Scoring and Funding Breakthrough Ideas: Evidence from a Global Pharmaceutical Company

Joshua Krieger (), Ramana Nanda, Ian Hunt, Aimee Reynolds and Peter Tarsa
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Joshua Krieger: Harvard Business School, Entrepreneurial Management Unit
Ian Hunt: NIBR
Aimee Reynolds: NIBR
Peter Tarsa: NIBR

No 23-014, Harvard Business School Working Papers from Harvard Business School

Abstract: We study resource allocation to early-stage ideas at an internal startup program of one the largest pharmaceutical firms in the world. Our research design enables us to elicit every evaluator’s scores across five different attributes, before seeing how they would allocate capital to the projects in a head-to-head comparison. In head-to-head comparisons, evaluators displayed a systematically higher preference for projects that scored high on execution-related attributes, compared to the organization’s proposed weight on these attributes. Because of this, projects of similar overall quality perceived as being high risk and high reward were systematically penalized relative to projects perceived as less transformational, but safer bets. Our results shed light on a potential mechanism for why breakthrough ideas are handicapped in R&D funding.

Pages: 52 pages
Date: 2022-08, Revised 2023-11
New Economics Papers: this item is included in nep-ino and nep-ppm
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