1. Rebecca Henderson Iain Cockburn
MEASURING COMPETENCE? EXPLORING FIRM EFFECTS IN PHARMACEUTICAL RESEARCH
Rebecca Henderson
Iain Cockburn

2. Research Question
How can heterogeneous organizational “competence” be a source of sustained competitive advantage of firms?
Specifically, the effects of “component” and “architecture” competence.
Pharmaceutical research

3. Organizational Competence
Three conditions: heterogeneously, non-tradable, and not replicable.
Component Competence: local abilities and knowledge that are fundamental to day-to-day problem-solving;
Architectural Competence: ability to use these component competencies-to integrate them effectively and to develop fresh component competencies as they are required. (Henderson & Clark, 1990)

4. Component Competence
Hypothesis 1: Drug discovery productivity is an increasing function of firm- specific expertise in particular disciplinary areas.
Unique disciplinary expertise, tacit knowledge, social complex
Hypothesis 2: Drug discovery productivity is an increasing function of component competence in particular disease areas.
Human physiology, more demand side

5. Architectural Competence
Henderson and Clark (1990) and culture, value, control system etc..
Two critical abilities: assess the knowledge outside the boundaries; and integrate knowledge flexibly across disciplinary
Trends of drug discovery (from “random” to “rational”; rely on public knowledge.
Hypothesis 3: Firms with the ability to encourage and maintain an extensive flow of information across the boundaries of the firm will have significantly more productive drug discovery efforts, all other things equal.

6. Architectural Competence
Hypothesis 4: Firms that encourage and maintain an extensive flow of information across the boundaries between scientific disciplines and therapeutic classes within the firm will have significantly more productive drug discovery efforts, all other things equal.
Integrate knowledge within the firm; information exchange across “component” boundaries within the firm
Turbulent environments; rapidly changing environment

7. Methodology Qualitative and quantitative
10 major pharmaceutical firms (28% of U.S. R&D and sales)
3,210 observations;
Heavily interview 5 firms; 3-4 senior scientists for each of the remaining 5; 110 individuals in total
Cardiovascular research
Patents

8. Results and Discussion
All supported but first one (cannot be tested in this dataset)
Very detailed empirical report: different measurement; different model
Hypothesis that cannot be tested with dataset
Turbulent environment is a necessary condition?
Potentially related to ecosystem literature