Strategy & Organization Area Recruiting Candidate

The Desautels Faculty of Management
Strategy & Organization Area
presents recruiting candidate

Peter Younkin
University of California, Berkeley

Thursday, December 3, 2009
10:30 am. - 12:00 pm
Room: Bronfman 425

ABSTRACT
Re-Making the Market: How the American pharmaceutical industry transformed itself during the 1940s

Between 1940 and 1950 the American pharmaceutical industry transformed itself from a collection of several hundred, small, barely profitable firms to a small group of large, highly profitable firms. The object of this paper is to use this case to understand how an industry evolves and, more specifically, to determine how a single industry comes to be dominated by a few large firms. Hypotheses are drawn from recent studies examining the role of political, organizational, and social variables in the evolution of American industry. They are tested using both qualitative analysis of the War Production Board’s Penicillin Program, and time-series cross sectional analysis on panel data collected on the population of public pharmaceutical firms between 1935-1955. I find that the movement towards oligopoly began with the selection of a limited number of firms to participate in the production of penicillin for the war effort. This initial favor to a subset of firms caused those firms to reorient their activities and to collaborate on product-innovation. Participation in this program, more than any other organizational or industry variable, accounts for the success of these firms and the rise of the American pharmaceutical industry.