Abstract
In this study, we investigate the effects of organizational cognition on organizational innovation, along with the role of security analysts as the primary information intermediaries in the financial market. Using a 19-year panel data of global biopharmaceutical firms, we found that heightened coverage by security analysts tended to increase managerial attention on exploitation (as opposed to exploration); in turn, this cognitive shift increased the quantity and reduced the level of novelty of the R&D activities. Such relationships became strengthened when the security analysts that cover the firms had higher reputation. These results provide novel insight on the interplay among managerial cognition, financial market pressure, and firm-level innovation process.
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