Exploring the nonlinear interaction effects of technology and market on firm performance in emerging biotechnology industry

Technology pull and market push are two key factors driving the emerging industry to success. Although there are some precious studies focusing on the interaction effects of technology and market on firm performance, most of which are conceptual, the empirical researches are few and almost linear. So the nonlinear empirical results are lack, especially in emerging industry. The objective of this study is to explore the nonlinear effects of technology and market on firm performance in the emerging biotechnology industry by using BP neural network. Based on a sample of 43 global top sales biotechnology firms, the results show that the interaction effects of technology and market actually affect firm performance in a nonlinear way, which is in the form of a U shape, i.e., the interaction effect is detrimental to firm performance until a threshold level is reached and then the effect becomes contributory thereafter. The paper concludes with a discussion of theoretical and practical implications of the finding.