When are assets complementary? star scientists, strategic alliances, and innovation in the pharmaceutical industry

TLDR

The study investigates when assets are complementary by examining resource combinations along the pharmaceutical value chain, proposing that combinations targeting the same chain segments are substitutes due to knowledge redundancies while those linking different segments are complements through integration of nonredundant knowledge, and tests these hypotheses using data from 108 firms over 1974–2003. The authors employ two mechanisms—recruitment and retention of star scientists and engagement in strategic alliances—to combine resources for innovation and empirically assess their impact on innovative performance across 108 pharmaceutical firms from 1974 to 2003. © 2011 John Wiley & Sons, Ltd.

Abstract

Abstract To answer the question of when are assets complementary, we investigate specific resource combinations along the value chain, focusing on two mechanisms that are central to combining resources for innovation in the pharmaceutical industry: recruitment and retention of star scientists, and 2) engagement in strategic alliances. We propose that resource combinations that focus on the same parts of the value chain are substitutes due to knowledge redundancies. Conversely, we hypothesize that resource combinations that link different parts of the value chain are complements due to integration of nonredundant knowledge. To test these hypotheses, we empirically track the innovative performance of 108 global pharmaceutical firms over three decades (1974–2003). Copyright © 2011 John Wiley & Sons, Ltd.