Technological and product‐market experience and the success of new product introductions in the pharmaceutical industry

TLDR

The growth of a firm depends on its ability to introduce new products, which requires technological knowledge, the capacity to combine knowledge elements, and complementary assets for manufacturing, sales, and distribution. The study argues that a firm’s technological and product‑market experience develops over time and that new products are more successful when the firm holds sufficient stocks of both types of experience. We test this by analyzing whether pharmaceutical firms’ experience in their technological and product‑market domains confers early advantages to their new product offerings and leads to higher initial sales levels. © 2004 John Wiley & Sons, Ltd.

Abstract

Abstract The growth and development of a firm depend on its ability to introduce new products over time. To do this successfully, it requires technological knowledge, the ability to combine knowledge elements into valuable new products, and the complementary assets that facilitate the manufacturing, sales, and distribution of those products. We argue that these all develop as a function of a firm's experience in its technological and product‐market domains. Moreover, given the prospect of complementarities among technological and product‐market experience, the value of any one type of experience may be enhanced by the presence of another. Therefore, new products will be more successful when a firm possesses the appropriate stocks of technological and product‐market experience. We test this idea by analyzing whether pharmaceutical firms' experience in their technological and product‐market domains confer early advantages to their new product offerings, and lead to higher initial sales levels. Copyright © 2004 John Wiley & Sons, Ltd.