Learning from Failures or Failing to Learn? Lessons from Pharmaceutical R&D

14 Pages Posted: 21 Apr 2012

See all articles by Laura Magazzini

Laura Magazzini

University of Verona

Fabio Pammolli

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering; CERM Foundation

Massimo Riccaboni

KU Leuven - Department of Managerial Economics, Strategy, and Innovation; IMT Institute for Advanced Studies

Date Written: Spring 2012

Abstract

Innovation is a trial and error process in which both successes and failures contribute to knowledge creation and destruction. In this paper we test theoretical predictions about the role of failures in new product development on private and public knowledge and interfirm knowledge transfer. We analyse the outcomes of world‐wide R&D projects in the pharmaceutical industry, and proxy knowledge flows with forward citations received by patents associated with each project. We find that patents covering successfully completed projects (i.e., leading to drug launch on the market) receive more citations than those associated to failed (terminated) projects, which in turn are cited more often than patents lacking clinical or preclinical information. Failures by specialized firms are cited more frequently than the ones of generalist companies. We therefore offer evidence of the value of failures as research inputs in (pharmaceutical) innovation.

Keywords: R&D competition, product development, vicarious learning, patent citation, pharmaceutical industry

Suggested Citation

Magazzini, Laura and Pammolli, Fabio and Riccaboni, Massimo, Learning from Failures or Failing to Learn? Lessons from Pharmaceutical R&D (Spring 2012). European Management Review, Vol. 9, Issue 1, pp. 45-58, 2012. Available at SSRN: https://ssrn.com/abstract=2043458 or http://dx.doi.org/10.1111/j.1740-4762.2012.01027.x

Laura Magazzini (Contact Author)

University of Verona ( email )

Via dell'Artigliere, 8
Verona, 37129
Italy

Fabio Pammolli

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering ( email )

Via Lambruschini 4C - building 26/A
Milano, 20156
Italy

CERM Foundation ( email )

Via Fiorentina, 1
Siena, Siena 53100
Italy

HOME PAGE: http://www.cermlab.it

Massimo Riccaboni

KU Leuven - Department of Managerial Economics, Strategy, and Innovation ( email )

Naamsestraat 69 bus 3500
Leuven, 3000
Belgium

IMT Institute for Advanced Studies ( email )

Complesso San Micheletto
Lucca, 55100
Italy

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