The unfulfilled promise of biotechnology firms: a top management team-based explanation

Hakan Ener

Industrial and Corporate Change, 2017, vol. 26, issue 5, 887-906

Abstract: A key feature of biotechnology firms’ business models is the tendency to branch into related therapeutic markets within the same industry in developing new products. Recent analyses revealed that this business model has not paid off for the vast majority of firms in this industry. Building on theories of learning and attention, and supported by empirical analyses of firms’ ability to develop new products over two decades, this article finds evidence that initiating new product development projects targeting new-to-the-firm therapeutic markets within the same industry disrupts firms’ product development projects in their existing markets. This effect is primarily driven by firms that ventured into therapeutic markets that were not highly related to their area of expertise, and firms that did not recruit top executives with experience in newly entered markets. These results help to explain the poor performance of biotechnology firms in getting new products to market.

JEL-codes: L25 L65 M13 (search for similar items in EconPapers)
Date: 2017
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