Governance Inseparability and the Evolution of the U.S. Biotechnology Industry

32 Pages Posted: 27 Jun 2001

See all articles by Julia Porter Liebeskind

Julia Porter Liebeskind

University of Southern California - Management and Organization Department

Nicholas S. Argyres

Boston University - School of Management

Abstract

This paper explores mechanisms through which a party's choice of governance mode for a focal transaction is constrained by the governance choices it made for other, prior transactions. We argue that this condition of "governance inseparability" plays an important role in determining the differential organizational costs incurred by various firms when undertaking the same new activity, and is therefore important for theories aimed at predicting what kinds of firms will undertake such an activity. We develop these arguments by showing how governance inseparability conditions help explain the persistent fragmentation of the U.S. biotechnology industry.

Keywords: Governance, transaction costs, industry evolution

JEL Classification: L1, L2, O3

Suggested Citation

Porter Liebeskind, Julia and Argyres, Nicholas S., Governance Inseparability and the Evolution of the U.S. Biotechnology Industry. Available at SSRN: https://ssrn.com/abstract=275178 or http://dx.doi.org/10.2139/ssrn.275178

Julia Porter Liebeskind

University of Southern California - Management and Organization Department ( email )

Los Angeles, CA 90089
United States
(213) 740-0749 (Phone)
(213) 749-0541 (Fax)

Nicholas S. Argyres (Contact Author)

Boston University - School of Management ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States
(617) 353-4152 (Phone)
(617) 353-5003 (Fax)

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