Asset accumulation, interdependence and technological change: evidence from pharmaceutical drug discovery

TLDR

The resource‑based view has been widely discussed, yet the micro‑level processes by which firms accumulate assets remain poorly understood. The study explores asset accumulation in pharmaceutical drug discovery, proposing that complex interactions among assets can create market imperfections and suggesting directions for future research. Field research, discovery data from nine pharmaceutical firms, and alliance data on 218 technology collaborations were used to examine how assets are built. Three factors were identified: inter‑asset dependencies hinder imitation, structural inertia within firms blocks asset trading, and rapid technological change makes it nearly impossible to pre‑specify all influencing factors. © 2002 John Wiley & Sons, Ltd.

Abstract

Abstract Although the resource‐based view of the firm has been written about extensively, the process by which firm assets are accumulated has not been explored in detail. That is, we know little about the micro‐level mechanisms by which assets are built, nor do we have sufficient empirical evidence why some assets are more difficult to imitate, trade, or substitute. In this exploratory paper, we attempt to provide a better understanding of asset accumulation via an empirical research program in pharmaceutical drug discovery. Using a combination of field research, discovery data from nine pharmaceutical firms, and data on 218 alliances involving new technologies for experimentation and testing, three causes affecting asset accumulation are identified and described. First, the difficulty of imitating a particular asset is affected by interdependencies with other assets. Second, trading of assets can be impeded by structural inertia in the core of a firm that is adopting the technology asset. And third, fully specifying all factors affecting imitation and trading ex ante is very difficult, if not nearly impossible, under conditions of rapid technological change. We propose that the complex interactions of these causes can give rise to imperfections in factor markets. Finally, implications for further research are discussed as well. Copyright © 2002 John Wiley & Sons, Ltd.