The effects of university-industry collaboration in preclinical research on pharmaceutical firms' R&D performance: Absorptive capacity's role

Pharmaceutical firms frequently engage in preclinical research collaboration with universities. Many of these collaborative preclinical research projects are conducted by firms' subsidiaries. In this setting, the challenge of transferring knowledge from university-industry collaborations (UICs) to internal research and development (R&D) increases, since knowledge has to be transferred twice: to the subsidiary and to the parent. To benefit from tacit and complex knowledge obtained through collaboration with academic partners, firms need to have a high absorptive capacity. However, existing research on absorptive capacity's effect on the efficacy of UIC has provided mixed results, and the knowledge transfer mechanisms remain unclear, particularly in the case of basic (or preclinical) research and of the complex knowledge transfer process from subsidiaries' collaborative efforts. Building on the knowledge-based view and following a multidimensional perspective of absorptive capacity, this study investigates the role a firm's capabilities play in successful university knowledge integration in a firm's internal R&D. Therefore, this paper analyzes both parent firms' UICs and their subsidiaries' UICs in basic (preclinical) research. The results of our longitudinal analysis of a unique panel data set of 56 global pharmaceutical firms indicate that firms do successfully exploit valuable knowledge from preclinical research UIC in internal R&D, measured by the number of performed clinical trials. This holds true for the UIC involving the parent firm and its subsidiaries. As transformative learning dimensions of absorptive capacity, high diversity in therapeutic activity and high R&D intensity levels strengthen the positive relationship between parents' UIC and R&D performance. A high exploration intensity level of the firm and high diversity in therapeutic activity help to transfer the knowledge from subsidiaries' preclinical research UIC to parents' innovation projects.