Absorptive Capacity, Coauthoring Behavior, and the Organization of Research in Drug Discovery

We examine the interface between for-profit and publicly funded research in pharmaceuticals. Firms access upstream basic research through investments in absorptive capacity in the form of in-house basic research and 'pro-publication' internal incentives. Some firms also maintain extensive connections to the wider scientific community, which we measure using data on coauthorship of scientific papers between pharmaceutical company scientists and publicly funded researchers. 'Connectedness' is significantly correlated with firms' internal organization, as well as their performance in drug discovery. The estimated impact of 'connectedness' on private research productivity implies a substantial return to public investments in basic research.     

Would Freeing Up World Trade Reduce Poverty and Inequality? The Vexed Role of Agricultural Distortions

Trade policy reforms in recent decades have sharply reduced the distortions that were harming agriculture in developing countries, yet global trade in farm products continues to be far more distorted than trade in non‐farm goods. Those distortions reduce some forms of poverty and inequality but worsen others, so the net effects are unclear without empirical modelling. This article summarises a series of new economy‐wide global and national empirical studies that focus on the net effects of the remaining distortions to world merchandise trade on poverty and inequality globally and in various developing countries. The global Linkage model results suggest that removing those remaining distortions would reduce international inequality, largely by boosting net farm incomes and raising real wages for unskilled workers in developing countries, and would reduce the number of poor people worldwide by 3 per cent. The analysis based on the Global Trade Analysis Project model for a sample of 15 countries, and nine stand‐alone national case studies, all point to larger reductions in poverty, especially if only the non‐poor are subjected to increased income taxation to compensate for the loss of trade tax revenue.     

Scale, scope, and spillovers: the determinants of research productivity in drug discovery

We examine the relationship between firm size and research productivity in the pharmaceutical industry. Using detailed internal firm data, we find that larger research efforts are more productive, not only because they enjoy economies of scale, but also because they realize economies of scope by sustaining diverse portfolios of research projects that capture internal and external knowledge spillovers. In pharmaceuticals, economies of scope in research are important in shaping the boundaries of the firm, and it may be worth tolerating the static efficiency loss attributable to the market power of large firms in exchange for their superior innovative performance.     

Racing To Invest? The Dynamics of Competition in Ethical Drug Discovery

Recent advances in the theoretical literature have greatly expanded our understanding of the forces that shape the competitive dynamics of research and development, but a paucity of sufficiently detailed empirical data has left these insights relatively untested. We draw on unusually detailed qualitative and quantitative infernal data provided at the research program level by 10 major pharmaceutical firms to explore the usefulness of the modern literature as a source of insight into the dynamics of competition in ethical drug discovery. Our analysis focuses on one particularly compelling aspect of the literature: the suggestion that in “winner take all situations,” competition in R&D becomes a Prisoner's Dilemma, leading to overinvestment in research. Without adequate measures of the social return to innovation, we can say nothing about whether there is “too much” or “too little” research undertaken by the industry, but our results do not support the suggestion that R&D investment in drug discovery is driven by the “tit-for-tat” or simple reaction function models hinted at by the institutional literature. First, R&D investment is only weakly correlated across firms once common responses to exogenous shocks are accounted far, and second, rivals' R&D results are positively correlated with own research productivity, which we interpret as evidence for extensive R&D spillovers rather than the depletion externality implied by “winner take all” models. These results are not, of themselves, sufficient to reject the hypothesis that investment behavior in the industry is driven by strategic considerations since there is theoretical support for a wide variety of observable behavior as equilibrium outcomes of strategic interaction. Nonetheless, they suggest that the more extreme forms of rent dissipation identified in the literature are probably poor characterizations of the reality of competition in pharmaceuticals. Our results point both to the need to develop theories that incorporate richer models of possible payoff structures, adjustment costs, and firm heterogeneity and to the need to collect empirical data that is comprehensive enough to enable one to test them.     

Deals not done: Sources of failure in the market for ideas

Using novel survey data on technology licensing, we report the first empirical evidence linking the three main sources of failure emphasized in the market design literature (lack of market thickness, congestion, lack of market safety) to deal outcomes. We disaggregate the licensing process into three stages and find that, although lack of market thickness and deal failure are correlated in the first stage, they are not in the latter stages, underscoring the bilateral monopoly conditions under which negotiations over intellectual property often occur. In contrast, market safety is only salient in the final stage. Several commonly referenced bargaining frictions (congestion) are salient, particularly in the second stage. Also, universities and firms differ in the stage during which they are most likely to experience deal failure. Copyright © 2014 John Wiley & Sons, Ltd.     

Equal opportunities: the short and long agenda

Here the author considers the reasons for the current disillusionment of many concerned with ‘equal opportunities’ policies in employment and reviews the potential of an EO orientation for progressive change within organisations and draws on her current research on responses to EO, citing a company in the retail sector.     

Meta‐Analysis of Coefficient Alpha: A Reliability Generalization Study

Increasing precision of measurement is a goal of scientific advancement, but Nunnally's (1978) .70 benchmark for coefficient alpha (alpha) has remained the omnibus test for reliability for nearly 40 years. This likely arises due to there only being scattered empirical evidence of the degree to which the field has met or surpassed this standard. Using meta‐analytic techniques known as reliability generalization (RG), we cumulate alphas across 36 commonly used individual differences, attitudes, and behaviours from 1675 independent samples (N = 991,588). Our primary finding is that alphas almost always exceed .70 and generally fall above .80. In addition, we identified factors that moderate alpha including the specific measure used, the number of scale items, and the rater. The study provides baseline alphas that can be used for research planning and design; it also offers best practices for RG and notes the benefits of RG for understanding systematic fluctuations in reliability.     

Patents, Thickets and the Financing of Early-Stage Firms: Evidence from the Software Industry

Legal changes in the patentability of software since the mid 1990s have resulted in a substantial increase in the number of patents on software inventions. We focus here on the impact of transactions costs associated with patent "thickets" on new entrants' interactions with the capital markets. Using data on the financing of entrants into 27 narrowly defined software markets, we show that start-up software companies operating in markets characterized by denser patent thickets saw their initial acquisition of VC funding delayed relative to firms in markets less affected by patents after the mid 1990s. The relationship between patent thickets and subsequent financing activity such as IPO or acquisition is more complex, but there is weak evidence that firms without patents became less likely to go public if they operated in a market characterized by patent thickets. Firms with patents are more likely to be funded or experience a liquidity event. However, the application for a patent appears to matter more than its grant.     

Characteristics of demand for pharmaceutical products: an examination of four cephalosporins

We model demand for four cephalosporins and compute own- and cross-price elasticities between branded and generic versions of the four drugs. We model demand as a multistage budgeting problem, and we argue that such a model is appropriate to the multistage nature of the purchase of pharmaceutical products, in particular the prescribing and dispensing stages. We find quite high elasticities between generic substitutes and also significant elasticities between some therapeutic substitutes.