Essays on learning and strategy in research and development

Abstract

This dissertation investigates how research organizations learn from and adapt to new knowledge. In particular, I examine how news about scandals, stigmas and failures influences the direction of research and development efforts. These negative information shocks force research organizations to pause, interpret external signals, and apply any lessons to their own project portfolios. I investigate how these negative information events impact decisions in the settings of scientific publishing and drug development. In the first essay, I study the impact of scientific retractions on citation patterns and funding in the retracted paper's intellectual field. I investigate how the retraction disclosure and affected field's characteristics influence the extent of these spillover effects. The second essay evaluates how retraction scandals damage individual scientists' reputations. This study shows that the magnitude of the retraction penalty depends on a scientist's prominence and whether or not the retraction event involved "misconduct." In the third essay, I analyze how late-stage drug development failures alter competitor's project continuation decisions. I separate technological learning effects from market competition effects, and grade decision-making across firms.