Knowledge Bases and Collaboration Propensity during Clinical Drug Development

Abstract

We apply the theory of the knowledge-based view on the firm to investigate why pharmaceutical companies enter into inter-organizational collaborations during clinical drug development. A firm’s propensity to collaborate is influenced by the firm’s knowledge base, i.e. its stock of knowledge resources. We consider two knowledge bases that exist within pharmaceutical firms: early-stage R&D and late-stage R&D knowledge bases. As pharmaceutical companies possess and utilize both knowledge bases during drug development, traditional patent-based measures present too homogeneous a view on the firm's knowledge base. We complement traditional measures with a measure that captures late-stage R&D knowledge base and answer the following research question: What is the impact of the concentration of the early-stage R&D and late-stage R&D knowledge bases on the propensity of pharmaceutical companies to engage in collaborative clinical drug development? We find that pharmaceutical companies with a concentrated clinical development knowledge base collaborate less during clinical drug development. Contrary to previous research, we do not find that a highly concentrated preclinical R&D knowledge base leads to less collaboration. We do confirm that R&D intensive firms collaborate more during new product development. Our dataset covers 17 large pharmaceutical firms for the period 2005 – 2011.