Empirical essays on alliances and innovation in the biopharmaceutical industry

In this dissertation I discuss two empirical studies that examine how different types of firms in the biopharmaceutical industry approach different types of challenges posed by radical and uncertain technological change. In the first empirical essay I explore the role of different sources of experience in understanding incumbent pharmaceutical firms' decisions to develop new drugs. In the second empirical essay I explore how emerging new biotechnology ventures make alliance partner selection decisions as a function of both partner attractiveness and the risks of appropriation that arise from establishing alliances with incumbent pharmaceuticals.;In the first essay I examine the effects of different types of experience on the number of new products that a pharmaceutical firm develops for specific therapeutic areas. I focus on two sources of experience: a firm's internal experience and the experience of the members of the board of directors. First, I find that a firm's internal experience, which arises from prior new-product developments, has a curvilinear effect on the extent of new-product developments for a specific therapeutic area. Second, I provide evidence that the extent of new-product developments is explained by the directors' experience gained from participating in the new-product development activities of other organizations. Finally, I provide evidence that the directors' experience shapes the way in which the firm's internal experience affects the extent of new-product developments for a specific therapeutic area. These findings suggest that directors' experience may help firms overcome the constraints they face when trying to exploit their internal experience through new product developments.;In the second essay I explore how new biotechnology firms (NBFs) select pharmaceutical firms as R&D allies as a function of partner attractiveness and appropriation risks. I find that NBFs are more likely to ally with pharmaceutical firms that have the following two capabilities: (1) the ability to understand the NBF's technology (technological relatedness), and (2) strong development competences. Yet, I provide evidence showing that these positive effects of technological relatedness and a pharmaceutical firm's development experience on the likelihood of establishing an R&D alliance are negatively moderated by the pharmaceutical firm's therapeutic area diversity and the NBF's technology breadth. These findings suggest that NBFs see pharmaceutical firms' development experience and technological relatedness as increasing appropriation risks (rather than partner attractiveness) when the NBF's knowledge is broadly applicable or when the pharmaceutical firm is highly diversified across many therapeutic domains.