The purpose of this study was to investigate how biotech SMEs structure their business model to deal with the industry’s challenges. The first step was to lay a theoretical foundation of the business model and clarify ambiguities surrounding the business model concept. This lead to the Business Model Canvas, which was used as tool of analysis for this thesis. Semi-structured interviews were then conducted with companies, experts and cluster managers, following the nine building blocks of the Business Model Canvas.   The results showed that two typologies of business models could be seen, which we divided in pharmaceutical biotech SMEs and non-pharmaceutical biotech SMEs. Both business models face challenges of research and development process, but to different degrees. Pharmaceutical biotech SMEs deal with long, costly and risky research process, which results in a research-centered business model. During the research period, these companies don’t generate revenues through sales. Non-pharmaceutical biotech SMEs on the other hand, face less harsh research and development processes, which allows them to market their products faster and generate revenue from sales. This results in a more customer-centric business model than the pharmaceutical biotech SMEs.

There is a large body of research supporting the importance of market orientation in determining performance. A growing body of research supports the notion that strategic alliance management competencies positively influence performance. Few empirical investigations have examined the importance of market orientation in the biotechnology industry, much less the effect of alliance orientation on performance, or the combined effect of market and alliance orientation on performance. This study explores these relationships among Canadian biotechnology companies with medical/healthcare focuses. Of the 394 Canadian medical/healthcare biotechnology companies identified, 81 usable responses were received, yielding a response rate of 20.6 percent. It was found that market orientation positively and significantly influenced business performance, supporting the first hypothesis. Additionally, alliance orientation positively and significantly influenced business performance, supporting the second hypothesis. However, when market and alliance orientation were examined together, alliance orientation’s effect on business performance remained positive and significant, but market orientation’s effect on business performance became negative and non-significant. This prompted a further analysis that investigated the presence of a mediation relationship. Market orientation was fully mediated by alliance orientation in its relationship with business performance. This study contributes academically by adding to market and alliance orientation research and by the successful development of a biotechnology-specific performance instrument. This study contributes to marketing and management strategy, as it outlines performance indicators that enable high performance.