Trials and Terminations: Learning from Competitors' R&D Failures

• 成果类型: Article
• 署名作者: Krieger, Joshua L.
• 署名单位: Harvard University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3775
• 发表日期: 2021
• 页码: 5525-5548
• 关键词: research and development: project selection; research and development: innovation; industrial organization: market structure; Firm strategy; and market performance; organizational studies: decision making; industries: pharmaceutical

摘要

I analyze project continuation decisions where firms may resolve uncertainty through news about competitors' research and development (R&D) failures, as well as through their own results. I examine the tradeoffs and interactions between product market competition and technological learning from parallel R&D projects. Leveraging the biopharmaceutical industry's unique characteristics to overcome barriers to measuring project-level responses, I use a difference-in-differences strategy to evaluate how competitor exit news alters a firm's own project discontinuation decisions. The findings reveal that technological learning dominates competition effects. Firms are most sensitive to competitor failure news from within the same market and same technology area-more than doubling their propensity to terminate drug development projects in the wake of this type of information. Finally, I explore how levels of competition, uncertainty, and opportunities to learn moderate the response to competitor failure news.