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Title: Financing innovation in bio-pharma : a sectoral systems approach
Author: Sierra Gonzalez, Jaime Humberto
ISNI:       0000 0004 5355 973X
Awarding Body: University of Manchester
Current Institution: University of Manchester
Date of Award: 2015
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The literature on the financing of innovative projects follows two trends: one contemplates that either the prospective fundees or the potential funders use their preferences to choose the other party out of a range of theoretical possibilities; the other refers to project owners or investors that actively look for an “opportunity” and try to talk the other party into entering the funding relationship. These views, however, cannot explain several facts such as: why projects rejected by some funders are accepted by others, why IPOs and markets are not attractive to all players or why that changes over time and across settings, how can State funds support a sector across regions, or how players’ and setting features and time affect funding criteria. A critique of these explanations sees three main shortcomings: lack of balance (i.e.,one party’s initiative prevails), bias (i.e., criteria of the domineering party prevail), and disembeddedness (i.e., milieu factors and changes over time are ignored). We think that an analysis supported by a sectoral approach may contribute to build a more articulate, integral insight about the funding of innovation. The bio-pharmaceutical sector was chosen because it exhibits amazing complexity related to the heterogeneity embodied by a multifaceted network of players (e.g., universities, companies, potential financiers, regulation bodies), to the nature and development path of innovative projects, and to the competitive/collaborative interactions framed in a particular setting. Hence, a qualitative approach based on the case study of the sector is the choice for this study. Case data are collected through semi-structured interviews with thirty participants that have played different roles in organisations of the bio-pharmaceutical sector or are highly experienced VC practitioners. Our findings allow us to propose an enhanced characterisation of innovation financing by showing that: i) Investors’ understanding of a sector is essential for funding decisions and can be updated through networking; ii) Networks facilitate firms-funders contact, coordination among funders, enhancement of financiers’ knowledge about the sector, and venture owners’ knowledge of track record and potential benefits of investors; iii) Interactions involve other actors in different roles and support network-based learning; iv) Funding decisions are impacted by the geographic availability of sources/mechanisms of finance and by their readiness to fund specific venture stages; v) Investors’ specificities matter; vi) Trends of change impact the availability of funding sources/mechanisms since they imply a reorganisation of the relations and interactions among players in the sector. Therefore, we propose a systemic analytic explanation where the strategy of funders (generalist or dedicated), therefore their role in a particular setting, is essentially defined in relation to the structure and dynamics of their knowledge consolidation system; then, we derive a number of implications for firm managers, investors, and policy-makers. Finally, the main limitations of this work and some further questions for future research are stated.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Innovation funding ; Bio-pharma ; Sectoral systems of innovation ; Science-based sectors ; Knowledge system