ABSTRACT
From a pharmaceutical management perspective, when biotechnology firms entered the pharmaceutical industry, established pharmaceutical firms faced unprecedented situations. According to a managerial cognition study, top managers in pharmaceutical firms, such as Bristol-Myers and Squibb (BMS) and Eli Lilly, made sense of the emergence of new competitors equipped with new scientific knowledge. Top management mental models were linked to strategic choice and action in the face of a discontinuous event. Specifically, the firms identified the potential of new biotechnology firms (NBFs) and their new biotechnologies. Then, both companies decided to learn and integrate the new knowledge that NBFs had discovered. The survival of incumbent firms is threatened if the discontinuities are external in origin and require mastery of new fields of knowledge. History demonstrates that top managers in pharmaceutical firms made insightful moves to master new knowledge. Eli Lilly illustrated entrepreneurial management: opportunity identification, strategic behavior such as forming alliances with new companies, and value creation.
