How to leverage the impact of firm-specific uncertainty on innovation performance? Moderating effects of alliance stage and partner type in the pharmaceutical industry

Abstract

This study investigates the impact of firm-specific uncertainty on innovation performance and how alliances moderate this relationship in the pharmaceutical industry. To reflect drug research and development (R&D) characteristics, we separate the alliance stage into “preclinical research” and “drug development,” and examine the effects of alliances with different partner types (public and private). An integrated firm-level dataset was created for empirical analysis by combining financial, alliance, patent, and new product data from 96 US pharmaceutical firms. We found that while a firm's uncertainty does not always significantly impact alliance activities, it positively influences certain innovation performance (new products). Furthermore, we probe the moderating effect of alliances on the relationship between uncertainty and innovation performance. The results revealed that alliances with public organizations strengthened the relationship in the “preclinical stage”; however, there was no significant effect in the “drug development” stage. Also, alliances with private firms even negatively moderates in “drug development stage” in some innovation performance. This study provides novel evidence that alliances can mitigate or exacerbate innovation performance depending on the alliance stage and partner type.