Technological knowledge and firm performance of pharmaceutical firms
| Published date | 01 March 2003 |
| DOI | https://doi.org/10.1108/14691930310455360 |
| Pages | 20-33 |
| Date | 01 March 2003 |
| Author | P.N. SubbaNarasimha,Sohel Ahmad,Sudhirkumar N. Mallya |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Technological knowledge and
firm performance of
pharmaceutical firms
P.N. SubbaNarasimha and Sohel Ahmad
Department of Management, G.R. Herberger College of Business,
St Cloud State University, St Cloud, Minnesota, USA, and
Sudhirkumar N. Mallya
i2 Technologies, Parsippany, New Jersey, USA
Keywords Technology, Knowledge, Measurement, Pharmaceutical industry,
Data envelopment analysis, USA
Abstract How efficient are firms at utilizing their technological knowledge stocks? In this paper we
focus on a firm’s breadth and depth of technological knowledge and investigate their differential
effects on two performance measures: return on capital and sales growth. Using a sample of 29
pharmaceutical firms we conduct data envelopment analysis (DEA) to determine those firms that
are the most efficient converters of breadth and depth of technological knowledge into
performance, and the knowledge dimension that the inefficient firms ought to focus upon to
improve their performance.
The problem of sustaining competitive advantage in the face of rapid
technological change has become acute. Accepting the proposition that
organizational knowledge is a strategic resource, much of the work in the
knowledge-based stream has concentrated on delineating specific properties
and dimensions of knowledge that help assure su stained competitive
advantage (Grant, 1996; Henderson and Clark, 1990; Starbuck, 1992; Winter
1987). In this paper, we focus on two dimensions – breadth and depth of a
firm’s knowledge stock. Specifically, we report on a study of the performance
effects of breadth and depth of technological knowledge on a sample of 29 US
pharmaceutical firms. We ask three research questions:
(1) Which firms are the most efficient at converting their technological
knowledge stocks into performance?
(2) What is the relative inefficiency of the inefficient firms?
(3) How should each firm change its stock of breadth and depth of
technological knowledge to reach the efficient frontier?
We answer these questions for each of the two performance measures that we
use – return on capital (ROC) and sales growth. A distinguishing feature of our
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/researchregister http://www.emeraldinsight.com/1469-1930.htm
The first two authors gratefully acknowledge the financial support of the Center for Business
Research, G.R. Herberger College of Business, St Cloud State University.
JIC
4,1
20
Journal of Intellectual Capital
Vol. 4 No. 1, 2003
pp. 20-33
qMCB UP Limited
1469-1930
DOI 10.1108/14691930310455360
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