Webinar on Knowledge Sources for Innovation by Multinational Enterprises (MNEs): An Analysis of Pharma Patents

Prof Suma Athreye of Essex Business School, University of Essex presented this paper which is co-authored with John Cantwell of Rutgers Business School, Rutgers University, Sarah Edris of University of Maastricht, and Marianna Marra of University of Sussex Business School on September 17, 2021. This paper aims to capture the knowledge sourcing pattern of pharma MNEs over a period of four decades since 1976 using the backward patent citation data. Conventional pharmaceutical firms faced a setback with the advent of biotechnology and were expected to substitute their deteriorating technology capability through sourcing of knowledge from other sources.  The study used patent citation data of 11 pharmaceutical MNEs and divided sources of knowledge into four categories – intra MNE local, intra MNE international, inter organisational local, and inter organisational international.

Using patent citation data and rearranging them along organisational and geographic dimensions, the study observes a rapid growth in the use of all four sources of knowledge among the MNEs. Consistent with existing studies on subsidiary innovation, the study finds the complementarity of intra-MNE local and unit knowledge sources. It also finds the patterns of self-reinforcement over time, consistent with existing literature. Citation of local inter-organisational sources increased the citation of local intra-unit sources and vice versa. Decreasing own unit citations also decreased citation of international inter-organisational knowledge sources and vice versa.

In addition, the study also finds that pharmaceutical MNEs showed dynamic substitutability of unit knowledge sources. The MNEs moved away from relying on their own internally generated sub-unit knowledge and increased use of international inter-unit and local inter-organisational knowledge sources. International intra-organisational knowledge also substituted over time for international inter-organisational knowledge.

The presentation was followed by a discussion by a panel consisting of Prof Vinish Kathuria, IIT Bombay, Ms Aradhana Aggarwal Copenhagen Business School, and Dr Reji Joseph, ISID and a Q&A session. Prof Nagesh Kumar moderated the webinar.