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business school research

Simon Fraser researchers recommend scientists pursue broad patents on their technologies while still in the university laboratory and then delay forming a company until they are closer to commercial viability.Getty Images

The Globe's monthly roundup of research from business schools.

We've all heard it said that timing is everything. Now researchers at Simon Fraser University's Beedie School of Business have put that old adage to the test and found it to be measurably true – at least as it applies to the success or failure of cutting-edge, science-based startups.

The study, published in the Nature Nanotechnology journal, is part of an ambitious, multiyear project on the global nanobiotechnology industry. It's led by Elicia Maine, a Beedie professor of innovation and entrepreneurship, and Jon Thomas, a Beedie research associate, lecturer and author on the cross-section of science and technology commercialization.

Specifically, the researchers are seeking to understand – and ultimately vanquish – the many barriers that nanotech and biotech startups face in bringing what Drs. Maine and Thomas call high-capital "radical innovation" from the lab to the business world.

Success, they say, is too often stymied by long and uncertain development times of up to 10 or 15 years from innovation to production, and the associated difficulty of attracting the necessary funding at critical phases throughout a product's development, since most investors typically want to see a return on their money after three to seven years.

The research draws on previous analysis, led by Dr. Thomas, of the prolific entrepreneurial success enjoyed by Robert Langer, a Massachusetts Institute of Technology (MIT) scientist behind several successful ventures, such as a nanotechnology platform that allows targeted drug delivery via a patient's bloodstream and the controlled release of that delivered drug.

Of note, the research found Dr. Langer was able to maximize interest among venture capitalists by strategically timing when he published his ideas in academic journals, filed for a patent and formally launched a company.

Applied to the latest study, the researchers say science-based entrepreneurs can gain much from Dr. Langer's example. They recommend scientists pursue broad patents on their technologies while still in the university laboratory and then delay forming a company until they are closer to commercial viability.

"Essentially, you need to have good news coming out in a timeline that suits venture capitalists," says Dr. Maine.

Money aside, the impact on society from a lack of forward movement from lab to real life is a much bigger concern.

"The big challenge, and reason Jon and I are so passionate about this, is that some of the biggest issues in the world could be addressed and potentially solved by research that is happening in university labs and yet it is incredibly difficult, much more so than most people realize, to get those very promising inventions out of the lab and into society," says Dr. Maine.

All is fair in love, war and supply chains

If all is fair in love and war, surely in a supply chain system, where competition is a given and profit maximization the goal, the same rules must apply.

But a new study published in the European Journal of Operational Research has uncovered another, surprisingly powerful factor at play in the relationship between suppliers and retailers: fairness.

"That is the major takeaway of this paper," says Sungchul Choi, associate professor of marketing at the University of Northern British Columbia's school of business and co-author of the report with Paul Messinger of the University of Alberta's school of business.

"Being a fair-minded participant is quite important because in a competitive situation, due to the repeated interaction [of players], if you are only being self-minded, it is quite difficult to make the entire system efficient. At the same time, a fair-minded participant will make the entire system better – not only their own profit, but the entire channel profit because of utility, everyone is going to get more," says Dr. Choi.

Fairness in a supply chain is equated with "equal profit" among channel participants – a factor that might seem at odds in a system involving several players who are independent and where conflict seems inevitable, should one player choose to push its own interests over others in the chain.

But, using an analytic model to measure participant behaviour, Dr. Choi found supply chain members to be deeply cognizant of their mutual interdependence, especially between the same partners over time.

Why is this important? Say you have five channel members in a particular system and they are each going to apply their own interests – that is, mark up their price.

"Ultimately the consumer is going to pay a high price and a high price means demand goes down," says Dr. Choi. "That is not the optimal situation."

Players are also aware that playing fair with other channel members helps keep those relationships in place – a critical element in a business that relies on efficiency and effectiveness.

With costs and compatibility front of mind, supply chain members will look to find ways to work with the same partners over and over again, says Dr. Choi.

"Given this context, if you just focus on your own interests, how are you going to keep the relationship," he asks.

In an experimental economic model involving volunteers playing a game in which they assumed the role of manufacturers and retailers in a three-member supply chain, one manufacturer had higher production costs, while another recorded lower production cost. Yet, rather than using the cost advantage, the second manufacturer remained focused on getting equal profits throughout the chain.

The study also found that volunteer players learned quickly from the outcomes of previous rounds – that is, "if they didn't get what they expected or got lower than what the opponent got, they are going to adjust their price … to make equal profit over time," says Dr. Choi.

Those findings were further supported in a follow-up survey that ranked fairness as critical to the supply chain relationship.

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