The effect of R&D-knowledge on firms’ propensity to collaborate: evidence from drug development

The last two decades have been marked by a sharp rise in inter-firm collaborations in drug development. Collaboration is a response to the steady decline in R&D productivity that has resulted from growing competition and tightening regulations in the pharma sector. Along the lines of the knowledge-based view of the firm, we examine how concentration of a firm’s knowledge influences its willingness to collaborate. We use longitudinal data from 17 global pharma firms over a 6-year period. Results show, as expected, that a concentrated clinical (i.e., late stage) knowledge base (which reflects R&D specializing in a limited range of technologies) significantly lowers firms’ willingness to collaborate. Yet, a concentrated pre-clinical (i.e., early stage) knowledge base does not affect collaboration. Unexpectedly, combining research in both the pre-clinical and clinical stage seems to lead firms towards more rather than less collaboration.