Entrepreneurial Orientation on Clinical Development in Pharmaceutical Industry: Fixed-Model Analysis

Success in pharmaceutical clinical development requires organizational management capabilities. “Entrepreneurial Orientation (EO)” is a strategic construct that reflects the extent to which firms are innovative, proactive, and risk taking in their behavior and management philosophies. This study elucidates how EO influences clinical development in pharmaceutical firms. Panel-data analysis was conducted using a fixed-effect model. The panel data consists of 29 global pharmaceutical firms focusing on novel drug development for 14 years from 2004 to 2017. Accumulative numbers of novel drug approval in the United States are set as a dependent variable. Independent variables are EO components, stock beta value, and annual turnover. The EO consists of three entrepreneurial factors of innovativeness (R&D expense per sales), proactiveness (R&D expense per EBITDA), and risk taking (Stock volatility). The study results indicate that innovativeness and risk taking showed a significant positive association with an increase in the cumulative number of new product approvals. Risk taking also showed positive association both when excluding bio-tech firms and in biotech firms, but proactiveness was negative only when excluding bio-tech firms. As a result, the study showed that EO impacts novel drug approval in the pharmaceutical industry. Traditional large firm should take risks in separate small organization.