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Innovation and Strategic Divergence: An Empirical Study of the U.S. Pharmaceutical Industry from 1920 to 1960

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  • Jeho Lee

    ()
    (Graduate School of Management, Korea Advanced Institute of Science and Technology, 207-43Cheongryangri-dong, Dongdaemun-gu, Seoul 130-012, Korea)

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    Abstract

    Today, firms employing two distinct survival strategies---(1) innovation and (2) imitation ---coexist in the U.S. pharmaceutical industry. History indicates that this intraindustry heterogeneity did not exist prior to 1940. This study empirically investigates the origin of this strategic divergence by focusing on changes in firms' R&D inputs and outputs. It finds that some U.S. pharmaceutical firms responded to the opportunity presented by the discovery of antibiotics in the 1940s by investing more in R&D, while many others did not. Over time, the innovators dominated in developing new drugs, and the gap between innovators and imitators steadily increased. These findings also shed light on Üthe genesis of strategic groups,Ý a phenomenon that is not yet well understood.

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    File URL: http://dx.doi.org/10.1287/mnsc.49.2.143.12745
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 49 (2003)
    Issue (Month): 2 (February)
    Pages: 143-159

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    Handle: RePEc:inm:ormnsc:v:49:y:2003:i:2:p:143-159

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    Keywords: innovation; strategic groups; schumpeterian competition;

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    Cited by:
    1. Furman, Jeffrey L. & MacGarvie, Megan J., 2007. "Academic science and the birth of industrial research laboratories in the U.S. pharmaceutical industry," Journal of Economic Behavior & Organization, Elsevier, vol. 63(4), pages 756-776, August.
    2. Jackie Krafft & Francesco Quatraro & Pier Saviotti, 2014. "Knowledge characteristics and the dynamics of technological alliances in pharmaceuticals: empirical evidence from Europe, US and Japan," Journal of Evolutionary Economics, Springer, vol. 24(3), pages 587-622, July.
    3. Smirnova, Michelle Hannah, 2012. "A will to youth: The woman’s anti-aging elixir," Social Science & Medicine, Elsevier, vol. 75(7), pages 1236-1243.
    4. Leiponen, Aija & Drejer, Ina, 2007. "What exactly are technological regimes?: Intra-industry heterogeneity in the organization of innovation activities," Research Policy, Elsevier, vol. 36(8), pages 1221-1238, October.
    5. Lee, Jeho & Park, Seung Ho & Ryu, Young & Baik, Yoon-Suk, 2010. "A hidden cost of strategic alliances under Schumpeterian dynamics," Research Policy, Elsevier, vol. 39(2), pages 229-238, March.

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