IDEAS home Printed from https://ideas.repec.org/a/inm/ororsc/v12y2001i1p19-36.html
   My bibliography  Save this article

Technological Innovation in the Pharmaceutical Industry: The Use of Organizational Control in Managing Research and Development

Author

Listed:
  • Laura B. Cardinal

    (Kenan-Flagler School of Business, McColl Building, CB #3490, The University of North Carolina at Chapel Hill, Chapel Hill, North Carolina 27599-3490)

Abstract

The literature on the management of R&D professionals strongly advocates managing R&D projects on a project-by-project basis. This literature suggests that projects should be managed differently depending upon project characteristics such as risk, ambiguity, and nonroutineness. While the primary emphasis of the R&D professional literature has been on project teams, the purpose of this study is to examine the impact of organization-wide controls on innovativeness at the firm level.In a sample of 57 pharmaceutical firms, this study investigates the influence of organizational controls on the research and development activities of R&D professionals. This study is one of a handful of studies that simultaneously explores the use of input, behavior, and output controls. Two categories of innovation are considered as dependent variables: incremental innovations in the form of drug enhancements and radical innovations in the form of new drugs. Contrary to existing theory and hypotheses developed in this study, the results show that input, behavior, and output control enhanced radical innovation, and input and output controls enhanced incremental innovation.These results challenge several important features of existing models of R&D management and diverge from common beliefs about R&D management at the project level. While it is commonly accepted that incremental and radical innovation should be managed differently, the results of this study suggest otherwise. In this instance, the management of R&D activities may be considered more similar than previously thought.

Suggested Citation

  • Laura B. Cardinal, 2001. "Technological Innovation in the Pharmaceutical Industry: The Use of Organizational Control in Managing Research and Development," Organization Science, INFORMS, vol. 12(1), pages 19-36, February.
    • Handle: RePEc:inm:ororsc:v:12:y:2001:i:1:p:19-36
    DOI: 10.1287/orsc.12.1.19.10119
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/orsc.12.1.19.10119
    Download Restriction: no
    File URL: https://libkey.io/10.1287/orsc.12.1.19.10119?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Holmstrom, Bengt, 1989. "Agency costs and innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 12(3), pages 305-327, December.
    2. John Bound & Clint Cummins & Zvi Griliches & Bronwyn H. Hall & Adam B. Jaffe, 1984. "Who Does R&D and Who Patents?," NBER Chapters, in: R&D, Patents, and Productivity, pages 21-54, National Bureau of Economic Research, Inc.
    3. James G. March, 1991. "Exploration and Exploitation in Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 71-87, February.
    4. Andrew R. Weiss & Philip H. Birnbaum, 1989. "Technological Infrastructure and the Implementation of Technological Strategies," Management Science, INFORMS, vol. 35(8), pages 1014-1026, August.
    5. George P. Huber & C. Chet Miller & William H. Glick, 1990. "Developing More Encompassing Theories About Organizations: The Centralization-Effectiveness Relationship as an Example," Organization Science, INFORMS, vol. 1(1), pages 11-40, February.
    6. Karen A. Bantel & Susan E. Jackson, 1989. "Top management and innovations in banking: Does the composition of the top team make a difference?," Strategic Management Journal, Wiley Blackwell, vol. 10(S1), pages 107-124, June.
    7. Govindarajan, V. & Gupta, Anil K., 1985. "Linking control systems to business unit strategy: impact on performance," Accounting, Organizations and Society, Elsevier, vol. 10(1), pages 51-66, January.
    8. Zvi Griliches, 1984. "R&D, Patents, and Productivity," NBER Books, National Bureau of Economic Research, Inc, number gril84-1, October.
    9. Langfield-Smith, Kim, 1997. "Management control systems and strategy: A critical review," Accounting, Organizations and Society, Elsevier, vol. 22(2), pages 207-232, February.
    10. 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.
    11. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107, Elsevier.
    12. Laurie J. Kirsch, 1996. "The Management of Complex Tasks in Organizations: Controlling the Systems Development Process," Organization Science, INFORMS, vol. 7(1), pages 1-21, February.
    13. Alberto Zanzi, 1987. "How Organic Is Your Organization?– Determinants Of Organic/Mechanistic Tendencies In A Public Accounting Firm," Journal of Management Studies, Wiley Blackwell, vol. 24(2), pages 125-140, March.
    14. Deborah Dougherty, 1992. "Interpretive Barriers to Successful Product Innovation in Large Firms," Organization Science, INFORMS, vol. 3(2), pages 179-202, May.
    15. Rebecca Henderson & Iain Cockburn, 1994. "Measuring Competence? Exploring Firm Effects in Pharmaceutical Research," Strategic Management Journal, Wiley Blackwell, vol. 15(S1), pages 63-84, December.
    16. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-938, July.
    17. Taylor, Frederick Winslow, 1911. "The Principles of Scientific Management," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number taylor1911.
    18. Gambardella, Alfonso, 1992. "Competitive advantages from in-house scientific research: The US pharmaceutical industry in the 1980s," Research Policy, Elsevier, vol. 21(5), pages 391-407, October.
    19. Cardinal, Laura B. & Opler, Tim C., 1995. "Corporate diversification and innovative efficiency an empirical study," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 365-381, April.
    20. Deborah Gladstein Ancona & David F. Caldwell, 1992. "Demography and Design: Predictors of New Product Team Performance," Organization Science, INFORMS, vol. 3(3), pages 321-341, August.
    21. Abernathy, William J. & Clark, Kim B., 1985. "Innovation: Mapping the winds of creative destruction," Research Policy, Elsevier, vol. 14(1), pages 3-22, February.
    22. Denis M. S. Lee & Thomas J. Allen, 1982. "Integrating New Technical Staff: Implications for Acquiring New Technology," Management Science, INFORMS, vol. 28(12), pages 1405-1420, December.
    23. Karel O. Cool & Dan Schendel, 1987. "Strategic Group Formation and Performance: The Case of the U.S. Pharmaceutical Industry, 1963--1982," Management Science, INFORMS, vol. 33(9), pages 1102-1124, September.
    24. William G. Ouchi, 1979. "A Conceptual Framework for the Design of Organizational Control Mechanisms," Management Science, INFORMS, vol. 25(9), pages 833-848, September.
    25. Robert D. Dewar & Jane E. Dutton, 1986. "The Adoption of Radical and Incremental Innovations: An Empirical Analysis," Management Science, INFORMS, vol. 32(11), pages 1422-1433, November.
    26. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
    27. William H. Glick & George P. Huber & C. Chet Miller & D. Harold Doty & Kathleen M. Sutcliffe, 1990. "Studying Changes in Organizational Design and Effectiveness: Retrospective Event Histories and Periodic Assessments," Organization Science, INFORMS, vol. 1(3), pages 293-312, August.
    28. Kathleen M. Eisenhardt, 1985. "Control: Organizational and Economic Approaches," Management Science, INFORMS, vol. 31(2), pages 134-149, February.
    29. Mona V. Makhija & Usha Ganesh, 1997. "The Relationship Between Control and Partner Learning in Learning-Related Joint Ventures," Organization Science, INFORMS, vol. 8(5), pages 508-527, October.
    30. Catherine M. Banbury & Will Mitchell, 1995. "The effect of introducing important incremental innovations on market share and business survival," Strategic Management Journal, Wiley Blackwell, vol. 16(S1), pages 161-182.
    31. John E. Ettlie & William P. Bridges & Robert D. O'Keefe, 1984. "Organization Strategy and Structural Differences for Radical Versus Incremental Innovation," Management Science, INFORMS, vol. 30(6), pages 682-695, June.
    32. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    33. Alfred M. Jaeger & B. R. Baliga, 1985. "Control systems and strategic adaptation: Lessons from the Japanese experience," Strategic Management Journal, Wiley Blackwell, vol. 6(2), pages 115-134, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Johnson, William H.A., 2011. "Managing university technology development using organizational control theory," Research Policy, Elsevier, vol. 40(6), pages 842-852, July.
    2. Hagedoorn, John & Cloodt, Myriam, 2003. "Measuring innovative performance: is there an advantage in using multiple indicators?," Research Policy, Elsevier, vol. 32(8), pages 1365-1379, September.
    3. Karbowski Adam, 2016. "The Elasticity-Based Approach to Enterprise Innovation," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 49(1), pages 58-78, March.
    4. Kristina McElheran, 2015. "Do Market Leaders Lead in Business Process Innovation? The Case(s) of E-business Adoption," Management Science, INFORMS, vol. 61(6), pages 1197-1216, June.
    5. Quintana-Garci­a, Cristina & Benavides-Velasco, Carlos A., 2008. "Innovative competence, exploration and exploitation: The influence of technological diversification," Research Policy, Elsevier, vol. 37(3), pages 492-507, April.
    6. Cockburn, Iain M. & Henderson, Rebecca M., 2001. "Scale and scope in drug development: unpacking the advantages of size in pharmaceutical research," Journal of Health Economics, Elsevier, vol. 20(6), pages 1033-1057, November.
    7. Barbara Brenner & Björn Ambos, 2013. "A Question of Legitimacy? A Dynamic Perspective on Multinational Firm Control," Organization Science, INFORMS, vol. 24(3), pages 773-795, June.
    8. Choi, Mincheol & Lee, Chang-Yang, 2021. "Technological diversification and R&D productivity: The moderating effects of knowledge spillovers and core-technology competence," Technovation, Elsevier, vol. 104(C).
    9. Jeffrey T. Macher, 2006. "Technological Development and the Boundaries of the Firm: A Knowledge-Based Examination in Semiconductor Manufacturing," Management Science, INFORMS, vol. 52(6), pages 826-843, June.
    10. Turner, Karynne L. & Monti, Alberto & Annosi, Maria Carmela, 2021. "Disentangling the effects of organizational controls on innovation," European Management Journal, Elsevier, vol. 39(1), pages 57-69.
    11. Klette, Tor Jakob & Griliches, Zvi, 2000. "Empirical Patterns of Firm Growth and R&D Investment: A Quality Ladder Model Interpretation," Economic Journal, Royal Economic Society, vol. 110(463), pages 363-387, April.
    12. Bruce Rasmussen, 2010. "Innovation and Commercialisation in the Biopharmaceutical Industry," Books, Edward Elgar Publishing, number 13680, December.
    13. Lerner, Josh, 2006. "The new new financial thing: The origins of financial innovations," Journal of Financial Economics, Elsevier, vol. 79(2), pages 223-255, February.
    14. Laura B. Cardinal & Sim B. Sitkin & Chris P. Long, 2004. "Balancing and Rebalancing in the Creation and Evolution of Organizational Control," Organization Science, INFORMS, vol. 15(4), pages 411-431, August.
    15. Linda Argote & Henrich R. Greve, 2007. "A Behavioral Theory of the Firm ---40 Years and Counting: Introduction and Impact," Organization Science, INFORMS, vol. 18(3), pages 337-349, June.
    16. Chung-Jen Chen & Bou-Wen Lin & Jun-You Lin & Yung-Chang Hsiao, 2020. "Learning-from-parents: exploitative knowledge acquisition and the innovation performance of joint venture," The Journal of Technology Transfer, Springer, vol. 45(1), pages 228-258, February.
    17. Frederico Rocha & Ana Urraca Ruiz & Bruno Campos, 2006. "Measuring Technological Opportunity: The Brazilian Case," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 7, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    18. Francisco Polidoro & Matt Theeke, 2012. "Getting Competition Down to a Science: The Effects of Technological Competition on Firms' Scientific Publications," Organization Science, INFORMS, vol. 23(4), pages 1135-1153, August.
    19. F. Ted Tschang & Gokhan Ertug, 2016. "New Blood as an Elixir of Youth: Effects of Human Capital Tenure on the Explorative Capability of Aging Firms," Organization Science, INFORMS, vol. 27(4), pages 873-892, August.
    20. Chris P. Long & Sim B. Sitkin & Laura B. Cardinal & Richard M. Burton, 2015. "How controls influence organizational information processing: insights from a computational modeling investigation," Computational and Mathematical Organization Theory, Springer, vol. 21(4), pages 406-436, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ororsc:v:12:y:2001:i:1:p:19-36. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.