| dc.description.abstract | The theory of social judgements of organizations received considerable attention in organizational literature during the last decade. Studies focused on demarcating organizational legitimacy, reputation and status and how these affect decision-making. Judgements about organizational reputation are used as heuristic to estimate future product quality based on previous interactions with the organization holding the reputation. In management literature, organizational reputation is threefold, divided into familiarity (being known), expectations about future outcomes based on prior performance (being known for something) and general impressions about the organization (generalized favorability). Studies proved that when uncertainty exists about product outcome, judgements about the organizational reputation are used to aid decision-making. This is especially relevant for industries were product quality cannot be assessed before large-scale usage. The pharmaceutical industry matches these conditions and is researched extensively, primarily focusing on the case of the US Food and Drug Administration (FDA). These studies proved that being known and generalized favorability facilitate decision-making, but largely neglected the effects of being known for something.
This study aims to provide insights in the relationship between three types of organizational reputation and drug review times, by empirically testing them in the context of new drug approvals in Europe. This allowed replication of the variables used in research on the FDA, while extending to newly introduced indicators that measured the applicants prior performance regarding quality issues and product discontinuities. Hence, a dataset was composed with 488 marketing authorization application review procedures and reputational indicators of the applicants. All procedures received approval by the EMA between 1995 and 2017 and had comparable levels of product uncertainty. Using negative binomial and cox proportional hazard regressions allowed for validation that organizational reputation significantly affects the time to decision for products with comparable levels of uncertainty. Variables for all reputational dimensions showed statistical significant positive relationships with the duration of review times. In particular the number of current applications and proportion of failed applications of an applicant and general safety issues extended review times. Social judgements by the regulator appear to be mainly based on generalized favorability, as this was most evidently present in the data. For practice, this means that the EMA should be aware that even when relying on scientific information as base of decision-making, social judgements cannot be neglected. Additionally, future applicants can use these insights to submit new applications via subsidiaries, or in collaboration with others with a more favorable reputation. | |
