Analysis of r & d failure

Abstract

The basic issue of this paper is to investigate whether the relationship between market determinateness and performance found in the Israeli biomedical electronics industry reflects a particular pattern of comparative advantage or whether inadequate program execution was responsible for a part or all of the failures. For this purpose we build a tentative framework for analysing failure. This framework is based on a distinction between what we term causes of failure (inappropriate behavior or uncertainty) and their manifestation at the time of program suspension. Inappropriate behavior (and uncertainty) appears at three levels: overall firm level, choice of program, and program execution. Firm variables (size, market involvement, and management orientation) play a role both in determining inappropriate firm behavior and in explaining it. The results point to the predominance of inappropriate program selection (i.e. lack of comparative advantage) in explaining failure, despite the prevalence of faulty program execution. Inappropriate program selection is the result of insufficient exploratory search coupled with a management orientation which underestimates the importance of marketing aspects in the innovation of process. It also leads to inappropriate execution of innovation programs.