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.     

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.     

Coordinating R&D and business planning

In order for US companies to become more competitive they need to improve coordination between their R&D and business planning. This article explanis what is known about coordinating R&D and business palnning, and provides guidance on how to improve it. It examines the development of a technology plan. Before a company can effectively deal with issues related to coordinating R&D and business planning, the R&D organization should understand its own capabilities through developing a technology plan. The intergration of technology planning with business planning is then examined. Two types of business palns are considered in relation to technology planning-product line strategies and a long-range business plan. Finally, the problem of definning on R&D organization's mission clearly is looked at.     

The pharmaceutical industry: Towards a new innovation environment

This article examines one facet of changing research alliances between the private and public sector. Consideration ofthe changes occurring within the pharmaceutical industry as a whole and its approach to research and development (R&D) give us some indight into why pharmaceutical companies are are zncreasingly choosing to embark on long-term R&D collaborations with hzgher education establishments. The article suggests possible future directions of alliances and raises questions regarding the implications for industrial and academic research departments izs a result of such collaborations.     

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.     

Technologies, products and firms' strategies part 2-analysis of three cases

This article is in two parts, Part I having been published in an earlier issue of this journal. It examines the character. and significance of 'strategies' fomtulated within the R&D function of a business, and their relationship to the broader business strategy of the parent company. The discussion i n Part 1 formed a basis for the analysis of case-studies of three large UK companies, ,wh.ich are presented here as Part 2 of the article. Part 1 ident$ed the three foci of innovation studies: the innovations themselves; patterns of innovation within discrete industrial sectors, the in:novatingjmns and their strategies. In Part 2 the substance of the case studies are presented and the lessons which they reveal are reviewed. The case studies were conducted in three large UK companies, one in the automotive component industry, another in the precious metals industry, with special reference to ceramic colours and pigment blending, and the third in the chemical industry. Use of the analytical devices produces intrwrting case study material, and indications for future research. In particular the need to explore further the separation of technology and products as objects of R&D study; further exploration of Pavitt's 1984 taxonomy, and an improvement in the understanding of strategy fornulation using a processual and interpretivist framework.     

Industry-university technology cooperation: a theory of inter-organizational relationships

This article proposes a grounded theoretical framework of R&D technology cooperation based on the congruence of existing theories of inter-organizational relationships. The theory is grounded in the empirical experiences of the industry-university cooperative centers in the US. It addresses two research questions: (1) Why do universities and industrial companies engage in cooperatioe R&D? (2) What factors affect their survival? Perceived resource dependency is proposed to be a motivator for initiating cooperative R&D. Interaction theories explain survivability, in that prior interaction between the parties and the degree of institutionalization of the interactions are hypothesized to explain survival over time. The intensity of interaction is also suggested to improve the chances for survival, but within a range of optimality (not too much and not too little). Iimitations and implications for research and poliy are also discussed.     

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.     

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.     

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.     

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.     

Exploring Strategic R&D Success Factors

This paper identifies strategic R&D success factors for organizations that produce R&D results for proprietary use. First, six types of R&D organizations are identified by using the criteria of profit orientation and external or internal use of R&D results. Following this, success criteria are identified by studying sample organizations that match the classification criteria. In the concluding section it is shown that important success criteria can be derived, many of which are independent of the organizational arrangement chosen for the generation of R& D results. Among them are: embedment into the scientific system, development of core competencies, securing appropriability, choosing appropriate organizational structures and processes.     

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     

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.     

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.     

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.     

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.