In this article, we explore the relationship between two key aspects of open innovation in small firms-absorptive capacity (ACAP) and external relationships-and their effects on growth in the U.S. and European biopharmaceutical sectors. Results from an international sample of 349 biopharmaceutical firms surveyed in the United States, United Kingdom, France, and Germany suggest that realized ACAP plays an important role in determining firms' growth. In terms of the interaction between firms' ACAP and external relationships, we find that engagement with exploratory relationships depends strongly on the continuity of R&D, while participation in exploitative relationships is more conditional on firms' realized ACAP.

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The complementarities between internal capabilities and external linkages have been widely acknowledged in the open innovation literature, yet little is known about the extent to which internal capabilities affect firms' openness within different institutional contexts. This paper therefore empirically explores the relationship between absorptive capacity (ACAP) and openness in the United States and European biopharmaceutical sectors. Based on analysis of data from a large-scale international survey of 349 biopharmaceutical firms inthe United States, the United Kingdom, France and Germany, the results suggest that exploratory openness depends more strongly on the research and development (R&D) aspect of firms' potential absorptive capacity, whereas exploitative openness is more conditional on firms' realized absorptive capacity (RACAP). The results also highlight the major differences between firms' openness and ACAP in the United States and Europe -in the United States, firms' skill levels prove more significant in contributing to firms' engagement with exploratory relationships, whereas in Europe, continuity of R&D proves more important. Engagement with exploitative relationships, however, is more conditional on firms' RACAP in Europe only. Absorptive capacity and openness of small pharmaceutical firms

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Drawing on the institution-based view and the global political economy perspective, this study examines the role of home-country government support and interstate relations in the overseas subsidiary performance of Chinese multinational enterprises (MNEs). We focus on two aspects of home-country government support: financial support and non-financial policy support, as well as their effects under the contingency of interstate relations. Using survey data, we find that Chinese MNEs' subsidiary performance is positively related to the degree of home-country government nonfinancial policy support, but not financial support. The impact of non-financial policy support is contingent on interstate political and economic relations. Stronger interstate political relations complement the impact of non-financial policy support on subsidiary performance, whereas interstate economic relations have a substitutive effect.