Strategies and External Relationships of Small and Medium-Sized Enterprises in the US Agricultural Biotechnology Sector

Abstract

This paper examines the characteristics of small and medium-sized enterprises (SMEs) involved in the agricultural biotechnology (agro-bio) sector. Specific objectives are to understand firm-specific strategies utilized to remain competitive in an uncertain business environment, and to examine the impact of government/policy and farmers on strategies. The controversial nature of processes used and the ethical debate surrounding genetically modified organisms (GMOs) contribute to an ongoing struggle for these firms in negotiating their position in society as innovators. Data from surveys of US-based firms and farmers are used to show how firms respond to external conditions and how farmers adjust to the GMO controversy, and, in turn, affect the business of biotech. At first cut, the data suggest that firms are worried only about science; as the survey probes into firm-level evaluation of external actors, the importance of Federal over local – regional initiatives stand out. While states are investing to promote biotechnology clusters, the lack of perceived importance of state/local level efforts to innovators is of particular significance. The discussion also notes the disconnect between policymakers and SMEs. Farmers point out the indirect effect of public opinion in sustaining the business of agro-bio. This study raises questions about gaps in our understanding of the relationship among firms (innovators), users (farmers who are the traditional innovators), and the government (regulator – facilitator) in the agro-bio subsector of the biotech industry. The need to engage other partners (food companies, wholesalers, retailers, consumer groups) in understanding the prospect of agro-bio is evident.