economies of scope (Chandler, 1990). Piore & Sabel’s (1984) discovery of a Neo-
Marshallian school of economic theory purporting to explain not the anachronistic but
globally competitive existence of modern industrial districts in Italy (e.g. Becattini,
1989; Brusco, 1989) in terms that included superior knowledge circulation and
management among small firms, caused revision to prevailing orthodoxy.
This paper will explore from a firm-capabilities and, innovatively, an institution-
capabilities perspective, the modes by which DBFs mange complex types of
knowledge ranging from basic scientific to financial in creating project networks to
generate and exploit research to develop therapeutic treatments. The extent, and
degree of formality and informality of involvement by knowledge intermediaries in
this process as compared to direct contact among peers will be explored. Moreover
the process management functions and problems of big pharma in the ‘knowledge
value chain’ from research to financing and final distribution as its control shifts
downstream will be of key theoretical interest. This is especially pertinent as a test of
the evolving thesis of transnational corporations becoming ‘hubs’ buying not making
key services (Stewart, 2001; Best, 2001). The role of knowledgeable intermediaries as
agents in innovation interactions will also be investigated to refine theory.
Theoretically there are four links connecting the paper’s key interests to the ‘design
space’ of post-genomics (Stankiewicz, 2002). First, following Polanyi (1966) and
Nonaka & Takeuchi (1995), there is the interplay of implicit (tacit) and explicit
knowledge in the project networks formed among firms with distinctive expertise, like
combinatorial chemistry, high throughput, target-based screening, genomics and
genomic libraries. The extent this mimics Nonaka & Takeuchi’s (1995) original and
Stewart’s (2001) recently reviewed ‘SECI Process’ linking ‘Socialisation’,
‘Externalisation’, ‘Creation’ and back to ‘Internalisation’ in the eliciting of implicit
knowledge, its formulation as explicit or codified knowledge, followed by its re-
internalisation as tacit knowledge can be explored. In particular, the question as to
whether there are important differences related to types of knowledge (e.g.
‘exploration’ versus ‘exploitation’) has to be confronted.
Second, how adequate are the institutional mechanisms by which such interactions are
managed? Are they largely informal and inaccurately accounted, where is formality