Frank Rothaermel, holder of the Angel and Stephen M. Deedy Professorship, who has conducted award-winning research on innovation.
Published on:09-01-2009Frank Rothaermel, associate professor of strategic management, recently contributed an op-ed to The Wall Street Journal discussing his holistic study of strategies employed by pharmaceutical firms for innovating in the realm of biotechnology.
Published in The Wall Street Journal’s special section on “The New Face of Innovation,” the article was titled “Finding Innovation Strategies that Work” and co-authored by Drew Hess, who earned his PhD in strategic management at Georgia Tech in 2008 and is now on the faculty of the University of Virginia.
Rothaermel and Hess examined strategies employed by pharmaceutical firms to build innovative capability, including the acquisition of biotechnology firms, the formation of alliances with other firms or universities, the recruitment and cultivation of human capital, and spending on research and development.
Many firms employ multiple strategies to innovation at once, but that grab-bag approach may actually lead to decreases in innovative output, found the researchers. “Some strategies don’t mix well, and companies risk wasting valuable resources if they pursue them together,” Rothaermel and Hess explain in The Wall Street Journal.
Titled “Building Dynamic Capabilities: Innovation Driven by Individual-, Firm-, and Network-Level Effects,” the research was published in the journal Organization Science in 2007 and won the 2008 Sloan Industry Studies Best Paper Award.
Several previous studies have emphasized the importance of star scientists, but Rothaermel and Hess found that average performers (the rank-and-file or “nonstar scientists”) were primarily responsible for drug development. The stars are more important as visionaries, guiding the firm in promising new research directions.
“Specifically, we found that the most effective way to achieve continuous innovation over the long term is to hire and cultivate talented people,” wrote Rothaermel and Hess in the Wall Street Journal. “Companies that innovate through hiring will have stronger control over their intellectual property and often a steadier pipeline of future inventions because they aren’t relying on outside partners for any part of the innovation process.”
Rothaermel, holder of the Angel and Stephen M. Deedy Professorship, considers the studys’ findings relevant to innovation in other industries, even though the study specifically related to the pharmaceutical industry.
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