Ariel Dora Stern is an Assistant Professor of Business Administration and Hellman Faculty Fellow in the Technology and Operations Management Unit at Harvard Business School. She teaches the Technology and Operations Management course in the MBA required curriculum.
Ariel's research focuses on the management of innovation in health care, with a focus on the medical device and pharmaceutical industries. Her projects seek to understand the drivers of innovation among firms and the determinants of how medical technologies are adopted and used in practice. Ariel is particularly interested in the intersection of the regulation, firm strategy, and economics of health care. She also researches the digital transformation of medical technology and health care delivery, investigating the policy and managerial questions raised by the growth of “digital health.” Her research has been cited by Bloomberg, The New York Times, and National Public Radio.
Ariel Dora Stern is an Assistant Professor of Business Administration in the Technology and Operations Management Unit at Harvard Business School. She teaches the Technology and Operations Management course in the MBA required curriculum.
Ariel's research focuses on the management of innovation in health care, with a focus on the medical device and pharmaceutical industries. Her projects seek to understand the drivers of innovation among firms and the determinants of how medical technologies are adopted and used in practice. Ariel is particularly interested in the intersection of the regulation, firm strategy, and economics of health care. She also researches the digital transformation of medical technology and health care delivery, investigating the policy and managerial questions raised by the growth of “digital health.” Her research has been cited by Bloomberg, The New York Times, and National Public Radio.
Professor Stern received her Ph.D. in Public Policy from Harvard, where she was a National Bureau of Economic Research Predoctoral Fellow in the Economics of Health and Aging and was honored with the Harvard Kennedy School Dean’s Award for excellence in student teaching. She holds an undergraduate degree in economics from Dartmouth College, where she was a Presidential Scholar and a two-time U.S. national collegiate figure skating champion. Before beginning her academic career, she worked as an economist on Wall Street and at the Federal Reserve Bank of New York, the German Institute for Economic Research (DIW), the German Development Bank (KfW), and LeapFrog Investments, an impact investment fund.
Ariel is currently a faculty affiliate of the Harvard Business School Health Care Initiative and Digital Initiative and a Research Associate at Ariadne Labs, a joint center between the Brigham and Women’s Hospital and the Harvard T.H. Chan School of Public Health, which focuses on scaling health care delivery innovation.
This study sheds new light on first- and early-mover advantages. Research on this classic topic often assumes that each firm participates in the entirety of the innovation process and that all firms aim to monetize their innovations on product markets. However, a division of labor between innovative new entrants and industry incumbents, endowed with complementary assets, is common in many industries. Such settings are distinct because new entrants have the additional option to sell their innovation in a “market for technology” and may therefore seek acquisition rather than shepherding an innovation through the entire commercialization process. We argue that this binary outcome – i.e., success via acquisition – creates different opportunities and threats for new entrants and has important and novel implications for the question: is it advantageous to be early to market? Using data from the U.S. medical device industry, we find that pioneer (dis-)advantages in a market for technology setting are similar to those typically seen in product markets, but different in some important respects. In particular, pioneers must pave the way for a new product type in order to reduce the technological and market risks, where reducing technological risk is of paramount importance. As a reward, pioneers ultimately realize a higher likelihood of acquisition, but among acquired firms, early entrants wait longer for acquisition to happen. To a certain extent, therefore, later movers can free ride on early-movers’ efforts: although they are less likely to experience acquisition, acquisitions of later entrants happen more quickly.
When innovations are successfully commercialized into new products, they can create value for both consumers and firms. When products malfunction, however, they can harm consumers and disrupt firm operations. Product failures are therefore likely to impact firms’ subsequent innovation activities. Using 13 years of Food and Drug Administration data, we examine the effects of firm and competitor medical device recalls on subsequent new product innovation. Recalls vary by source, proximity, and severity while innovations vary in their sophistication and novelty. We use recurrent-event accelerated failure time models to examine how product failures experienced by firms and their competitors impact subsequent major and minor innovations. We find that focal firm recalls slow minor innovation, an effect that is strongest when recalls are in the same product area as innovation activity. A one standard deviation increase in the number of proximate focal firm recalls implies more than a one-year delay in minor innovation. However, competitor firm recalls lead to acceleration in both minor and major innovative activity. The relationship between competitor recalls and minor innovation is strongest when recalls are more severe, while the relationship between competitor recalls and major innovation is strongest when recalls are proximate and more severe. Just one localized, severe competitor recall leads to a one-month reduction in time to major innovation. Our results suggest that product failures influence subsequent innovation, but that their impact is dependent upon recall source, proximity and severity. The strategic and public policy implications of these results are highlighted.
While chronic disease management (CDM) apps have had some initial success, they have not yet lived up to their potential. This shortcoming is not due to the capability of the technologies, which are quite impressive; the problem is the incentives and institutions of the delivery system into which the technologies are being introduced. To succeed under these circumstances, developers of CDM apps must first consider who the primary (that is, paying) customers will be for their technologies. They must then develop an approach for ensuring that a customer’s willingness to adopt the app translates into the sustained use of that app. Only with sustained use will CDM apps have a chance of improving patient outcomes and reducing costs for the treatment of the conditions they target.
Many public and private efforts in coming years will focus on research in precision medicine, developing biomarkers to indicate which patients are likely to benefit from a certain treatment so that others can be spared the cost—financial and physical—of being treated with unproductive therapies and therapeutic signals can be more easily uncovered. However, such research initiatives alone will not deliver new medicines to patients in the absence of strong incentives to bring new products to market. We examine the unique economics of precision medicines and associated biomarkers, with an emphasis on the factors affecting their development, pricing, and access.
