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Corporate Governance and Firm Strategy in the Pharmaceutical Industry


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  • Steven Casper
  • Catherine Matraves


Using the case of the pharmaceutical industry, this paper assesses how the leading German and UK firms are adapting to changes in their competitive environment, at both the national and international level. We attempt to link how firms create governance structures (management decision-making, the organisation of the R&D process, etc.), and the national system of innovation, impact the innovation strategies adopted in leading German and UK firms. Our results show that first, the firm competencies created in order to compete globally may still originate within national economies, in part because the generation of R&D remains relatively national. Second, towards the end of the 1970s, the scientific basis in the pharmaceutical industry began to change rapidly. The evidence presented shows that UK firms rapidly developed new competencies in biotechnology and other research areas in response to the structural changes. However, German firms tended, until very recently, to maintain and in some cases strengthen competencies in traditional research methods based on organic chemistry. ZUSAMMENFASSUNG - (Corporate Governance und Unternehmensstrategie in der pharmazeutischen Industrie) Am Beispiel der pharmazeutischen Industrie wird in diesem Beitrag aufgezeigt, wie führende deutsche und britische Firmen sich an Änderungen in ihrer Unternehmensumwelt anpassen, sowohl der nationalen wie auch der internationalen Umwelt. Es wird gezeigt, wie die Unternehmen Governance-Strukturen (Managemententscheidungen, die Organisation von FuE-Prozessen etc.) schaffen und wie nationale Innovationssysteme die Innovationsstrategien beeinflussen, die von führenden deutschen und britischen Firmen verfolgt werden. Erstens gelangt die Studie zu dem Ergebnis, daß die Kompetenz der Unternehmen so ausgerichtet wurde, daß sie für den globalen Wettbewerb fit sind, aber ihre Wurzeln dennoch innerhalb der nationalen Volkswirtschaften behalten, teilweise deshalb, weil FuE verhältnismäßig national fundiert ist. Zweitens begann zum Ende der siebziger Jahre eine dramatische Änderung in der wissenschaftlichen Basis der pharmazeutischen Industrie. Diese Evidenz zeigt, daß britische Firmen rasch neue Kompetenz in Biotechnologie und anderen Forschungsbereichen entwickelten, um auf die Änderungen zu reagieren. Deutsche Unternehmen tendierten jedoch noch bis vor kurzem dazu, ihre bisherige Kompetenz beizubehalten und in manchen Fällen in traditionellen Forschungsbereichen, basierend auf organischer Chemie, sogar zu verstärken.

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Bibliographic Info

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 97-20.

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Length: 28 pages
Date of creation: Sep 1997
Date of revision:
Handle: RePEc:wzb:wzebiv:fsiv97-20

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Keywords: corporate governance; firm strategy; national systems of innovation; pharmaceuticals;


References listed on IDEAS
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  1. Teece, David J., 1986. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 15(6), pages 285-305, December.
  2. Vitols, Sigurt, 1995. "Corporate governance versus economic governance: banks and industrial restructuring in the US and Germany," Discussion Papers, Research Unit: Economic Change and Employment FS I 95-310, Social Science Research Center Berlin (WZB).
  3. DiMasi, Joseph A. & Hansen, Ronald W. & Grabowski, Henry G. & Lasagna, Louis, 1991. "Cost of innovation in the pharmaceutical industry," Journal of Health Economics, Elsevier, vol. 10(2), pages 107-142, July.
  4. Henderson, Rebecca., 1994. "The evolution of integrative capability : innovation in cardiovascular drug discovery," Working papers 3711-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  5. Catherine Matraves, 1998. "Market Structure, R&D and Advertising in the Pharmaceutical Industry," CIG Working Papers FS IV 98-17, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  6. Iain Cockburn & Rebecca Henderson, 1997. "Public-Private Interaction and the Productivity of Pharmaceutical Research," NBER Working Papers 6018, National Bureau of Economic Research, Inc.
  7. Rebecca Henderson & Iain Cockburn, 1996. "Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 32-59, Spring.
  8. Patel, Pari, 1995. "Localised Production of Technology for Global Markets," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 141-53, February.
  9. Pavitt, Keith, 1991. "What makes basic research economically useful?," Research Policy, Elsevier, vol. 20(2), pages 109-119, April.
  10. Mark Lehrer, 1997. "German Industrial Strategy in Turbulence: Corporate Governance and Managerial Hierarchies in Lufthansa," Industry and Innovation, Taylor & Francis Journals, vol. 4(1), pages 115-140.
  11. Henry Grabowski & John Vernon, 1990. "A New Look at the Returns and Risks to Pharmaceutical R&D," Management Science, INFORMS, vol. 36(7), pages 804-821, July.
  12. 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.
  13. Kenney, Martin, 1986. "Schumpeterian innovation and entrepreneurs in capitalism: A case study of the U.S. biotechnology industry," Research Policy, Elsevier, vol. 15(1), pages 21-31, February.
  14. Joaquim Oliveira Martins & Stefano Scarpetta & Dirk Pilat, 1996. "Mark-Up Ratios in Manufacturing Industries: Estimates for 14 OECD Countries," OECD Economics Department Working Papers 162, OECD Publishing.
  15. Aoki, Masahiko, 1990. "Toward an Economic Model of the Japanese Firm," Journal of Economic Literature, American Economic Association, vol. 28(1), pages 1-27, March.
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Cited by:
  1. Catherine Matraves, 1998. "Market Structure, R&D and Advertising in the Pharmaceutical Industry," CIG Working Papers FS IV 98-17, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  2. Adleberger, Karen, 1999. "A Developmental German State? Explaining Growth in German Biotechnology and Venture Capital," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series qt8z55s60f, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
  3. Couderc, J.P. & Couderc, M. (ed.), 2006. "Dynamiques des Entreprises Agroalimentaires (EAA) du Languedoc-Roussillon : évolutions 1998-2003. Programme de recherche PSDR 2001-2006 financé par l'Inra et la Région Languedoc-Roussillon," Research serial MOISA, UMR MOISA : Marchés, Organisations, Institutions et Stratégies d'Acteurs : CIHEAM-IAMM, CIRAD, INRA, Montpellier SupAgro, IRD - Montpellier, France, number 200603.


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