The Evolution of Science-Based Business: Innovating How We Innovate

Posted: 26 Apr 2010

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Date Written: April 2010

Abstract

Science has long been connected to innovation and to business. As early as the late 19th century, chemical companies, realizing the commercial potential of science, created the first industrial research laboratories. During much of the 20th century, large-scale business enterprises like DuPont, GE, Westinghouse, IBM, Kodak, Xerox (PARC), and AT&T (Bell Laboratories) created in-house labs capable of first-rate basic scientific research. In recent decades, however, the connection between science and business has begun to change in important ways. While the corporate lab declined, new “science-based businesses” in sectors like biotech, nanotech, and energy emerged. Universities also became active players in the commercialization of science. In short, science has become a business. This essay examines the institutional and organizational challenges created by this convergence of science and business through a Chandlerian lens. It highlights three fundamental challenges of science-based businesses: (i) managing and rewarding long-term risk, (ii) integrating across technical disciplines, and (iii) learning. Whereas these challenges were once managed inside the boundaries of corporate R&D labs-under the auspices of Chandler’s visible hand-today the invisible hand of markets increasingly governs them. An assessment of this form of governance against the requirements of science-based businesses suggests a gap and a need for organizational innovation.

Suggested Citation

Pisano, Gary, The Evolution of Science-Based Business: Innovating How We Innovate (April 2010). Industrial and Corporate Change, Vol. 19, Issue 2, pp. 465-482, 2010, Available at SSRN: https://ssrn.com/abstract=1594002 or http://dx.doi.org/dtq013

Gary Pisano (Contact Author)

Harvard Business School ( email )

Technology & Operations Management Unit
Morgan Hall
Boston, MA 02163
United States
617-495-6562 (Phone)
617-496-5265 (Fax)

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