Multiple Performances, Aspiration Levels and Partnering Behavior: The Case of the Pharmaceutical Industry

Abstract

Our paper explores how multiple performances (financial and innovative) and related aspiration levels explain changes in the partnering patterns of 144 pharmaceutical firms during the period 1990 to 2003. Our results confirm the central idea that firms exhibit different risk profiles and related strategic behavior, depending on the objectives based on performance feedback mechanisms. When financial performance deviates (either above or below) from aspirations, pharmaceutical firms decrease the extent of change in partnering patterns; when innovative performance deviates (either above or below) from aspirations, pharmaceutical firms exhibit increase in the extent of change in partnering patterns. Furthermore, innovative performance in relation to financial performance functions as risk-adversity catalyst increasing the extent of risky strategic behavior, such as change to the alliances and acquisitions portfolio.

Keywords: multiple performances, innovation, partnering behavior, aspiration levels

JEL Classification: M10