Abstract
AbstractHow do firms decide which R&D projects to pursue and which ones to cast aside? We use a real options approach to advance our understanding of how firms manage uncertainties in R&D project management, in particular uncertainties linked to the external scientific environment. Our findings highlight how these uncertainties have an impact on the initiation and discontinuation of R&D projects. We examine these effects in the context of shifts in US science policy in the cell therapy field, using a dataset on 570 R&D projects in the global cell therapy sector, initiated over the period 1986–2011. We find decreased R&D project initiation rates and higher discontinuation rates for projects initiated by US firms in the aftermath of policy shifts that increased uncertainties about public funding support for US cell therapy research. We also highlight how this effect was reversed as the US public funding outlook for such research recovered.
Highlights
Organised within networks encompassing both academic institutions and commercial entities, the development of R&D projects in science-intensive industries such as the biotechnology industry feeds off and is closely intertwined with publicly funded scientific research (e.g., Cohen et al, 2002; Powell et al, 2005)
Focusing on the discontinuation of R&D projects in the cell therapy field, our results indicate that cell therapy projects that were initiated by US firms during the period following the examined changes in US science policy had a higher propensity for failure than projects initiated by non-US firms
Due to the small number of cases of human embryonic stem cells (hESC) projects, this study is not able to test the effect of changes in the funding outlook on the initiation and failure of hESC R&D projects only; instead we focus in our analyses on the broader set of interlinked research programs that make up the cell therapy field
Summary
Organised within networks encompassing both academic institutions and commercial entities, the development of R&D projects in science-intensive industries such as the biotechnology industry feeds off and is closely intertwined with publicly funded scientific research (e.g., Cohen et al, 2002; Powell et al, 2005). Public Funding for Science and the Value of Corporate R&D Projects 1001 firms, provided US$ 104 million in seed- and start-up- funding for biotechnology firms in 2012 (PricewaterhouseCoopers, 2015), the National Institutes of Health (NIH) alone distributed US$ 258 million for biomedical research at the region’s three major research universities in that same year. Given the central role of external scientific communities in corporate R&D projects, uncertainties relating to firms’ ability to rely on these communities as R&D projects progress, likely shape firms’ management of these projects. The challenges these uncertainties represent are substantial. Both the scientific knowhow a firm needs over the course of an R&D project, and the new scientific knowhow that will become available during that period, are often difficult to predict when a firm commits resources to a new project
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
