An empirical analysis of sustained advantage in the U.S. pharmaceutical industry: impact of firm resources and capabilities

The authors test a model of the relationships among firm resources, firm capabilities, and sustained competitive advantage between 1971 and 1989. Sustained comparative advantage was captured by two variables: therapeutic differentiation and global NCEs. The results show that R&D and salesforce expenditures have indirect and direct effects, respectively, on sustained competitive advantage. Firm capabilities were differentiated into component and integrative capabilities. Component capabilities were captured by the firm’s internal R&D efforts and therapeutic market focus, while integrative capabilities were concerned with the firm’s ability to obtain FDA approvals and to develop radical new drugs. Findings on each of these four capabilities on therapeutic differentiation and global NCEs are mixed. The direct and indirect effects of these resources and capabilities on therapeutic differentiation and global NCEs suggest important managerial implications in the way firms coordinate and combine their assets so as to achieve sustained competitive advantage. Copyright © 1999 John Wiley & Sons, Ltd.     

Reliability of Assessment of Reading Ability in Three Countries

Over the last few decades, there have been a number ofnational and international programmes to assessperformance in key subjects. For example theInternational Association for Evaluation ofEducational Attainment (IEA), International Assessmentof Educational Progress (IAEP), and the ThirdInternational Mathematics and Science Survey (TIMSS)programs have aimed to compare performance betweenparticipating countries.Such exercises have different requirements from thosetests, such as public examinations, which aim toassess the attainment of individuals. National andinternational assessments aim to cover a very widerange of materials, and often use the technique ofmultiple matrix sampling to do so.The investigation is based on generalizability-typeanalyses of three national data sets at two ages, andlooks not only at the variance components arising fromsampling of schools, and of pupils within them, butalso at the variation between different assessmentinstruments, and between items within assessmentinstruments. If interpreted with care, such resultscan be of value in the design of future studies. Thispaper concentrates largely on the precision ofestimates of overall means, but analyses of the typedescribed could also be used to compare theperformance of subpopulations.     

Insuring Against Losses from Transgenic Contamination: The Case of Pharmaceutical Maize

Concerns about the risk of food supply contamination have limited the development and commercialization of certain pharmaceutical plants. This article develops an insurance pricing model that helps translate these concerns into a cost-benefit analysis. The model first estimates the physical dispersal of maize pollen subject to a number of weather parameters. This distribution is then validated with the limited amount of currently available field trial data. The physical distribution is then used to calculate the premium for a fair-valued insurance policy that would fund the destruction of possibly contaminated fields. The flexible framework can be readily adapted to other crops, management practices, and regions.     

Experimental evidence of how prior experience as an auditor influences managers’ strategic reporting decisions

We design an experiment to examine the influence of audit experience on subsequent reporting decisions when auditors become managers of audited firms. In contrast to the independence issues that can arise when auditors and their clients are related by prior affiliation, we focus this study on the more common case in which auditors assume subsequent employment with other firms’ clients. In a bi-matrix experimental game that captures key features of the strategic tension between auditors and reporters, we find that reporters who have prior experience as an auditor, particularly the experience of having been a diligent auditor, are more sensitive to large penalties for aggressive reporting than are reporters whose experience is exclusively as a reporter. Our results suggest implications for regulators in predicting the effects of reporting penalties and for firms in considering the effects of CPA experience when hiring for reporting positions.

Implementation of market orientation in the subsidiaries of global companies: the role of institutional factors

Drawing upon the market orientation literature and institutional theory, this study examines the factors that affect the implementation of market orientation in the subsidiaries of global companies, using data gathered from multiple informants and multiple sources in 79 subsidiaries located in 45 countries. Findings indicate that the market orientation of subsidiaries is positively related to the legal institutions, local competition in the host country market, and the market orientation of headquarters. The findings also indicate that the headquarters’ market orientation has more pronounced effects on the implementation of market orientation for subsidiaries that strongly identify with headquarters. Moreover, the study demonstrates that cultural distance between home and host countries of the subsidiary strengthens the positive effects of competitive intensity on market orientation implementation. As such, this research addresses an important concern among researchers and managers that is related to how to increase the market orientation and, thereby, the performance of their subsidiaries located in foreign countries.     

Goal configuration in a global industry context

This study analyzes the goal configuration of 126 firms, based in Japan, U.K. and U.S., competing in global industries. The results indicate that firm nationality and internationalization do not affect the firm's goal configuration. The breadth of the firm's reward system was found to be related positively to a dispersed goal configuration and, within global and multifocal industry segments, a congruence between goal configuration and industry position was found to be associated positively with performance.     

Spillovers,Complementarities, and Sorting in Labor Markets with an Application to Professional Sports

Spillovers to productivity across workers may exist when workers produce in teams. Under certain conditions, these spillovers may cause a worker's marginal product to differ across different firms. Empirical examination of professional basketball finds significant spillovers to offensive productivity but finds relatively little evidence for market sorting based on spillovers. Thus, while teammate composition is important to a player's success, there is no evidence for complementarity.     

Capital Is Not Enough: Innovation in Developing Economies

Economic development and social entrepreneurship often conceive of poverty as a resource allocation problem in which a lack of capital prevents the poor from increasing their income through entrepreneurship. This allocative view, however, represents only one possible approach to conceptualizing entrepreneurial opportunity. The alternative discovery‐ and creativity‐based views place a greater emphasis on innovation which implies that superior ideas are also needed if poverty is to be reduced through firm performance. Drawing from a survey of 201 small business owners involved in a microcredit programme in Nairobi, Kenya, we find that the financial, social, human capital–performance relationships are mediated in part by innovation. Further, we find that differentiation‐related innovations lead to better firm performance than novelty‐related innovations.