An empirical analysis of sustained advantage in the US pharmaceutical industry: Impact of firm resources and capabilities

The authors test a model of the relationships among firm resources, firm capabilities, and sustained competitive advantage between 1971 and 1989. Sustained comparative advantage was captured by two variables: therapeutic differentiation and global NCEs. The results shaw that R&D and salesforce expenditures have indirect and direct effects, respectively, on sustained competitive advantage. Firm capabilities were differentiated into component and integrative capabilities. Component capabilities were captured by the firm's internal R&D efforts and therapeutic market focus, while integrative capabilities were concerned with the firm's ability to obtain FDA approvals and to develop radical new drugs. Findings on each of these four capabilities on therapeutic differentiation and global NCEs are mired. The direct and indirect effects of these resources and capabilities on therapeutic differentiation and global NCEs suggest important managerial implications in the way firms coordinate and combine their assets so as to achieve sustained competitive advantage. Copyright (C) 1999 John Wiley & Sons, Ltd.