Article: R&D Effort, Effectiveness, and Firm Performance in the Pharmaceutical Sector. Journal: Journal of Business and Management (JBM) 2012 Vol.18 No.1 pp.97 - 115 Abstract: Research exploring the impact of R&D on firm outcomes yields mixed results. The paper draws on an integration of the resource-based view, the capabilities perspective, and accumulation theory to highlight the effectiveness of R&D effort in yielding recognized innovative output as a fundamental, yet underemphasized factor in the role of R&D as a contributor to firm performance. Specifically, innovative output is examined as an intervening factor in the relationship between R&D effort and firm performance. Empirical tests on a sample of 303 firms in the pharmaceutical industry reveal that R&D effort yields increasing returns to R&D effectiveness, which suggests that firms can enhance the value of research activities through increased activity. However, the discovery of innovative output as an important mediating factor between R&D effort and firm performance suggests that the benefit of increased R&D may be limited if this effort is not effective in yielding recognized innovative output. These findings are critical since managers in research-intensive industries often base resource allocation decisions on the assumed influence of R&D effort on firm performance. Inderscience Publishers - linking academia, business and industry through research

Title: R&D Effort, Effectiveness, and Firm Performance in the Pharmaceutical Sector.

Authors: Annetta Fortune; Lois Shelton

Addresses: Author address listing can be found in the "About the Authors" section at the end of the article.

Abstract: Research exploring the impact of R&D on firm outcomes yields mixed results. The paper draws on an integration of the resource-based view, the capabilities perspective, and accumulation theory to highlight the effectiveness of R&D effort in yielding recognized innovative output as a fundamental, yet underemphasized factor in the role of R&D as a contributor to firm performance. Specifically, innovative output is examined as an intervening factor in the relationship between R&D effort and firm performance. Empirical tests on a sample of 303 firms in the pharmaceutical industry reveal that R&D effort yields increasing returns to R&D effectiveness, which suggests that firms can enhance the value of research activities through increased activity. However, the discovery of innovative output as an important mediating factor between R&D effort and firm performance suggests that the benefit of increased R&D may be limited if this effort is not effective in yielding recognized innovative output. These findings are critical since managers in research-intensive industries often base resource allocation decisions on the assumed influence of R&D effort on firm performance.

Keywords: R&D effort; firm performance; pharmaceutical sector; innovative output; research effectiveness.

DOI: 10.1504/JBM.2012.141200

Journal of Business and Management, 2012 Vol.18 No.1, pp.97 - 115

Published online: 05 Sep 2024 *

Title: R&D Effort, Effectiveness, and Firm Performance in the Pharmaceutical Sector.

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