(R&D) Alliance Governance Modes in the Pharmace

183 Pages·2015·2.49 MB·English

by  Columbia University

Global Knowledge Sourcing Activities: The Choice of Research and
Development (R&D) Alliance Governance Modes in the
Pharmaceutical Industry

By

Jeongho Choi

A Dissertation submitted to the
Graduate School – Newark
Rutgers, The State University of New Jersey
in partial fulfillment of the requirements
for the degree of
Doctor of Philosophy
Ph.D. in Management
Written under the direction of
Prof. Farok Contractor

And approved by

___________________________

___________________________

___________________________

Newark, New Jersey
Jan. 2015
© 2015
JEONGHO CHOI
ALL RIGHTS RESERVED
ABSTRACT OF THE DISSERTATION
Global Knowledge Sourcing Activities: The Choice of Research and Development
(R&D) Alliance Governance Modes in the Pharmaceutical Industry
By
Jeongho Choi
Dissertation Director:
Prof. Farok Contractor

The dissertation investigates factors affecting the choice of global R&D (Research and
Development) alliance governance mode and successful alliance collaboration
performance in one of knowledge intensive industries (i.e., Pharmaceuticals). In the first
study, by identifying a variety of R&D alliance modes used in the Pharmaceuticals, and
classifying them into four categories, I go beyond the traditional binary equity vs. non-
equity alliance classification. This enriches the study of alliance governance structure and
broadens the application of alliance modes in what is today a more complicated
international R&D collaboration setting. And then, I explore the multi-specific factors (e.g.,
national, industry and firm) affecting the choice of an appropriate R&D alliance
governance mode. Using a sample of 237 alliance deals announced in between 2000 and
2003, I found that the R&D alliance governance modal choice is not attributable to a single
factor (e.g., exogenous country-specific factors), but is influenced by multiple factors. But
those multiple factors have different impacts depending upon whether firms involve in R
or D. Specifically, the likelihood of using a more-integrated alliance governance mode
decreases as the gaps in culture and quality of human capital between nationalities of
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partnering firms increase. On the other hand, national geographic distance and institutional
environment difference are positively associated with the more-integrated governance
mode. Furthermore, firms in the research stage are more likely to use a more-integrated
governance mode, as opposed to firms in the development stage. These findings advance
alliance governance structure research by opening the black box concealing the answers
for paradoxical mixed-results on factors affecting the R&D alliance governance mode
choice.
The second paper enhances the study of R&D alliance governance structure as well as
Knowledge-Based View of alliance by examining the relationship between coordination
and communication structure of alliances and successful alliance collaboration
performance. Using data from a sample of biopharmaceuticals, I found that the probability
of successful alliance performance depends on the degree of interaction and complexity of
alliance deal; such lower degree leads to a better performance due to reduced
communication and coordination costs. However, this negative relationship is moderated
by partner’s national diversity (i.e., domestic vs. foreign) and technological base
complementarity in a way that alliances with less interactive and less complicated structure
tend to have a better performance when the alliances are between domestic partners, and
with similar technological bases. But when the alliances are more interactive and complex
that increases coordination and communication costs, collaborating with foreign partners
and partners with diverse technological bases contributes to a better performance even
though the alliance governance structure incurs communication and coordination costs.
The findings also provide insightful strategic implications to practitioners with regard to
designing a suitable alliance governance structure for the better performance.
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ACKNOWLEDGEMENT
The dissertation is a big project as part of PhD program. And it is a long-term journey
shaping one’s disciplinary identities and professions. Without the guidance and supports
from my advisors, I could not have built my professions, academic identity nor finished
my dissertation. I owe an enormous debt of gratitude to my advisor Prof. Farok Contractor
for his endless supports and encouragements. His invaluable comments and insights have
always stimulated my intellectual curiosity and enabled me to move forward to achieve my
academic goals. I also want to thank to my Prof. John Cantwell, Prof. Mahmud Hassan,
and Prof. Gerard Wedig (University of Rochester) for their commitment and their guidance
to the field of global technology innovation and biopharmaceuticals. I cannot list all their
supports during my PhD years in this page, but most significantly their ideas and feedbacks
helped me trim and organize my unfiltered ideas in a logical manner.

I also gratefully appreciate people from the pharmaceutical industry for their helps and
supports, particularly in the beginning of my dissertation. Dr. Robert Winkler from Array
Biopharma has provided me invaluable inputs regarding research and development
(clinical trials) in the pharmaceuticals. Dr. Thomas P. Richardson from the Office of
Research Alliances at Rutgers University (currently a Vice President at BioNJ) has also
involved in my dissertation in getting me access to the industry data. And the meetings and
discussions with people from Norvatis and Johnson & Johnson were absolutely helpful to
make my dissertation more applicable to the real field environment.

I also deeply appreciate all the supports (travel funds and research awards) from the
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Management & Global Business (MGB) department at Rutgers Business School. And
special thanks to my fellow PhD students who share their happiness and pains during the
doctoral program. Last but not least, I express my sincere appreciation to my lovely wife
Julie for her patience and unconditional love. Thanks also go to my 10-month-old son
Philip for his endurance while his dad works on his dissertation.

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TABLE OF CONTENTS

1. CHAPTER I: Introduction
1.1 Background of the Study
1.2 Research Questions and Goals
1.3 Research Setting
1.4 Overall Methodology

2. CHAPTER II: Literature Review
2.1 Review of Collaborative Research and Development and its Modes
2.1.1 Definition of Collaboration, and Research and Development
2.2 Motivations for Alliance Formation
2.3 Alliance Governance Modes under TCE and KBV
2.4 Globalization of Research and Development
2.5 Determinants of International R&D Alliances
2.6 Conclusion

3. CHAPTER III: Industry Review- Drug Discovery and Development Activities
in the Biopharmaceuticals
3.1 Historical Characteristics of U.S. Pharmaceutical R&D
3.2 Increased R&D Costs for New Drug Development
3.3 Trends in R&D Collaboration

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4. CHAPTER IV: Determinants of International R&D Alliance Governance
Mode Choice
4.1 Introduction
4.2 Identification and Classification of Alliance Governance Modes
4.2.1 Classifying Alliance Governance Types Using Cluster Analysis
4.2.2 Cluster Analysis for the Dependent Variable
4.3 Hypotheses Development
4.3.1 Country-Specific Factors
4.3.2 Industry-Specific Factors
4.3.3 Firm-Specific factor
4.4 Methodology (Data and Sample, and Measurements)
4.5 Results
4.6 Additional Test
4.7 Discussion and Conclusion

5. CHAPTER V: R&D Alliance Governance Structure and the Successful
Alliance Collaboration Performance: The Effects of Partner Diversity and
Technological Base Complementarity
5.1 Introduction
5.2 Coordination and Communication Mechanism in Alliances
5.2.1 Discriminant Analysis for the Communication and Coordination Structure
of Alliances
5.3 Hypotheses Development
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5.3.1 R&D Alliance Structure and Collaboration Performance
5.3.2 Moderating Effects of Partner Diversity and Technological Base
Complementarity
5.4 Methodology (Data and Sample, and Measurements)
5.5 Results
5.6 Additional Findings
5.7 Discussion and Conclusion

6. CHAPTER VI. Discussion and Implications
6.1 Summary of Dissertation
6.2 Theoretical Contributions
6.3 Managerial Implications
6.4 Limitations and Future Research

7. REFERENCES

8. APPENDIX

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LIST OF TABLES
TABLE 2.1 A Typology of Alliances
TABLE 3.1 Top Brand Name Drugs with Patent Expiration in 2012 and 2013
TABLE 4.1 ANOVA Statistics
TABLE 4.2 Descriptive Statistics and Correlation Matrix
TABLE 4.3 Ordinal Logistic Regression: Alliance governance modes as the dependent
variable, and full sample used (Sample A)
TABLE 4.4 Moderating Effects of R&D phase
Ordinal Logistic Regression: Samples in Research Phase (Sample B) vs.
Samples in Development Phase (Sample C)
TABLE 4.5 Marginal Probability Effects of Ordinal Logistic Regression
TABLE 5.1 Canonical Discriminant Analysis
TABLE 5.2 Classification Results
TABLE 5.3 Descriptive Statistics and Correlation Matrix
TABLE 5.4 Results of Logistic Regression
TABLE 5.5 Three-way Interaction Effect
TABLE 6.1 Summary of Results

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