with Andreas Lichter, Max Löffler, Ingo Isphording, Thu-Van Nguyen and Sebastian Siegloch
Filling the Gap: The Consequences of Collaborator Loss in Corporate R&D
R&R at Management Science Discussion PaperHere (SSRN)
with Fabian Gaessler, Karin Hoisl, Dietmar Harhoff and Matthias Dorner
(Older version entitled ‘Filling the Gap - Firm Strategies for Human Capital Loss’: AOM Best Paper)
Abstract We examine how collaborator loss affects knowledge workers in corporate R&D. We argue that such a loss affects the remaining collaborators not only by reducing their team-specific capital (as argued in the prior literature) but also by increasing their bargaining power over the employer, who is in need of filling the gap left by the lost collaborator to ensure the continuation of R&D projects. This shift in bargaining power may, in turn, lead to benefits, such as additional resources or more attractive working conditions. These benefits can partially compensate for the negative effect of reduced team-specific capital on productivity and influence the career trajectories of the remaining collaborators. We empirically investigate the consequences of collaborator loss by exploiting 845 unexpected deaths of active inventors. We find that inventor death has a moderate negative effect on the productivity of the remaining collaborators. This negative effect disappears when we focus on the remaining collaborators who work for the same employer as the deceased inventor. Moreover, this group is more likely to be promoted and less likely to leave their current employer.
Valuing Pharmaceutical Patent Thickets
with John McKeon and Timothy Simcoe
Abstract (Preliminary) Policymakers have expressed concerns about strategic use of the patent system by pharmaceutical companies. Motivated by those concerns, we study the valuation of patents throughout the drug development life cycle. Stock market event studies indicate that patents issued later in the drug-development process are more valuable, even though these “secondary” patents are generally viewed as weaker than the more highly cited patents covering a new molecule. To explain this finding, we propose a simple model that highlights the resolution of scientific uncertainty as well as the impact of new patents on market exclusivity. In regressions that control for uncertainty, we find that additional exclusivity, continuation status, and the level of pipeline competition remain important factors to explain patenting and patent value.
The Price of Concentration: Product-level effects of the IG Farben Breakup
Abstract (Preliminary) The relationship between competition, entry and prices is hard to disentangle as exogenous variation in market structure is rare. Such a rare disruption is the 1952 breakup of Germany's leading chemical company, IG Farben. Detailed product-level data on suppliers and prices reveals that the breakup induced long-run product-level competition between the IG Farben successors. In affected product areas, prices declined, and additional suppliers entered. This is a companion paper to Poege (2022), focusing on product-level results.