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Corporate Governance and the Governance of Innovation: the Case of Pharmaceutical Industry

The paper focuses on some organizational dynamics that have characterized pharmaceutical industry in the last thirty years, when biotechnology and the development of life sciences have defined a new technological paradigm, reshaping many aspects of the industry, especially the organization of innovative activity. We suggest an original interpretation of some organizational settings, as the increased importance of skilled scientists within firms and the development of inter-organizational alliances for the division of scientific labor. Following recent theorizing on corporate governance issues, which points out the intrinsic organizational and relational dimensions of the resource allocation processes or strategic decision-making, we propose a role of the organizational practices mentioned above on corporate governance, and, in turn, an influence of different governance arrangements on innovative activity. We recall more traditional approaches to the analysis of corporate governance, and give a broader interpretation to the relevant variables proposed. Further, relying on more recent theories and on literature on firm's boundaries and sectoral systems of innovation, we propose industry-specific variables for pharmaceuticals, including internal settings as well as relations with external actors. Preliminary empirical support is given to our hypotheses, concerning a panel of large US pharmaceutical companies.

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Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 122.

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Length: 39 pages
Date of creation: Dec 2000
Date of revision: Dec 2000
Handle: RePEc:cri:cespri:wp122
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