The relevance of project cost information in a modern pharmaceuticals company

Kirby, Meyrick John (2007) The relevance of project cost information in a modern pharmaceuticals company. PhD thesis, University of Glasgow.

Abstract

The original aim of this thesis was to test the current frameworks that exist in the transfer pricing literature, Eccles (1985), Spicer (1989), and van der Meer-Kooistra (1994). The economics and marketing literatures have had success in using questionnaires in single or a limited set of companies to test transaction cost economics, and in the latter case have used structural equation modelling. Therefore this thesis originally aimed to emulate this with a questionnaire in a single pharmaceuticals company. However measurement of the concepts used in the three frameworks proved to be problematic suggesting a need to further explore the concepts with an aim to develop better understanding of the concepts as they appear in a real world setting. Therefore this thesis switches to a case study, exploring the concepts using a modified form of Grounded Theory, with the frameworks providing Allison lens on the interview data, that is, the frameworks to some extent informed the questioning and open coding, and also provided the general axial codes. This case study demonstrated heterogeneity in respect to the relevance of accounting information for organisational units. The embedded nature of this case study allows for comparisons between these organisational units. Objectives, strategies, and structure are found to vary along both the vertical chain and company hierarchy. This variance is driven by differences in project solidity and human capital. The use of cost allocation to projects and products is also found to vary along the value chain, from full cost allocation to no allocation of costs to individual projects. The development process, the process of taking candidate drugs through Federal Drug Administration (FDA) phases to become prescription drugs is found to be organised as a matrix system, where the cost allocation system plays a role in helping to allocate resources between projects. The earlier process of researching chemical compounds to become candidate drugs is found to have a different structure due to the uncertainty of projects, and where cost allocation to projects is not undertaken. It is hypothesised that uncertainty explains both the differences in structure and cost allocation system, thereby providing a link between the two. The heterogeneous nature of this case study suggests that future research should consider the use of embedded case studies as a fruitful type of research. The three transfer pricing frameworks, although they fit the case at the corporate level, fail to explain the rich complexities of the embedded case. Furthermore, uncertainty in the form of project fluidity appears to play a greater role than van der Meer-Kooistra predicts.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Additional Information: Some detail missing on pages 253-257.
• Subjects: H Social Sciences > HG Finance
• Colleges/Schools: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Supervisor's Name: Emmanuel, Professor Clive
• Date of Award: 2007
• Depositing User: Enlighten Team
• Unique ID: glathesis:2007-85668
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 17 Dec 2025 11:23
• Last Modified: 21 Dec 2025 19:09
• Thesis DOI: 10.5525/gla.thesis.85668
• URI: https://theses.gla.ac.uk/id/eprint/85668