Open Innovation in the Pharmaceutical Industry: An Empirical Analysis on Context Features, Internal R&D, and Financial Performances

This paper aims at investigating the relationships between the adoption of open innovation by companies and their context features, internal R&D, and financial performances. Two proxies for openness-variety and intensity-are defined, and six hypotheses are formulated and tested on a sample of 68 worldwide top R&D spending pharmaceutical companies. The period of 2008-2012 was analyzed for a total of 340 statistical units. Our results suggest that open innovation is a very pervasive behavior among smaller and younger companies, for which internal R&D is complementary to openness; still being in the development phase, they derive most of their revenues from open innovation itself and show negative financial performances. Yet, a wider range of open transactions are performed by larger and longer established firms, exhibiting good financial performances and adopting open innovation as a substitution to internal R&D efforts. Through an in-depth review of the literature, this paper contributes to the research on open innovation by providing an accounting measurement system, testing six hypotheses among open innovation and some firm-level variables, and positioning the obtained results within the current debate.