Innovation in the Intra- and Inter-firm Contexts

As a result of the rapid advances being made in technology, innovation has become a key concept in the strategic management of firms. Firms must innovate in order to achieve and maintain competitive advantage. For example, firms rely on the introduction of improvements in products to respond to changes in the environment. This dissertation explores some of the ways firms achieve innovation. Paper 1 examines innovation-related behaviors within the firm, namely the entry of new technology features in products following a pioneering firm’s market entry. Specifically, it examines how a manager’s position within the organizational structure biases their response to risk in the context of innovation. The results indicate that the interaction between organizational structure and firm risk is critical for understanding entry timing and contributes to theories of entry timing, risk, and organization design. This study aligns with recent research suggesting that cognitive biases may be affected, and in some cases circumvented, by the organizational context in which learning and decision making occur and how it might shape innovation within the firm. But while organizational processes conducted within the firm can lead to innovation, firms also rely heavily on inter-firm collaborations to develop R&D that can enable successful innovation. The following two papers examine innovation between firms. Paper 2 seeks to develop a framework to better understand how elements of the design of the contract may impact the performance of R&D collaborations. Using the literature on innovation and R&D, the paper identifies management and interfirm relationship factors that can enhance or inhibit innovation that are likely to be affected by contract design. The paper then uses the literature on interfirm contracts to identify the control and coordination provisions of contracts that are highly pertinent to understanding interfirm behavior and outcomes, and augments it with recent research on contract framing to identify how certain provisions can play additional roles by psychologically impacting the exchange and ongoing relationship between firms. The paper integrates these two literature streams and develops a framework and a set of propositions for understanding how contract design elements impact innovative performance through their effect on the management and interfirm relationship factors that enhance or inhibit innovation in R&D collaborations. Paper 3 empirically tests predictions on a sample of 305 biopharmaceutical partnerships at various stages of research and development and finds some evidence that elements of the design of the contract may impact the innovative performance of R&D partnerships. These studies contribute to the literature on both R&D partnerships by improving our understanding of the factors that may lead to innovative performance, and innovation by examining a more robust set of measures for innovative performance than previously operationalized. In doing so, this study posits a role for the specification of contract design elements that provide a control or coordinating role between partners that enhances or inhibits collaborative innovative performance in exploratory and exploitative R&D partnerships