CMA Centre for Innovation: NPD’s relationship with aspirational levels

Professor Beverly Tyler, Poole College of Management at North Carolina State University, presented her new research at a special CMA Centre for Innovation event.

Biopharmaceutical firms who are performing below the levels of new product development they strive for are more likely to form strategic research and development alliances to compensate.

This was the focus of a special CMA Centre for Innovation research presentation by Beverly Tyler, professor in the Poole College of Management at North Carolina State University. The event, held at the Segal Graduate School on 16 October, featured a presentation by Tyler on research from her new paper, explaining how high technology firms’ new product development (NPD) performance below aspiration levels impact the number of research and development (R&D) alliances the firms form.

The study, which focused on the biopharmaceutical and biotechnology sectors, examined how firms respond to closures in gaps beyond their aspirations – the level the firms aim to be at. It examined the levels of aspiration from a top-level management perspective, with the company looking at their own historical performance in producing new products.

Contrary to what the researchers expected, the study found that as firms’ NPD performance fell below historic aspiration levels the firms actually increased the number of R&D alliances they form. Further, the research found that as the distance of performance below aspiration increases, there will be a corresponding increase in the number of alliances formed.

In addition, the greater the slack available to the firm – with firms with large cash balances possessing greater slack than those with little financial leeway – the more this intensifies their relationship with their R&D alliances.

To define whether or not the companies were performing below or above their aspirational levels, the researchers employed a complex formula. Over the current two year period, they examined the number of new products each company had developed, and subtracted the current performance from the performance in two-year windows prior to this, weighting it accordingly the further back they looked.

Keen to engage in dialogue with the audience – which included several Beedie faculty who themselves conduct research in innovation and biopharmaceutical development –Tyler encouraged questions, resulting in engaged debate throughout the session.

In closing, Tyler offered a piece of advice for the doctoral students in the audience, explaining that the paper had been rewritten to focus on a different subject upon request from the journal to which it had originally been submitted. Although the researchers had complied with this request, rather than give up on the original focus of the paper, they had submitted it in its original form to other journals – ultimately succeeding in having it published twice.

For more information on the CMA Centre for Innovation, visit beedie.sfu.ca/cma-centre/