Firms invest differentially in the intellectual human capital required to recognize, evaluate, and utilize technological breakthroughs occurring outside the firm. Such differential investment has been crucial in explaining which incumbent pharmaceutical firms have successfully transformed their technological identities in response to the biotechnological revolution and which are threatened by persistent low performance. While all incumbent firms lagged the dedicated new biotechnology firms in adopting the new drug-discovery technology, firms with higher R&D expenditures before the biotech revolution were more likely to successfully adopt the new techniques and likely to do so earlier. Failure to adopt the new techniques was associated with lower performance compared to firms adopting more fully and faster.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
5577.
Length: Date of creation: Nov 1996 Date of revision: Handle: RePEc:nbr:nberwo:5577
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Hanson, Gordon H, 1995.
"Incomplete Contracts, Risk, and Ownership,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 341-63, May.
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