skip to main content
US FlagAn official website of the United States government
dot gov icon
Official websites use .gov
A .gov website belongs to an official government organization in the United States.
https lock icon
Secure .gov websites use HTTPS
A lock ( lock ) or https:// means you've safely connected to the .gov website. Share sensitive information only on official, secure websites.

Explore Research Products in the PAR
It may take a few hours for recently added research products to appear in PAR search results.


Title: Missing Novelty in Drug Development
Abstract We provide evidence that risk aversion leads pharmaceutical firms to underinvest in radical innovation. We introduce a new measure of drug novelty based on chemical similarity and show that firms face a risk-reward trade-off: novel drug candidates are less likely to obtain FDA approval but are based on more valuable patents. Consistent with a simple model of costly external finance, we show that a positive shock to firms’ net worth leads firms to develop more novel drugs. This suggests that even large firms may behave as though they are risk averse, reducing their willingness to investment in potentially valuable radical innovation.  more » « less
Award ID(s):
1564368
PAR ID:
10400565
Author(s) / Creator(s):
; ;
Editor(s):
Koijen, Ralph
Date Published:
Journal Name:
The Review of Financial Studies
Volume:
35
Issue:
2
ISSN:
0893-9454
Page Range / eLocation ID:
636 to 679
Format(s):
Medium: X
Sponsoring Org:
National Science Foundation
More Like this
  1. ; ; (, American Economic Journal: Macroeconomics)
    We investigate the determinants of radical (“creative”) innovations that break new ground in knowledge creation. We develop a model focusing on the choice between incremental and radical innovation and on how managers of different ages and human capital are sorted across firms. Firm- and patent-level evidence reveals that firms that are more “open to disruption” are significantly more likely to engage in radical innovation and hire younger managers and inventors with a comparative advantage in radical innovation. However, once the effect of the sorting is factored in, the (causal) impact of manager age on creative innovations, though positive, is small. (JEL D22, L26, M10, M14, O31, O34) 
    more » « less
  2. ; (, R&D Management)
    With its focus on value creation and value capture, open innovation research explicitly or implicitly examines the competitive impacts of collaboration. However, to date such research has not considered the effects of a blockbuster industry structure upon open innovation. Here, we examine a particular form of multilateral collaboration, the open R&D consortium, in which the results from collaboration are allowed to spill over to members and nonmembers alike. We do so in the context of the pharmaceutical industry, a stable but fragmented industry defined by the ongoing search for blockbuster hits protected by strong appropriability. Using a novel data set, we identify 141 such consortia that involve two or more of the 30 largest pharma firms. We show that firms financially support such consortia, in part, because their value creation activities benefit members without disrupting the value capture or other aspects of the incumbent industry structure. We discuss the implications of these findings for research on multilateral collaboration in blockbuster industries, and open innovation more generally. 
    more » « less
  3. ; ; (, 30th Americas Conference on Information Systems (AMCIS))
    Cybersecurity risk presents a significant and growing challenge for firms. Understanding better how firms are defending themselves can help answer important questions about which controls are more effective and whether firms are investing enough in their defenses. Unfortunately, data on firm-level cybersecurity investments have been difficult for researchers to obtain at large scale. This paper describes a method for constructing firm-level cybersecurity posture metrics by aggregating a selection of data on security products tracked in the SWZD Company Information database. Our exploratory analysis demonstrates this dataset's value in enriching cybersecurity research, offering novel perspectives that could shape sector-specific best practices and enable empirical evaluation of security controls. 
    more » « less
  4. ; ; ; ; (, Information Systems Research)
    Firms’ public communication on social media during disasters can benefit both disaster response efficiency and the perception of the corporate image. Despite its importance, limited guidelines are available to inform firms’ disaster communication strategies. The current study examines firms’ communication on social media in various disasters and how it impacts public engagement. We employ a novel natural language processing (NLP) approach, Semantic Projection with Active Retrieval (SPAR), to analyze Facebook posts made by Russell 3000 firms between 2009 and 2022 concerning various disasters. We show that firm communication can be measured based on two dimensions derived from the Competing Values Framework (CVF): internal versus external and stable versus flexible. We find that social media messages that emphasize operational continuity (internal/stable-oriented) are more popular during biological disasters. By contrast, messages that stress innovations and adaptations to disasters (external/flexible-oriented) elicit more engagement in weather-related disasters. The study offers a framework to characterize and guide firms’ design of disaster communication on social media in different disaster contexts. Our SPAR method is also available to firms to analyze their social media data and uncover the underlying patterns in communication across different contexts. 
    more » « less
  5. ; ; ; (, The Roles of Immigrants and Foreign Students in US Science, Innovation, and Entrepreneurship edited by Ina Ganguli, Shulamit Kahn and Megan MacGarvie University of Chicago Press, 2020)
    We estimate differences in innovation behavior between foreign versus U.S.-born entrepreneurs in high-tech industries. Our data come from the Annual Survey of Entrepreneurs, a random sample of firms with detailed information on owner characteristics and innovation activities. We find uniformly higher rates of innovation in immigrant-owned firms for 15 of 16 different innovation measures; the only exception is for copyright/trademark. The immigrant advantage holds for older firms as well as for recent start-ups and for every level of the entrepreneur’s education. The size of the estimated immigrant-native differences in product and process innovation activities rises with detailed controls for demographic and human capital characteristics but falls for R&D and patenting. Controlling for finance, motivations, and industry reduces all coefficients, but for most measures and specifications immigrants are estimated to have a sizable advantage in innovation. 
    more » « less
  • Citation Formats
  • MLA
  • APA
  • Chicago
  • BibTeX
  • Save / Share this Record
  • Send to Email