The role of intellectual capital in new product development: Can it become a liability?

Abstract

Given the increasingly high cost of new product development (NPD), it is important for firms to terminate unsuccessful NPD projects as soon as possible. This article investigates the role of intellectual capital in the discontinuation of NPD projects. The three dimensions of intellectual capital (human, structural, and social capital) are posited to decrease the likelihood of discontinuation of NPD projects, while contextual factors such as the firm's discontinuation experience and the size of the drug development portfolio are expected to affect this relationship. The research model is tested using a unique data set of 1,168 drug discovery and development projects. The results suggest that NPD projects rich in all three dimensions of intellectual capital are less likely to be discontinued. The size of the firm's drug development portfolio, however, is found to mitigate these effects, while discontinuation experience enhances the relationship between intellectual capital and discontinuation duration. As only a fraction of new product development initiatives result in success, timely discontinuation of unsuccessful projects is critical for sustained performance of organizations. Our findings make an important contribution to this stream of work. By highlighting the role of intellectual capital in the discontinuation process, we offer an interesting twist to the literature that invariably assumes intellectual capital to be important for innovation.

“Pulling the Plug:” Time Allocation between Drug Discovery and Development Projects

“…This result contrasts with Subramanian and van de Vrande's (2019) finding that the intellectual capital of an organization results in an escalation of its commitment to the drug discovery and development projects. A plausible reason for these contrasting results is that Subramanian and van de Vrande (2019) examined the escalation of commitment pertaining to drug discovery and development across all stages , while we focus only on early‐stage drug discovery . Perhaps, for early‐stage discovery, the expertise of the research scientists (human capital) helps firms discontinue less‐promising projects sooner than more promising ones.…”

“… 8 8 Subramanian and van de Vrande (2019) examine how intellectual capital influences the likelihood of discontinuation of new drug development projects due to escalation of commitment. The authors show how intellectual capital can become a liability due to factors rooted in the escalation of commitment, and how prior experience mitigates this issue.…”

Digital Intellectual Capital of Russian Companies and its Impact on Financial and Innovation Performance

“…The development of the digital environment in companies requires new competencies and knowledge from employees, the support of which is becoming one of the main challenges of digital transformation [3]. Human capital provides a dynamic transformation of structural capital, increasing its relevance for business situations, since codified knowledge itself is limited due to the variability of the environment in which the company operates [33]. On the one hand, digitalization leads to job cuts in a number of industries that are associated with routine information processing operations or monotonous production processes [11].…”

State-legal regulation of foreign economic and domestic economic activity of the agricultural and industrial complex of Russia

“…Currently, the state-legal regulation of the agro-industrial complex is carried out mainly by supporting the existing state of agriculture. However, there is little innovation in agricultural support mechanisms [5,6]. Thus, the impact of the private sector on the country's agro-industry is still very weak.…”