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Corporate Governance and the Governance of Innovation: the Case of Pharmaceutical Industry

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Abstract
The paper focuses on some organizational dynamics that have characterized pharmaceutical industry in the last thirty years, when biotechnology and the development of life sciences have defined a new technological paradigm, reshaping many aspects of the industry, especially the organization of innovative activity. We suggest an original interpretation of some organizational settings, as the increased importance of skilled scientists within firms and the development of inter-organizational alliances for the division of scientific labor. Following recent theorizing on corporate governance issues, which points out the intrinsic organizational and relational dimensions of the resource allocation processes or strategic decision-making, we propose a role of the organizational practices mentioned above on corporate governance, and, in turn, an influence of different governance arrangements on innovative activity. We recall more traditional approaches to the analysis of corporate governance, and give a broader interpretation to the relevant variables proposed. Further, relying on more recent theories and on literature on firm's boundaries and sectoral systems of innovation, we propose industry-specific variables for pharmaceuticals, including internal settings as well as relations with external actors. Preliminary empirical support is given to our hypotheses, concerning a panel of large US pharmaceutical companies.

Suggested Citation

  • Nicola Lacetera, 2000. "Corporate Governance and the Governance of Innovation: the Case of Pharmaceutical Industry," KITeS Working Papers 122, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Dec 2000.
    • Handle: RePEc:cri:cespri:wp122
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    Cited by:

    1. Belloc, Filippo, 2010. "Corporate governance and innovation: an organizational perspective," MPRA Paper 21495, University Library of Munich, Germany.

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    More about this item

    Keywords

    Corporate governance; Firm's boundaries; Innovation; Pharmaceutical industry; Research agreements; Research organization; Technological change;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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