Research

Firms manage their R&D portfolios by continuously evaluating and selecting which inventive paths to maintain and which ones to terminate. Prior research found that the extent of exploration in an invention increases the invention’s likelihood of termination. We inquire about organizational contingencies that impact the evaluation and selection of exploratory inventions. We suggest that the structure of an organization’s knowledge base and its failure experience are particularly relevant for better comprehending the conditions under which exploratory inventions are more or less likely to be terminated. We find that the positive effect of exploration on patent termination is weakened with increasing level of decomposability in organization’s knowledge base and increasing failure experience but only up to the moderate levels of these moderating variables. Empirically, we examine patent maintenance decisions in the biopharmaceutical industry. We discuss the contributions of our study for the research on exploration, invention termination, knowledge networks and failures.

How does a firm’s response time to past failures affect its likelihood of experiencing future failures? Does this likelihood depend on the reasons for past failures? Using drug recalls during 2006–2016, we examine the effect of pharmaceutical firms’ response time to their past failures on their learning from failure. Longer response times reduce the likelihood of subsequent failure. Variations in the reasons for past failures increase the potential for subsequent failure. However, a longer response time helps overcome the challenges associated with this variation. By focusing on the temporal dimension of learning from failure, we provide unique theoretical insights into when and how organizations can learn from failure. 

This paper examines the effect of decomposability in a firm's knowledge network—the extent to which knowledge elements in a firm's knowledge base are coupled with each other or isolated from each other in separate knowledge clusters—on external knowledge sourcing and exploratory invention. We contend that decomposability shapes the process of inventive search and knowledge recombination. We show that the extent of external knowledge sourcing decrease and then increases with an increasing level of decomposability in a firm's knowledge network. Second, we reveal that the opposite—inverted U-shaped—relationship exists between decomposability and new knowledge creation; nearly decomposable networks enhance the creation of new knowledge elements in a firm's inventions. To test our hypotheses we investigate the innovation activities of a sample of firms from the global photographic equipment and supplies industry between 1975 and 2008. We highlight the contributions of these findings for research on knowledge networks, knowledge search, and recombination and discuss their implications for practice. 

Which factors lead to firms' massive rapid business scaling? The prior work has predominantly focused on factors inside the firm, assuming that the possession of internally controlled idiosyncratic resources and capabilities largely explains the phenomenon. We extend this work by arguing that the alliance network community in which a scaling firm is embedded represents a distinct valuable channel through which it can access and orchestrate resources needed for its rapid growth. Network communities are structural groups of firms that are densely connected internally and sparsely linked to firms in other groups. We focus on three key characteristics of network communities: size, density, and stability. We theorize that the access to and orchestration of diverse and complementary network community resources influence firm rapid scaling through the expansion, replication, and synchronization of resources and business practices. Using a sample of firms publicly traded on the North American stock exchanges and observed over 1990–2020, we find that these firms' business scaling positively relates to the size and density of their network communities, yet the relationship between firm scaling and network community stability is negative.