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

See all articles by Rajat Khanna

Rajat Khanna

Tulane University - A.B. Freeman School of Business

Isin Guler

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Atul A. Nerkar

University of North Carolina (UNC) at Chapel Hill - Management-Strategy Area

Date Written: April 6, 2018

Abstract

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

Suggested Citation

Khanna, Rajat and Guler, Isin and Nerkar, Atul A., Entangled Decisions: Knowledge Interdependencies and Terminations of Patented Inventions in the Pharmaceutical Industry (April 6, 2018). Strategic Management Journal, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3158013 or http://dx.doi.org/10.2139/ssrn.3158013

Rajat Khanna

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

Isin Guler (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Atul A. Nerkar

University of North Carolina (UNC) at Chapel Hill - Management-Strategy Area ( email )

Chapel Hill, NC 27599
United States

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