Costly Information: Firm Transformation, Exit, or Persistent Failure

Firms invest differentially in the intellectual human capital required to recognize, evaluate, and utilize technological breakthroughs occurring outside the firm. Such differential investment has been crucial in explaining which incumbent pharmaceutical firms have successfully transformed their tech...

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Bibliographic Details
Published in:The American behavioral scientist (Beverly Hills) 1996-08, Vol.39 (8), p.959-974
Main Authors: ZUCKER, LYNNE G., DARBY, MICHAEL R.
Format: Article
Language:English
Subjects:
Bankruptcy
Biotechnology
Biotechnology industry
Business
Companies
Computers
Consumer goods
Diffusion of innovations
Drug industry
Drugs
Economic aspects
Employment
Enterprises
Factors
Genetics
Geophysics
Human capital
Information
Information seeking
Innovations
Marketing
New technology
Organizations
Pharmaceutical industry
Pharmaceutical research
Productivity
R&D
Research & development
Research & development expenditures
Research and development
Science
Scientists
Success
Technological change
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Summary:Firms invest differentially in the intellectual human capital required to recognize, evaluate, and utilize technological breakthroughs occurring outside the firm. Such differential investment has been crucial in explaining which incumbent pharmaceutical firms have successfully transformed their technological identities in response to the biotechnological revolution and which are threatened by persistent low performance. While all incumbent firms lagged the dedicated, new biotechnology firms in adopting the new drug-discovery technology, firms with higher research and development expenditures before the biotech revolution were more likely to successfully adopt the new techniques and likely to do so earlier. Failure to adopt the new techniques was associated with lower performance compared to firms adopting more fully and faster.
ISSN:0002-7642
1552-3381
DOI:10.1177/0002764296039008003