I analyze project continuation decisions where firms may resolve uncertainty through news about competitors’ research and development (R&D) failures, as well as through their own results. I examine the tradeoffs and interactions between product-market competition and technological learning from parallel R&D projects. Leveraging the biopharmaceutical industry’s unique characteristics to overcome barriers to measuring project-level responses, I use a difference-in-differences strategy to evaluate how competitor exit news alters a firm’s own project discontinuation decisions. The findings reveal that technological learning dominates competition effects. Firms are most sensitive to competitor failure news from within the same market and same technology area—more than doubling their propensity to terminate drug development projects in the wake of this type of information. Finally, I explore how levels of competition, uncertainty, and opportunities to learn moderate the response to competitor failure news. This paper was accepted by Joshua Gans, business strategy.
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Detecting and interpreting higher‐order interactions in ecological communities
Abstract When species simultaneously compete with two or more species of competitor, higher‐order interactions (HOIs) can lead to emergent properties not present when species interact in isolated pairs. To extend ecological theory to multi‐competitor communities, ecologists must confront the challenges of measuring and interpreting HOIs in models of competition fit to data from nature. Such efforts are hindered by the fact that different studies use different definitions, and these definitions have unclear relationships to one another. Here, we propose a distinction between ‘soft’ HOIs, which identify possible interaction modification by competitors, and ‘hard’ HOIs, which identify interactions uniquely emerging in systems with three or more competitors. We show how these two classes of HOI differ in their motivation and interpretation, as well as the tests one uses to identify them in models fit to data. We then show how to operationalise this structure of definitions by analysing the results of a simulated competition experiment underlain by a consumer resource model. In the course of doing so, we clarify the challenges of interpreting HOIs in nature, and suggest a more precise framing of this research endeavour to catalyse further investigations.
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- PAR ID:
- 10445383
- Publisher / Repository:
- Wiley-Blackwell
- Date Published:
- Journal Name:
- Ecology Letters
- Volume:
- 25
- Issue:
- 7
- ISSN:
- 1461-023X
- Page Range / eLocation ID:
- p. 1604-1617
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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