Scale, Scope and Spillovers: The Determinants of Research Productivity in the Pharmaceutical Industry

57 Pages Posted: 29 Jun 2004 Last revised: 20 Sep 2014

See all articles by Rebecca M. Henderson

Rebecca M. Henderson

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Iain M. Cockburn

Boston University Questrom School of Business; National Bureau of Economic Research (NBER)

Date Written: September 1993

Abstract

This paper presents the results of a study of the determinants of research productivity in the pharmaceutical industry. Using disaggregated, internal firm data at the research program level from ten major pharmaceutical companies, we find no evidence of increasing returns to scale at either the firm or the research program level. However our results suggest that there are three benefits to running research programs within the context of larger and more diversified R&D efforts: economies of scale arising from sharing fixed costs; economies of scope arising from the opportunity to exploit knowledge across program boundaries within the firm; and the enhanced ability to absorb internal and external spillovers. We also find that spillovers between firms may playa major role in increasing research productivity. The paper also speaks directly to the question of firm heterogeneity. A significant proportion of the "firm effect" identified in previous studies can be explained by the slowly changing composition of the research portfolio, as well as by less easily measured aspects of innovative capability.

Suggested Citation

Henderson, Rebecca M. and Cockburn, Iain M., Scale, Scope and Spillovers: The Determinants of Research Productivity in the Pharmaceutical Industry (September 1993). NBER Working Paper No. w4466. Available at SSRN: https://ssrn.com/abstract=227316

Rebecca M. Henderson (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E52-543
Cambridge, MA 02142
United States
617-253-6618 (Phone)
617-253-2660 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Iain M. Cockburn

Boston University Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
617-353-3775 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
60
Abstract Views
1,508
rank
352,264
PlumX Metrics