Failure experience in new product development and firm performance

Peiran Su, Peter McNamara, Vincent Mangematin

Research output: Contribution to journalArticle

Abstract

This paper focuses on the relationships between failure experience in product development and two aspects of R&D intensive firms - research conversion efficiency (i.e. the transformation of Research into Development) and financial performance. Based on a longitudinal study on 165 global pharmaceutical firms between 1990 and 2008, the study shows a positive relationship between failure experience and research conversion efficiency, and an inverted U-shaped relationship between failure experience and financial performance. We explore further these relationships by examining the moderating roles that exploration and exploitation play in shaping them: the evidence suggests that where a firm’s exploration experience is low then there is an inverted U shaped relationship between frequent failure experience and increased firm performance.
Original languageEnglish
JournalAcademy of Management Proceedings
Issue number10558
DOIs
Publication statusPublished - 2013
Externally publishedYes

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Keywords

  • firm performance
  • learning from failure
  • research conversion efficiency

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