R&D Portfolios and Pharmaceutical Licensing

We examine how R&D portfolios of drug pipelines affect pharmaceutical licensing, controlling firm size, diversity, and competitors in R&D and product markets. The data collected comprises 329 license-outs and 434 license-ins closed by 54 Japanese pharmaceutical companies between 1997 and 2007. We pay special attention to stage-specific licensing by dividing the innovation process into an early stage and a late stage. Estimates from the fixed-effect GMM model reveal that drug pipelines significantly affect stage-specific licensing. Particularly, the state of drug pipelines is leveled off by license-outs at the early stage and license-ins at the late stage. Theoretical implications are also discussed.R&D portfolios, licensing, pharmaceutical industry, drug pipelines

Externalities and complementarities in platforms and ecosystems: From structural solutions to endogenous failures

Platforms and ecosystems provide structures for constellations of economic actors to engage and interact as they seek to create and capture value. We consider how the constructs of platforms and ecosystems relate and explore why they have become more ubiquitous by focusing on the nature of their value-add. We propose that they emerge as a response to distinct market failures, which we identify, and we explain which specific externalities they help overcome. We also identify post-hoc endogenous functional and distributional failures that platforms and ecosystems, in turn, generate. We discuss implications for theory and practice

Does fragmented or heterogeneous IP ownership stifle investments in innovation?

Thickets of partially overlapping patent rights raise costs to secure IPR for innovation. Fragmented IP ownership raises coordination costs to resolve mutual blockades. Inadvertent patent infringement poses the risk of fruits from investments to be exploited. A gap in economic commitment levels may be exploited if capital-intensive innovators have more invested application-specifically than inadvertently infringed IPR owners. I study whether fragmentation or heterogeneous capital-intensities among owners of overlapping patents affect propensities to invest in innovation. I find that firms with small patent portfolios are less likely to invest in innovation if IPR is fragmented. Firms with large patent portfolios are less likely to invest in innovation if cited patent owners have smaller stocks of fixed capital. This suggests that effects of patent thickets on innovation are not evenly spread among innovating firms

External Ventures: Why Firms Don't Develop All Their Inventions In-house

In this paper we consider why firms sometimes choose an external development path for their own inventions, despite the costs of contracting and the risks of opportunistic behaviour and expropriation. We model the probability that firms adopt an external development strategy using survey data from over 2700 Australian inventions. Our results indicate that firms pursue external development strategies in response to perceived project-level risk about the technical feasibility of the invention, especially when suported by confidence in the patent system. Our findings also confirm that small to medium size enterprises, highly leveraged large firms and firms with few co-specialized assets are more likely to pursue an external development strategy.Outsourcing R&D, managing technological risk, licensing innovation

Supplier research and development : how Japanese multinational companies are innovating in their global networks

Includes bibliographical references (p. 41-43).Christopher J. Voisey

Hybrid administrative interfaces : authority delegation and reversion in strategic alliances

Steering committees are pivotal for governing complex collaborations by consensus to facilitate coordination and knowledge sharing. Although consensus-based governance promotes mutuality, it can also cause deadlocks, stalling expeditious decision making. We examine the conditions under which alliance partners delegate decision-making authority to steering committees as well as the conditions under which authority over discordant matters can be relocated to one of the alliance partners. We argue that joint coordination concerns increase the likelihood of authority delegation, whereas the higher costs and stakes associated with decision stalemates provide grounds for authority reversion. Empirical analyses of strategic alliances in the biopharmaceutical industry support our arguments. Our paper demonstrates the versatility of contractually defined administrative interfaces in alliance governance, allowing partners to coordinate bilaterally and adapt hierarchically as and when required

Patents, Data Exclusivity, and the Development of New Drugs

Pharmaceutical firms typically enjoy market exclusivity for new drugs from concurrent protection of the underlying invention (through patents) and the clinical trials data submitted for market approval (through data exclusivity). Patent invalidation during drug development renders data exclusivity the sole source of protection and shifts the period of market exclusivity at the project level. Patent invalidation therefore constitutes a natural experiment that allows us to causally identify how the duration of market exclusivity affects firms' incentives to innovate. In instrumental variables regressions we quantify the effect of a one-year reduction in expected market exclusivity on the likelihood of drug commercialization. We provide first estimates of the responsiveness of R&D investments to market exclusivity expectations and hereby inform the ongoing policy debate on the regulation of intellectual property rights in the pharmaceutical industry

Three Empirical Studies on Digital Innovation Management: New Organizing Logic of Antecedents and Consequences of Innovation

In the last decade, innovation has undergone considerable changes in most industries. Digital innovation may represent the use of digital technology in the innovation process or to the end outcome of innovation. Over the years, innovation has become open, global, and collaborative in nature and involves diverse stakeholders and distributed innovation processes (Nambisan 2013; Nambisan et al. 2017). The importance of innovation will continue to grow in the future, as the business environment becomes increasingly uncertain and competitive. With the rapid development of digitized technologies, in addition to innovation outcomes such as new products, platforms, and services, IS researchers have developed an emerging interest in innovation process describing the diffusing, assimilating, or adapting of information technologies in various contexts. As the management of digital innovation becomes more complex and distributed, besides focusing on internal dynamics within firm boundaries, external dynamics also increases in importance. Therefore, this dissertation aims to examine the new organizational logic of digital innovation management, investigating its antecedents and consequences. In particular, Essays 1 and 2 examine internal dynamics, emphasizing the impact of key antecedents such as IT diversification, business diversification, IT-enabled capabilities, and business strategy. Essay 3 goes further to shed light on external dynamics of IT infrastructure governance and environmental uncertainty on the relationship between innovation and firm performance

Great Idea, Now What? Three Essays Examining The Relationship Between Organization Design And Commercialization Of Knowledge

Innovation is a key driver of a firm’s overall performance. Within an organization, innovation involves multiple actors transforming a firm’s knowledge into a final market offering. How an organization is designed can shape this transformation by influencing actors’ behaviors and interactions. However, despite prior studies, our understanding of the relationship between organization design and innovation is somewhat limited. In this dissertation, I offer a framework in which I conceptualize innovation as a process consisting of upstream tasks around invention, and downstream tasks around product development and commercialization. This enables me to combine both knowledge- and incentives- based views of the firm to develop a more complete theoretical understanding of the relationship between organization design and innovation. The design attribute I focus upon is the degree of organizational centralization. On the one hand, more centralized designs are associated with enhanced intra-organizational knowledge flows, which can enhance innovation. On the other hand, more decentralized designs are associated with higher observability of effort and facilitate the more effective use of incentives, which can increase innovation efforts. I empirically examine this trade-off in the context of the pharmaceutical industry. I use a unique dataset of firms’ patents, clinical trials, sales and organization structures supplemented by 61 interviews with senior managers from 28 of my sample firms. I find that greater decentralization while yielding higher numbers of inventions is associated with less original inventions, and fewer inventions progressing through the earlier stages of development. However, greater decentralization is associated with more inventions progressing through the later stages of development and greater sales of new products as a proportion of total sales. Further, I find that firms with decentralized Research & Development units are associated with a higher proportion of externally sourced inventions primarily driven by licensing. This dissertation contributes to the organization design and innovation literatures by highlighting where (in the organization) and when (in the innovation process) design choices can impact both how firms innovate as well as their innovation outcomes

Application of the Cooperative Game Theory to Global Strategic Alliances

Tutkimuksen tavoitteena on selvittää yhteistyön peliteorian sovellusmahdollisuuksia globaaleihin strategisiin liittoutumiin. Globaalien strategisten liittoutumien kirjallisuustutkimuksella analysoidaan liittoutumien muodostumiseen ja pysyvyyteen liittyviä tekijöitä. Yhteistyön peliteorian peruskäsitteet ja ratkaisukonseptit kuvataan ja käsitellään niiden sovellusmahdollisuuksia strategisiin liittoutumiin. Kolme kirjallisuusesimerkkiä kuvaa erilaisia yhteistyön peliteorian sovellustapoja strategisiin liittoutumiin. Työhön sisältyy tapaustutkimus, jossa muodostetaan laskennallinen malli globaalien matkapuhelinoperaattoreiden strategisista liittoutumista soveltamalla yhteistyön peliteoriaa. Käytetty ratkaisukonsepti on yhteistyöpelin ydin. Kirjallisuusesimerkit ja tapaustutkimus todentavat, että yhteistyön peliteoriaa voidaan soveltaa strategisten liittoutumien mallintamiseen. Liittoutumien muodostumisen todennäköisyyttä ja niiden stabiilisuutta voidaan arvioida yhteistyön peliteorian avulla. Myös liiketoiminnan dynamiikka ja liiketoimintaympäristön muutokset voidaan ottaa mallinnuksessa huomioon. Tämä mahdollistaa liittoutumien pitkän aikavälin elinkelpoisuuden tarkastelun. Tapaustutkimuksen avulla osoitetaan, että laskennallisen mallinnuksen avulla saatavat tulokset vastaavat strategisten liittoutumien kvalitatiivisen tutkimuksen tuloksia. Tapaustutkimuksen yhteydessä esitellään uusi menetelmä liittoutumien pitkän aikavälin stabiilisuuden arvioimiseksi liiketoiminnan muutoksissa. Liiketoimintaa kuvaavat epävarmat ja muuttuvat parametrit mallinnetaan soveltuvalla todennäköisyysjakaumalla. Tutkimuksessa osoitetaan, että yhdistämällä Monte Carlo -simulointi ja yhteistyöpelin ydin -ratkaisukonsepti, voidaan muodostaa stabiilisuusindikaattori, joka kuvaa liittoutuman pitkän aikavälin stabiilisuutta muuttuvassa liiketoimintaympäristössä.The scope of this thesis is the application of the cooperative game theory to global strategic alliances. The objective is to find out how the cooperative game theory can be applied to global strategic alliances. Global strategic alliances are studied to understand the major questions of the alliance formation and the long-term stability. Various concepts of the cooperative game theory are investigated to find a feasible way to apply them to the modelling of strategic alliances. Three examples from literature are presented in which the cooperative game theory is applied to strategic alliances. Also a case study is introduced in which the global mobile operators' alliances are modelled as cooperative games using the core solution concept. The literature examples and also the case study demonstrate that the theory of cooperative games can be applied to model the global strategic alliances. The stability and likelihood of strategic alliances can be assessed by modelling them as cooperative games. With this modelling the stability of strategic alliances can be assessed in the alliance formation. Also the business dynamics and changes in the business environment can be taken into account in order to understand the alliance's long-term vitality. The case study demonstrates that the findings of the computational model of the strategic alliances reflect the respective findings made with qualitative methods. In the case study a new computational method is introduced to estimate an alliance's long-term stability in the changing business environment. In this method the uncertain and changing business parameters are modelled with applicable probability distributions. By combining the Monte Carlo simulation and the core solution concept of the cooperative game theory, a measure called a stability indicator can be calculated. It reflects the stability of an alliance in the changing business environment