The Diffusion of Science-Driven Drug Discovery: Organizational Change in Pharmaceutical Research
AbstractRecent work linking the adoption of key organizational practices to productivity raises an important question: if adoption increases productivity so dramatically, why does adoption across an industry take so long? This paper explores this question in the context of one particularly interesting practice, the adoption of science driven drug discovery by the modern pharmaceutical industry. Over the past two decades, the established pharmaceutical industry has slowly shifted towards a more science-oriented drug discovery: (a) adopters experienced substantially higher rates of R&D after the late 1970s and (b) the rate of adoption across the industry was extremely slow. Motivated by the apparent contradiction between large boosts in performance and slow rates of adoption, this paper characterizes the sources of differences in rates of adoption between 1980 and 1993. The principal finding is that adoption of a science-oriented research approach was a function of initial conditions, or subject to 'state dependence': some firms simply began the sample period at a much higher level of science orientation. Moreover, while these effects attenuated over time, our empirical results suggest that it took more than ten years before adoption was unrelated to initial conditions. In addition, consistent with theories developed in the context of technology adoption, we find that relative diffusion rates depend on the product market positioning of firms. More surprisingly, adoption rates are seperately driven by the composition of sales within the firm. This latter finding suggests the potential importance of differences among firms in terms of the internal structure of power and attention, an area which has received only a small amount of theoretical attention.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7359.
Date of creation: Sep 1999
Date of revision:
Note: PR IO
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-11-08 (All new papers)
- NEP-HEA-1999-11-08 (Health Economics)
- NEP-IND-1999-11-08 (Industrial Organization)
- NEP-TID-1999-12-14 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Heckman, James J, 1991. "Identifying the Hand of the Past: Distinguishing State Dependence from Heterogeneity," American Economic Review, American Economic Association, vol. 81(2), pages 75-79, May.
- Iain Cockburn & Rebecca Henderson & Scott Stern, 1999. "Balancing Incentives: The Tension Between Basic and Applied Research," NBER Working Papers 6882, National Bureau of Economic Research, Inc.
- Lynne G. Zucker & Michael R. Darby, 1999. "Present at the Revolution: Transformation of Technical Identity for a Large Incumbent Pharmaceutical Firm After the Biotechnological Breakthrough," NBER Working Papers 5243, National Bureau of Economic Research, Inc.
- Anita M. McGahan & Michael E. Porter, 1999. "The Persistence of Shocks to Profitability," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 143-153, February.
- Dasgupta, Partha & David, Paul, 1985. "Information Disclosure and the Economics of Science and Technology," CEPR Discussion Papers 73, C.E.P.R. Discussion Papers.
- Milgrom, Paul R & Qian, Yingyi & Roberts, John, 1991. "Complementarities, Momentum, and the Evolution of Modern Manufacturing," American Economic Review, American Economic Association, vol. 81(2), pages 84-88, May.
- Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June.
- Jensen, M.C. & Murphy, K.J., 1988.
"Performance Pay And Top Management Incentives,"
88-04, Rochester, Business - Managerial Economics Research Center.
- Daniel A. Levinthal, 1997. "Adaptation on Rugged Landscapes," Management Science, INFORMS, vol. 43(7), pages 934-950, July.
- Hicks, Diana, 1995. "Published Papers, Tacit Competencies and Corporate Management of the Public/Private Character of Knowledge," Industrial and Corporate Change, Oxford University Press, vol. 4(2), pages 401-24.
- Caves, Richard E, 1980. "Industrial Organization, Corporate Strategy and Structure," Journal of Economic Literature, American Economic Association, vol. 18(1), pages 64-92, March.
- Susan Helper, 1997. "Complementarity and Cost Reduction: Evidence from the Auto Supply Industry," NBER Working Papers 6033, National Bureau of Economic Research, Inc.
- Rebecca Henderson, 1993. "Underinvestment and Incompetence as Responses to Radical Innovation: Evidence from the Photolithographic Alignment Equipment Industry," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 248-270, Summer.
- Edward P. Lazear, 1996.
"Performance Pay and Productivity,"
NBER Working Papers
5672, National Bureau of Economic Research, Inc.
- Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-60, December.
- Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-91, September.
- Henderson, Rebecca. & Cockburn, Iain., 1994. "Measuring competence? : exploring firm effects in pharmaceutical research," Working papers 3712-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Zucker, Lynne G & Darby, Michael R & Brewer, Marilynn B, 1998. "Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises," American Economic Review, American Economic Association, vol. 88(1), pages 290-306, March.
- Cockburn, Iain M & Henderson, Rebecca M, 1998. "Absorptive Capacity, Coauthoring Behavior, and the Organization of Research in Drug Discovery," Journal of Industrial Economics, Wiley Blackwell, vol. 46(2), pages 157-82, June.
- Susan Athey & Scott Stern, 1998. "An Empirical Framework for Testing Theories About Complimentarity in Organizational Design," NBER Working Papers 6600, National Bureau of Economic Research, Inc.
- Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-26, June.
- Lee Branstetter & Reiko Aoki, 2005. "Is Academic Science Raising Innovative Productivity? Theory and Evidence from Firm-Level Data," Hi-Stat Discussion Paper Series d05-86, Institute of Economic Research, Hitotsubashi University.
- Josh Lerner & Julie Wulf, 2006.
"Innovation and Incentives: Evidence from Corporate R&D,"
NBER Working Papers
11944, National Bureau of Economic Research, Inc.
- Josh Lerner & Julie Wulf, 2007. "Innovation and Incentives: Evidence from Corporate R&D," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 634-644, November.
- Jacqueline Senker, 2006. "Biotechnology Alliances in the European Pharmaceutical Industry: Past, Present and Future," SPRU Working Paper Series 137, SPRU - Science and Technology Policy Research, University of Sussex.
- repec:dgr:unumer:2009066 is not listed on IDEAS
- Aija Leiponen, 2005. "Core complementarities of the corporation: organization of an innovating firm," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 351-365.
- Cassiman, Bruno & Veugelers, Reinhilde & Zuniga, Pluvia, 2007. "Science linkages and innovation performance: An analysis on CIS-3 firms in Belgium," IESE Research Papers D/671, IESE Business School.
- Moritz Müller & Robin COWAN & Geert Duysters & Nicolas JONARD, 2009. "Knowledge Structures," Working Papers of BETA 2009-24, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Beath, John & Owen, Robert F. & Poyago-Theotoky, Joanna & Ulph, David, 2003. "Optimal incentives for income-generation in universities: the rule of thumb for the Compton tax," International Journal of Industrial Organization, Elsevier, vol. 21(9), pages 1301-1322, November.
- Lee Branstetter & Kwon Hyeog Ug, 2004. "The Restructuring Of Japanese Research And Development: The Increasing Impact Of Science On Japanese R&D," Discussion papers 04021, Research Institute of Economy, Trade and Industry (RIETI).
- Lee Branstetter & Yoshiaki Ogura, 2005. "Is Academic Science Driving a Surge in Industrial Innovation? Evidence from Patent Citations," NBER Working Papers 11561, National Bureau of Economic Research, Inc.
- Cassiman, Bruno & Veugelers, Reinhilde & Zuniga, Pluvia, 2009. "Diversity of science linkages and innovation performance: some empirical evidence from Flemish firms," Economics Discussion Papers 2009-30, Kiel Institute for the World Economy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.