Prestige of the Decision Ecology and Risk-taking in R&D Project in the Biopharmaceutical Sector

Abstract

Knowledge-based organizations pose an innovation project ‘scope–risk paradox’ in their innovation projects. On the one hand, the uncertainty of the broader scope avails them opportunities to delegate responsibilities to the environment; on the other hand, an elevated risk–reward evaluation hampers their aspirations. This article suggests a solution: the prestige of the decision ecology inflates rewards and deflates risks in the scope decision. This decision ecology of the research and development (R&D) project consists of five prestige factors: (a) technological, (b) organization-specific, (c) nationality, (d) temporality and (f) structural. High prestige of these contextual elements implies that they influence the perceived reward to risk ratio. High prestige predicts high risk-taking, leading to a broader scope of the innovation project. The evidence supports that the technological prestige, organizational prestige, temporal prestige and structural prestige contribute to the broader scope decision of the R&D project in the clinical trial. However, the project nationality shows no difference. Overall, we conclude that the interpretative decisions based on the situation prestige influence the R&D project in the biopharmaceutical sector; therefore, the prestige of these ecological factors should matter in other disciplines. Other disciplines that draw value from the social context will show more pronounced effects of the prestige on decisions. Hence, this study sets a foundation for the theory and practice in other projects, organizations, sectors and nations.