Entangled Decisions: Knowledge Interdependencies and Terminations of Patented Inventions in the Pharmaceutical Industry
Strategic Management Journal, Forthcoming
42 Pages Posted: 10 May 2018 Last revised: 22 Aug 2019
Date Written: April 6, 2018
This study explores the role of knowledge interdependencies on the termination of patented inventions. Termination refers to the abandonment of inventive efforts that are no longer deemed promising. We argue that high interdependencies between an inventive effort and the other inventions in the same research program will increase the cognitive burden on managers and decrease the likelihood of termination. Further, in the presence of interdependencies, managers are likely to rely on heuristics for termination decisions. We focus on two such heuristics: interdependencies of an invention with those in other research programs and the level of external competition in the research program. We test our hypotheses with longitudinal data on patent terminations through non-payment of renewal fees in the pharmaceutical industry.
Keywords: R&D, Knowledge, Interdependencies, Termination, Research Programs
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