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New insights from Harvard Business School faculty on research and development in a variety of industries on topics including managing R&D, government regulation, and commercialization.
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Private and Social Returns to R&D: Drug Development and Demographics

by Efraim Benmelech, Janice Eberly, Dimitris Papanikolaou, and Joshua Krieger

Research and development (R&D) by pharmaceutical firms focuses disproportionately on medical conditions afflicting the elderly. The proportion of R&D spending targeting older age groups is increasing over time. Even though these investments in R&D prolong life expectancy and improve quality of life, they have little effect on measured productivity and output growth.

Short-Termism, Shareholder Payouts, and Investment in the EU

by Jesse M. Fried and Charles C.Y. Wang

Shareholder-driven “short-termism,” as evidenced by increasing payouts to shareholders, is said to impede long-term investment in EU public firms. But a deep dive into the data reveals a different story.

When Do Experts Listen to Other Experts? The Role of Negative Information in Expert Evaluations for Novel Projects

by Jacqueline N. Lane, Misha Teplitskiy, Gary Gray, Hardeep Ranu, Michael Menietti, Eva C. Guinan, and Karim R. Lakhani

Evaluators of early-stage scientific proposals tend to systematically focus on the weaknesses of proposed work rather than its strengths, according to evidence from two field experiments.

COVID's Surprising Toll on Careers of Women Scientists

by Rachel Layne

Women scientists and those with young children are paying a steep career price in the pandemic, according to new research by Karim Lakhani, Kyle Myers, and colleagues. Open for comment; 0 Comments.

Is the 'Experimentation Organization' Becoming the Competitive Gold Standard?

by James Heskett

SUMMING UP: Digital experimentation is gaining momentum as an everyday habit in many organizations, especially those in high tech, say James Heskett's readers. Open for comment; 0 Comments.

Inventing the Endless Frontier: The Effects of the World War II Research Effort on Post-War Innovation

by Daniel P. Gross and Bhaven N. Sampat

Investments made in World War II by the United States Office of Scientific Research and Development powered decades of subsequent innovation and the take-off of regional technology hubs around the country.

The Effects of Hierarchy on Learning and Performance in Business Experimentation

by Sourobh Ghosh, Stefan H. Thomke, and Hazjier Pourkhalkhali

Do senior managers help or hurt business experiments? Analyzing a dataset of more than 6,300 experiments on the A/B/n testing platform Optimizely, this study suggests that involving senior executives in experimentation teams can have surprising consequences.

Creating the Experimentation Organization

by Michael Blanding

New tools allow companies to innovate on an unprecedented scale, in every aspect of business. But the organization must also change. Stefan Thomke previews his forthcoming book, Experimentation Works. Open for comment; 0 Comments.

Corporate Innovation Increasingly Benefits from Government Research

by Michael Blanding

Nearly a third of US patents rely directly on government-funded research, says Dennis Yao. Is government too involved in supporting private sector innovation—or not enough? Open for comment; 0 Comments.

Pursuing Precision Medicine at Intermountain Healthcare

What happens when Intermountain Healthcare invests resources in an innovative precision medicine unit to provide life-extending, genetically targeted therapies to late-stage cancer patients? Professors Richard Hamermesh and Kathy Giusti discuss the case and its connections to their work with the Kraft Precision Medicine Accelerator. Open for comment; 0 Comments.

Find and Replace: R&D Investment Following the Erosion of Existing Products

by Joshua Krieger, Xuelin Li, and Richard T. Thakor

This study sheds light on how product outcomes shape the direction of innovation and markets for technology. In the drug development industry in particular, negative product shocks appear to spur investment changes both within the directly affected firm and in competing firms in the same R&D markets.

Corruption, Government Subsidies, and Innovation: Evidence from China

by Lily Fang, Josh Lerner, Chaopeng Wu, and Qi Zhang

Governments subsidize a growing number of innovation efforts, many of which may face the challenge of corruption. Using Chinese data, this study finds corruption-related distortions in government R&D subsidies, which diminished after the 2012 anti-corruption campaign and rotation of provincial officials. It provide insights for designing effective R&D subsidy programs.

Developing Novel Drugs

by Joshua Krieger, Danielle Li, and Dimitris Papanikolaou

This paper contributes to our understanding of how financing constraints affect the direction of innovation in drug development. The authors develop a new measure of drug novelty based on molecular characteristics, and explore the tradeoffs involved in decisions to develop more novel therapies. Open for comment; 0 Comments.

A Better Business Model for Fighting Cancer

by Julia Hanna

The Kraft Precision Medicine Accelerator aims to speed up the development and delivery of cancer therapies by improving the business processes that surround them. Open for comment; 0 Comments.

The Impact of the Entry of Biosimilars: Evidence from Europe

by Fiona Scott Morton, Ariel Dora Stern, and Scott Stern

Biosimilars are large-molecule drugs that, while not an exact copy of already-approved large-molecule drugs, have been shown to be therapeutically equivalent. Much like generic drugs, which become available when a small-molecule drug goes off patent, biosimilars are lower in cost than their reference products and present an opportunity for savings when large-molecule drugs’ patents expire. Biosimilars have been available in the United States only since 2015 but have been regulated, approved, and sold in Europe for over a decade. This paper examines the European experience to help inform policy design and institutional choices for the United States. Topics covered include the entry of distributors and unique products; predictors of average product prices following biosimilar competition; and penetration of biosimilars as a share of total sales.

New Medical Devices Get To Patients Too Slowly

by Michael Blanding

The FDA has streamlined drug testing to ensure new therapies come to market quickly. But when it comes to life-giving medical devices, approvals seem unnecessarily slow, according to research by Ariel Dora Stern. Open for comment; 0 Comments.

Financing Innovation

by William R. Kerr & Ramana Nanda

There is growing consensus that well-functioning financial markets play a central role in driving economic growth through their ability to spur technological innovation. In this paper for the Annual Review of Financial Economics, the authors ask how financial markets might actively shape the nature of R&D that is undertaken. They also examine how this may impact technological innovation and growth through the shaping of the ideas that are developed across firms. Drawing on a new but growing literature on the role that capital markets and financial intermediaries play in impacting firm-level innovation, the authors first elaborate on theoretical contributions regarding why financing R&D projects might be distinct from financing other types of projects and the channels through which financial intermediaries and capital markets can impact innovation. They then discuss empirical studies on financing innovation in mature firms, in particular the literature on how ownership and capital structure impact the amount and nature of innovation undertaken by firms. The paper also looks at innovation in startups and the growing literature on the effect that multi-stage financing has on innovation in young firms. Three main themes emerge: 1) A growing body of work documents a role for debt financing related to innovation. 2) A very active area of research has looked at "learning" across multi-stage financing. 3) There is strong interaction between financing choices for innovation and changing external conditions. Key concepts include: Financing constraints can be extensive in the context of firms engaged in R&D and innovation-with the ability to shape both the rate and the trajectory of innovation. Capital structure plays a central role in the outcome of innovations. Bank finance is an important source of finance, particularly for larger firms with tangible and intangible assets to pledge as collateral. Public markets may provide deep pockets but pose a set of agency costs that might be particularly harmful for firms engaged in exploration and novel innovations. There is a growing interest among academics and practitioners in the multi-stage financing of innovation, both in established firms and startups, and understanding the optimal contracts and policies that might stimulate innovation. Closed for comment; 0 Comments.

A Scholarly Crowd Explores Crowdsourcing

by Sean Silverthorne

At the Open and User Innovation Workshop, several hundred researchers discussed their work on innovation contests, user-led product improvements, and the biases of crowds. Closed for comment; 0 Comments.

Innovation Is Magic. Really

by Dina Gerdeman

When Stefan Thomke teaches students how to manage innovation and creativity, he turns to an unexpected source: Magician Jason Randal. Open for comment; 0 Comments.

Pay Attention To Your ‘Extreme Consumers’

by Michael Blanding

Jill Avery and Michael Norton explain what marketers can learn from consumers whose preferences lie outside of the mainstream. Open for comment; 0 Comments.