The Cure for the NIH Syndrome: Examining the Effects of Technology and Origin on Selection

This paper investigates the determinants of opportunity selection, in which an opportunity is defined in the literature as an idea for an innovation that may have value with additional investment of resources. Drawing on the literature of decision making under uncertainty, we hypothesize that rational and political factors may influence which opportunities are selected. Our empirical analysis studies 3,100 pharmaceutical compounds selected to advance from Preclinical to Phase I testing over a 10-year period. The findings are threefold. First, we find that compounds from new technological domains are more likely to be selected than those from existing technological domains, supporting rational preference arguments for pursuing new areas with potentially higher returns. Second, we find that externally developed compounds are less likely to be selected than internally developed compounds, supporting a “Not-Invented-Here” (NIH) political partiality. Third, we find that the NIH bias does not exist for compounds from new technological domains.