The Impact of First-Hand and Others' Major Failure and Success Experience On Drug Development

Abstract

We examine how new product development success and failure experience affects an organizations subsequent new product development project performance. We disaggregate these experiences into different magnitudes and differentiate between first-hand or others’ experience. Our findings support the assumption that future performance benefits from major failures but that major successes have an even greater impact. We also find support for the idea that first-hand major failure experience benefits future performance more than others’ related major experience does, and that others’ related success experience has a greater impact on future performance than first-hand success experience does. We conduct our research in the context of drug development in the biotech industry.