Predatory Networking: The Role of Small Firms in the Development of the British Biotechnology Industray

DR. RAY OAKEY IS ADDLESHAW SONS & Latham Professor of Business Development at Manchester Business School, England. This paper examines the effects of networking in competitive conditions, in particular the effects on new firms in the biotechnology sector. He finds that a close networking relationship, while helpful in the initial stages of formation and growth, can become a major barrier to independent expansion once a certain level of success has been achieved. As an increasing minority of growing firms were acquired by larger firms he suggests that a strong small firm contribution to innovation and growth in the emerging biotechnology sector is unlikely. He suggests that in Britain, for example, government should ensure that medium to long-term investment capital is available to viable small independent biotechnology firms who wish to remain independent. This is necessary because large firm dominance leads to a slow rate of technological change which in the long term renders industry uncompetitive at an international level.