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The unfulfilled promise of biotechnology firms: a top management team-based explanation

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  • Hakan Ener

Abstract

A key feature of biotechnology firms’ business models is the tendency to branch into related therapeutic markets within the same industry in developing new products. Recent analyses revealed that this business model has not paid off for the vast majority of firms in this industry. Building on theories of learning and attention, and supported by empirical analyses of firms’ ability to develop new products over two decades, this article finds evidence that initiating new product development projects targeting new-to-the-firm therapeutic markets within the same industry disrupts firms’ product development projects in their existing markets. This effect is primarily driven by firms that ventured into therapeutic markets that were not highly related to their area of expertise, and firms that did not recruit top executives with experience in newly entered markets. These results help to explain the poor performance of biotechnology firms in getting new products to market.

Suggested Citation

  • Hakan Ener, 2017. "The unfulfilled promise of biotechnology firms: a top management team-based explanation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(5), pages 887-906.
    • Handle: RePEc:oup:indcch:v:26:y:2017:i:5:p:887-906.
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    File URL: http://hdl.handle.net/10.1093/icc/dtw054
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    More about this item

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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