Interesting paper looking at the success rates of 77 pharmaceutical companies from 1997-2006
The innovation hit rate, or success rate, has important implications. If concerns over losses lead to attempts to avoid failure, the firm will also avoid learning (Corbett, Neck & DeTienne, 2007; McGrath, 1999). If firms can learn from past failures and improve the chances of future endeavors, then the hit rate may contribute to perceptions of learning efficacy (Garrett, Covin & Slevin, 2009). Sitken (1996) suggests that repeated success can lead to delusions that everything is fine even if the process could benefit from adjustments. Anecdotal evidence suggests that a series of misses can dampen employees’ enthusiasm for persisting or managers’ interest in allocating resources for innovation, while a string of hits may build a firm’s confidence or attract investors (Kanter, 2006).
- as the number of projects in the portfolio increases, the launch rate decreases
- an inverted-U curvilinear relationship between the percentage of projects that are newly initiated and the launch rate
- the launch rate decreases with increases in the percent of new projects in knowledge categories that are new to the firm.
Green, KR 2013 Experience and the Hit Rate for Entrepreneurial Initiatives American Journal of Business and Management Vol. 2, No. 2, 2013, 91-105