R&D Investments,Information and Strategy

This paper argues that firms can best realize the value of their investments in R&D by exploiting the associated information asymmetries. Attention is directed away from the physical results of R&D and towards the firm's ability, more generally, to earn rents from the private information emanating from its R&D. Four strategies may be used to exploit the information asymmetries from R&D: (1) publish the details of the innovation in return for legal protection; (2) keep the information inside the firm; (3) make the information selectively, informally available to others; and (4) disseminate the information as widely and rapidly as possible. To implement these strategies, resources may be allocated both to the commercial development of new technologies, and/or to related market opportunities (investing in other companies, assets and technologies). Of critical importance are the innovator's own skills and resources in effectively gathering, understanding, and commercially exploiting R&D-generated information asymmetries, both internally and in relation to other firms. This study should yield new insights to managers in designing strategies (and counter-strategies) to position themselves not only at the technological edge, but more fundamentally, at the 'information edge'.     

Creating New Resources through European R&D Partnerships

This paper describes the way firms participating in R&D consortia can benefit from the outcome of common R&D. More specifically, it is suggested that R&D consortia, which are part of the European EUREKA initiative, provide appropriate organizational structures for the creation of new knowledge and competencies. This qualitative research shows that both the function provided to the consortium and in-house capabilities help partners to create resources thanks to co-operative R&D. The links between R&D co-operative outcomes and both the organizational design of the consortium and the internal capabilities of member firms are of general interest for all companies involved in comparable types of consortia and, more generally, in technological partnerships.     

Joint research and development projects as technology training ventures

This paper presents an empirically derived model of the process through which industrial firms that lack internal resources in a particular technology area to implement certain research and development (R&D) projects on their own, initiale nad implement them jointly with not-for-profit research institutions. Such joint R&D projects are typically initiated by smaller, technologically less advanced firms in developing countires, with the underlying objective of training themselves in the relevant technology area and acquiring new technological resources from more advanced local research institutions, while simultaneously and rapidly completing the immediate R&D project. This process model has been developed by drawing from and synthesizing several in-depth case studies of such projects. In developing countries, joint R&D projects of this nature are important, as they can be more effective than formal technology training programmes for not-for-profit research institutions to fulfil their charter by transerning their advanced technical knowledge to the relatively less advanced local industrial firms. Participating firms that seek to their immediate interest, and therefore learn it rapidly and effectively. This paper adds to the scarce literature on ht process of organizational knowledge acquisition through contractual arrangements such as joint projects. It also enables both firms and research institutions to understand effective proceses for initiating and implementing such mutually beneficial joint R&D projects.     

Strategies of biotechnology companies

To identfy the R&D and marketing strategies adopted by by biotechnology firms in the UK, a survey was conducted spanning a range of biotechnology firm size, product, organizational arrangemens. and prior experiences with advanced technology. This was done using a comprehensive questionnaire similar to that used in a comparable investigation in the USA. Twenty-three firms active principally engaged in speciality chemicals human diagnostics and agricultural products.The information from the questionnaires was used to analyse the company strategies under three man headings. These were technology acquisitation,marketing and R&D. Companies were charecterized into three clusters within each of these headings. The means of appropriation for different strategies were then examined although the significance of the results was undermined by the small size. Finally, the relationship between R&D and marketing strategies within the same firms was investigated.     

Productivity, innovation and R&D: Micro evidence for Italy

By exploiting a rich firm level data-base, this paper presents novel empirical evidence on the effect of process and product innovations on productivity, as well as on the role played by R&D and fixed capital investment in enhancing the likelihood of introducing innovations at the firm level. Our results imply that process innovation has a large impact on productivity. Furthermore, R&D spending is strongly positively associated with the probability of introducing a new product, whereas fixed capital spending increases the likelihood of introducing a process innovation. The latter result might reflect the fact that new technologies are frequently embodied in new capital goods. However, the effect of fixed investment on the probability of introducing a process innovation is magnified by R&D spending internal to the firm. This implies that R&D can affect productivity growth by facilitating the absorption of new technologies.     

Life Science Innovation and the Restructuring of the Pharmaceutical Industry: Merger, Acquisition and Strategic Alliance Behaviour of Large Firms

This article explores the transformative nature of the life sciences in the context of pharmaceutical mergers, acquisitions and strategic alliances. Drawing on interviews with senior scientists and managers from large pharmaceutical firms, and secondary data on general industry trends, it identifies diverse company strategies for capturing and exploiting new technologies/knowledge and explores their implications for innovation. The article suggests that mergers, acquisitions and strategic alliances represent a cluster of related activities that provide various strategic options for managing innovation and productivity deficit. However, because the preferred balance between in-house R&D and externally sourced knowledge depends on a number of firm-specific factors, as well as challenges posed by the external operating environment, there is increasing variation between large companies in how these activities are exploited and strategically managed.     

From Imitation to Innovation: The Evolution of R&D Capabilities and Learning Processes in the Indian Pharmaceutical Industry

Since the mid 1990s the Indian pharmaceutical industry has emerged as a leading supplier of generic drugs to both developing and developed countries.The movement of the Indian pharmaceutical industry along the R&D value chain represents a remarkable shift from an importer to an innovator of drugs. The Indian government's industrial and technology policies along with changes in regulation of intellectual property rights played a crucial role in shaping this development of R&D capability. Using the 'capability creation model' this paper discusses the learning processes and stages involved in this dramatic accumulation of technological capability. This analysis shows that the Indian pharmaceutical industry has followed a trajectory from duplicative imitation to creative imitation to move up the value chain of pharmaceutical R&D. Finally as a result of changes in patent law the industry is learning to develop capabilities in innovative R&D. The basic and intermediate technological capabilities gained from imitative learning gave these firms a solid base for development of competence in advanced innovative R&D. These findings have implications for government policies as well as firm strategies in other developing countries albeit with some limitations due to global harmonisation of patent laws being promoted by the World Trade Organization.     

The strategic management of R&D collaboration

For many firms collaborative R&D is an important component of their technology strategies. R&D collaboration can provide valuable supplementary technological knowledge for firms, building technological capacity. Due to the additional problems of managing R&D in collaboration, rather than entirely in-house, outcomes from it are often uncertain and benefits are hard-earned. This paper, based on a literature review, and on six case-studies of firms experienced in collaboration, examines some of these problems. Because of the high management costs of collaboration, the length of tme needed to build effective communications paths between different organisations, and the specific technological nature of these forms of inter-firm linkage R&D collaboration should be a strategic toncern. Partner selection should be made, and the collaboration conducted, on the basis of the expectation of a continuing relationship encouraging mutual learning and based on a high degree of trust.     

Mathematical modelling as a tool to aid R&D investment decisions in a sustainable development policy climate

By its very nature, investment in R&D is a challenging proposition. It is a decision made today for an uncertain return in the future. Moreover, it has become more complex with the introduction of sustainable development considerations into the decision-making process. In this paper, the effect of environmental policy on the economic framework within which new technologies must compete is discussed, and analytical techniques which help assess these complexities are described. The return on an R&D investment is determined by the competitiveness of the resultant innovation at the time of its eventual application. A new technology is competitive relative to a given economic framework (which includes such factors as alternative technologies, availability of investment capital, trained human resources, etc).Government involvement in establishing goals and timetables for environmental protection signficantly affects the evolution of the economic framework in which new technologies must perform. To be successful in the 'sustainable development' age, the R&D investor must be able to anticipate the effect and development of government environmental and economic policy. Mathematical modelling is a valuable tool to help the investor and policy-maker appreciate the key risk factors and to understand the effect of environmental and economic policy on desired outcomes. For R&D, most model development has focused on policy development and is not very useful supporting the business decisions msociated with effective R&D investment. In this paper, the interaction bebeen government policy and business decision-making is discussed, and a methodology, supported by a model, is presented to aid R&D investors to take environmental and sustainabilip issues into account when assessing the future competitiveness of technology.     

Marketing and r&d strategies for biotechnology firms in the usa

This pape reports on a survey of 64 biotechnology firms in the USA about their R&D strategy, marketing focud and sources of technology. The survey explored the interrelationships among the strategic issues and how they were related with the means of appropriating R&D results. Three stralegic clusters for technology acquisitin emerged from the data: (i) internal developer, (ii) joint developer, and (iii) cooperative financed. Three marketing clusters were: (i) market penetartor, (ii) innovative marketer, and (iii) market developer. The R&D clusters were: (i) defensive strategy, (ii) aggressive strategy, and (iii) research-intensive strategy. External sources of technology appeared to be predominant among thje various firms and apparently marketing strategy and source of technology had no significant relationship. Most of the firms were involved with commercial innovation in their R&D strategy and few were research specialists. Innovative firms were inclined to depend on external sources sources of technology. Issues related to appropriability of R&D results for the different groups have been examined for their implications for public policy.     

Discontinuities in genetic engineering for pharmaceuticals? firms jumps and lock-in in systems of Innovation

This pape criticizes the concept of 'technological discontinuities'. It argues that the concept is misleading when the skills and knowledge of an indusry are composed of multiple rather than single core technologies. In cases such as the use of genetic engineering as the basis of production in pharmaceuticals, both existing pharmaceutical firms and new biotech firms integrate the new techniques into existing indusrial practice. The radical tecnology both enhances and destroys existing knowledge; the key to survival has been integration. Both existing and new firms have had the possibility of integrating multiple core technologies, but firms have been able to do so in different ways. Some existing firms could jump over to the radically new 'technological trajectory', by combining their creation of new competencies through in-house R&D with their access to novelty through relations with external agents in systems of innovation.     

Sources and directions of technological accumulation in France: a statistical comparison with FR Germany and the UK

Technological activities are an important determinant of national economic performance. Data on R&D and on the national origins of patenting in the USA show that, compared to those of FR Germany and the UK, French technological activities have the following characteristics: (1) a relatively high rate of growth over the past 20 years in aggregate activity; (2) concentration of technological strength in sectors dominated by state procurement and related R&D funding, rather than in “core” technologies; (3) stronger performance in fast-growing technologies in defence, electrical products and fine chemicals, than in electronics and motor vehicles; (4) a relatively stable and speialized sectoral pattern of technological strengths and weaknesses; and (5) sectoral patterns of trading strengths and weaknesses that broadly reflect those in technology. These characteristics of France's technological activities cannot be explained by their greater or lesser concentration, which is very similar to that found in both FR Germany and the UK, both in aggregate and in specific sectors. As in the other two countries, a few large firms have a major influence on national technological activities, especially in R&D-intensive sectors and automobiles. These results are on the whole consistent with the recent assessment by INSEE and CEPII of France's competitive position in international markets. However, they do show a strong Franch “niche” in technologies linked to state markets, and they do suggest certain advantages in long-term stability, rather than rapaid change, in technological priorities.     

Managing global research and development in China: Patterns of R&D configuration and evolution

The growing internationalization of R&D activities challenges multinational corporations (MNCs) to formulate technology strategies and manage increasingly diffuse and diverse networks of R&D laboratories and alliances in the context of disparate national institutions. This paper examines the evolutionary processes of MNCs' R&D strategies in China in terms of two principal dimensions, i.e. geographic dispersion and functional focus. Based on a study of 378 international R&D centers and alliances established in China over the 1995-2001 period, we investigate the evolution of managing international R&D configurations in an emerging economy. The model is further illustrated with key findings from case studies of three leading high-tech MNCs in managing their global R&D operations in China over 1996-2004, specifically Fujitsu, Motorola and Nokia. This study contributes to the existing literature by exploring the globalization of R&D through foreign centers of scientific and technological excellence, which enables MNCs to innovate closer to their product markets and manufacturing facilities in emerging markets.     

Research and Technology Outsourcing

The paper discusses the process of externalization and the contracting out of R&D and technical activity. The focus of the analysis is on the outsourcing of R&D and technical activity undertaken by firms and now outsourced to companies and organizations which supply the Contract Research and Technology (CRT) market. The analysis highlights that not only is it important to understand the factors in the demand for such services but also in changing dynamics of the nature of the research and technical services supplied and the way they are supplied. The paper then investigates the implications of these dynamic trends for the conduct of the R&D function, particularly towards research externalization and outsourcing, via the use of firms and organizations involved in contract research and technology.     

Science and Corporate Strategy: A Bibliometric Update of Hounshell and Smith

Hounshell and Smith's Science and Corporate Strategy: DuPont R&D, 1902- 1980 is one of the most comprehensive business history books ever written. In addition, it highlights the important relationship between corporate strategy and R&D activities. The purpose of this current paper is to update the information on DuPont's R&D activities using secondary data and bibliometrics. Our findings are that DuPont underwent a series of dramatic shifts in their R&D efforts during the 1980s and into the 1990s. For example, there was a focus on life sciences, a concerted attempt to reduce R&D, and an endeavour to align R&D more with core businesses. Beyond the bibliometrics, we found that corporate performance and changes in the top management team may have precipitated these changes in R&D. The implications of such relationships are also discussed.     

Choosing Between Internal and Non-internal R&D Activities: Some Technological and Economic Factors

This paper evaluates some of the technological and economic factors that underlie the choice between in-house R&D, R&D alliances and outsourcing. We recount the reasons for the growth in non-internal activities, and explain why these are not as prevalent for R&D as other value-adding activities, and highlight that outsourcing is most often undertaken where multiple, substitutable sources are available. We then develop two frameworks. First, a static framework is developed, which evaluates the choice of mode based on a firm's distribution of competencies, and their strategic importance. Second, a dynamic framework is developed that demonstrates how the static framework differs depending on whether the firm is engaged in pre-paradigmatic, paradigmatic or post-paradigmatic sectors. We also consider the effect of new technologies being introduced to a firm's portfolio of competencies     

Technologies, products and firms' strategies part 1—a framework for .analysis

This article examines, the character and significance of 'strategies' formulated within the R&D function of a business, and their relatzonship to the broader business strategy of the parent company. The discussion forms a basis for the analysis of case studies of three large UK companies, which will be published later as Part 2 of this article Part 1 of the article identifies three foci of innovation studzes: first, that of the innovations themselves; secondly, that of patterns of innovation within discrete industrial sectors; thirdly, that of the innovating firms and their strategies. The discussion focuses on the third topic nad explores two aspects of the tehnological components of innovation strategies. First, the shape of the prorgolio of products under development, the technical and market specificities they possess, and secondly, the structure of the portfolios of technologies required and used in those products. These dimensions of strategy combine both firm-specific and public-domain tecnoligical competenes. These competences affect both the competitive position and the strategic direction of firms. Finally, the article proposes some analytical devices for making sense of technology strategies in the thre firms studied. Part 2 of the article presetns the substance of the case studies, and reviews the lessons which they reveal.     

Some Determinants of Core Competencies: Evidence from a Binary-Logit Analysis

Despite the increasing recognition of the salience of core competencies in the process of competition, the notion of core competencies has remained largely ambiguous in the literature. Neither is it clear what strategies, institutions, and resources are necessary for developing and sustaining core competencies. This paper uses the binary-logit model to explore the determinants of core competencies, and identifies investment in intangible assets, marketing/promotional activities and firm size as significant determinants of core competencies. An evaluation of the technology strategies of two competence-seeking firms also points to the increasing salience of intangible assets, decentralization/globalization of the R&D function, and the intensive search for knowledge and capabilities.     

The occurrence and spatial distribution of collaboration: biotech firms in Gothenburg, Sweden

This paper deals with the occurrence and spatial distribution of collaborations within biotechnology. By starting from a total population of 45 firms involved in biotech R&D, we shed light on how many collaborate with (1) other firms, (2) venture capitalists, and (3) actors in science and technology and whether these partners can be found in the region, nation or in the rest of the world. Possible explanations for the different patterns are drawn out.