Journal
RESEARCH POLICY
Volume 36, Issue 4, Pages 548-565Publisher
ELSEVIER
DOI: 10.1016/j.respol.2007.02.012
Keywords
R&D; knowledge based view; financial performance; event study; alliances
Categories
Funding
- EPSRC [EP/E037208/1] Funding Source: UKRI
- Engineering and Physical Sciences Research Council [EP/E037208/1] Funding Source: researchfish
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We explore a financial returns dimension of the exploration-exploitation dilemma. Using 1277 R&D announcements by 178 listed bio-pharmaceutical firms, we examine whether investors are myopic along the continuum of exploration (patenting and preclinical trials) to exploitation (human clinical trials and NDA). We find that investors respond positively at every stage, but there are differences between small and large firms. For small firms exploration is favored, provided it is focused. For large firms, there is value in both exploration and exploitation. Projects which are part of an alliance are no more likely to generate abnormal returns. Policy implications are discussed. (c) 2007 Elsevier B.V. All rights reserved.
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