Growth dynamics of dedicated biotechnology firms in transition economies. Evidence from the Baltic countries and Poland

Countries undergoing the difficult transition from state ownership to market economies have characteristics which are often portrayed by scholars as adverse to the development of SMEs. Others nonetheless suggest that the performance of such firms can be positively influenced by business strategies. To develop a better understanding of the relation between these two seemingly different standpoints, this paper investigates the effects of (1) human capital; (2) administration system for start-ups; (3) financial capital; and (4) intellectual property rights on the emerging biotechnology industry in Estonia, Latvia, Lithuania and Poland and considers the strategic response of two highly successful dedicated biotechnology firms (DBFs): Bioton in Poland and Fermentas in Lithuania. The results suggest that the decision to implement an internationalization strategy (and alliances with foreign partners) in association with the production of low cost, high quality products can drive the growth dynamics of SMEs.