussi convaincante qui provient du contexte institutionnel plus large qui détermine et contraint les choix stratégiques. Industrie biomédicale Systèmes d'innovation Institutions Développement économique Lowe N. J. und Gertler M. S. Aufbau auf Vielfalt: Institutionelle Grundlagen für hybride Strategien im Life-Science-Komplex von Toronto, Regional Studies. In den geografischen Studien über Innovation wird in der Regel die Auswirkung regionaler Institutionen auf die Entwicklung von neuen Produkten und Verfahren untersucht. In dieser Studie untersuchen wir, wie diese institutionellen Systeme die Geschäftsstrategie und die Reaktionen von Firmen auf Herausforderungen der Konkurrenz beeinflussen. Untersucht werden der Fall des Life-Science-Komplexes in Toronto und die wachsende Prävalenz einer Geschäftsstrategie der Hybridisierung. Die hybriden Firmen in Toronto kombinieren zentrale Stärken in den Bereichen der Biotechnologie und der biomedizinischen Technologien mit Dienstleistungen wie Auftragsforschung und -produktion, Blutbank- und Datenverwaltung sowie mit der Reparatur und dem Vertrieb von Geräten. Diese Strategie wird oft als Antwort auf langwierige Produktentwicklungszyklen, ungeduldige Geldgeber und den Druck zur Erschließung zusätzlicher Einkommensquellen betrachtet. In dieser Erklärung wird jedoch ein ebenso überzeugender Grund übersehen, der sich aus dem größeren institutionellen Kontext ableitet, welcher die strategischen Entscheidungen dieser Firmen prägt und begrenzt. Biomedizinische Industrie Innovationssysteme Institutionen Wirtschaftsentwicklung Lowe N. J. y Gertler M. S. Construir la diversidad: bases institucionales de estrategias híbridas en un complejo de las ciencias de la vida en Toronto, Regional Studies. En los estudios geográficos sobre información se suelen examinar los efectos de las instituciones regionales en el desarrollo de nuevos productos y procesos. En este estudio analizamos la influencia de estos sistemas institucionales en la estrategia comercial y las respuestas de las empresas a los retos de la competencia. Examinamos el caso del complejo de las ciencias de la vida en Toronto y el creciente predominio de una estrategia comercial de hibridación. Las empresas híbridas en Toronto combinan las ventajas centrales en biotecnología y las tecnologías biomédicas con las actividades de servicios tales como la investigación y manufacturación contratadas, gestión de bancos de sangre y de datos, y la reparación y distribución de dispositivos. Esta estrategia muchas veces se considera una respuesta a la lentitud en los ciclos de desarrollos de productos, la impaciencia de inversores y la presión por identificar fuentes secundarias de ingresos. Sin embargo, esta explicación ignora una lógica igualmente convincente que procede del contexto institucional más amplio que conforma y limita sus opciones estratégicas. Industria biomédica Sistemas de innovación Instituciones Desarrollo económico Keywords: Biomedical industryInnovation systemsInstitutionsEconomic developmentJEL classification: OR Acknowledgements The authors wish to acknowledge the Social Sciences and Humanities Research Council of Canada for its generous support of this research. They would also like to thank Bjorn Asheim, Sharmistha Bagchi-Sen, Proinnsias Breathnach, Lars Coenen, Helen Lawton-Smith, and two anonymous reviewers for their comments on an earlier draft, as well as Uyen Quach for her superb assistance in the preparation of this paper. Notes Included within this category are medical and assistive technologies, as well as medical and biomedical technologies used for patient and disease diagnosis and therapeutic applications. It is a broad and diverse sector that includes manufacturers of products as varied as dialysis machines, surgical instruments, visual and hearing aids, and wheelchairs. In most cases, the names of individual firms have been changed in order to honour requests for anonymity. Actual names are used where information has been confirmed using publicly available and published sources. HTX is a non-profit organization that was established in 2001 to help develop and promote Ontario's home-grown MAT industry. This figure was obtained from MDS Inc.'s website (http://www.mdsintl.com/ir_facts.asp). See http://www.protana.com/. Original link: http://www.mdsproteomics.com/facs.shtml (parentheses and italics added). See http://www.mtsinai.on.ca/Cord_Blood/Default.htm/. See http://www.interfacebiologics.com/smm_technology.html/. Data for Alberta are not reported here for 2003 as Statistics Canada indicates potential reporting problems for the province. For most years between 1998 and 2003, Quebec's share of research-and-development spending for pure biotechnology activities hovered around 75%. The one exception is 2001, when pure-biotechnology research-and-development expenditures dropped to approximately 40%. While additional research is needed to explain this apparent statistical anomaly, the authors believe it reflects the fast growth (and subsequent international sale and relocation in late 2001) of Montreal-based firm BioChem Pharma, which managed to achieve global industry status between 1999 and 2001, thereby allowing it to move quickly into more diversified areas of biomedical research and development. Note that few GTA-based MAT firms rely on venture capital financing. The majority self-finance through product sales and distribution activities or rely on traditional forms of external financing, such as bank loans. The exceptions are firms that are categorized as MAT–biotechnology hybrids. Ontario's population in 2001 was 11.4 million, or 38% of Canada's national population. See http://www.greater.toronto.on.ca/. See http://www.greater.toronto.on.ca/. See http://www.canadapharma.org/. See http://www.cdma-acfpp.org/en/resource_facts.html/. Quebec based-scientists published 2000 biotechnology-related articles during the same period, accounting for 28% of the national total. Values for British Colombia and Alberta were 14% and 12%, respectively. Phase 2 will include a 550 000-square-foot building with office space, wet/dry laboratories, and shared meeting rooms (see http://www.marsdd.com/portal/desktop/explore/phaseTwo.jsp). See http://www.marsdd.com/portal/desktop/siteMap.jsp/. Original link: http://www.delextherapeutics.com/news/news_03jan14.htm/.