PhD Thesis Defence, Ivan Lugovoi
Date: December 6, 2019, 2.00pm, Campus HEC Paris, Room T104
Thesis Topic: Process Innovation in Pharmaceutical Industry
Supervisor: Professor Dimitrios Andritsos, HEC Paris
Abstract: Process innovation is commonly claimed to be a major source of competitive advantage for firms. Despite this perceived influence, it has received substantially less attention than product innovation and much uncertainty re-mains about its true association with firm performance. The main focus of this study is on the relationship between a pharmaceutical manufacturing firm’s process-innovation portfolio and its economic performance. Through a collaboration with expert patent attorneys, a unique longitudinal dataset was developed, that combines secondary data and evaluations of a firm’s portfolio of process patents along three key dimensions: novelty, scope, and locus. I find positive association between overall process innovation and firm performance. Econometric analyses of the large-scale longitudinal dataset suggest that ownership of a portfolio of patented process innovations for the production of a given drug is associated with a market share (for that drug) that is on average 5.4% higher relative to non-process-innovative competitors. When differentiating between dimensions of process innovation, results further suggest that high novelty is beneficial, and complemented by a broad scope, but only for patents applying to the later phase of the pharmaceutical manufacturing process. The results of this study reconcile differences in the organizational learning, strategy, and operations management literatures. The study identifies both advantages and disadvantages of the three types of technological experiences: focal, related, and unrelated. I find that technological experience with the focal product is positively associated with the ability of a firm to process innovate, resulting in the inventions of medium Novelty and broad Scope. By contrast, I find that technological experience with related products is negatively associated with the ability of a firm to process innovate, resulting in the inventions of low Novelty and broad Scope. Likewise, technological experience with unrelated products is also negatively associated with an ability of a firm to process innovate, though it results in the inventions of high Novelty and narrow Scope.