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Capturing Value for Innovation summary
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Capturing Value for Innovation / Strategic Innovation Management 2023Lecture 1: Introduction to Value Appropriation: Formal and Informal Protection Mechanisms
James, S. D., Leiblein, M. J., Lu, S. (2013), “How Firms Capture Value from their Innovations,” Journal
of Management, 39(5): 1123–1155.
Associating contextual conditions with value capture strategy
Patents
à institutional environment: less likely to use patent system to protect innovation of IP-laws
& law enforcement is weak
à Industry: industry-characteristics (like competitive intensity, number of capable
competitors, legal enforceability) affect firms’ propensity to patent
à Firm: more likely to use patent if: large patent portfolio; experienced in identifying &
litigating infringement; seek to shape appropriability of environment
à Technology: firms in discrete product industry more likely go for patents (can make
stronger claims of novelty) in complex product industry less likely
Secrecy
> institutional environment: secrecy is more likely used if environment provides weak IP-rights
> industry: competitive environment increases unintentional knowledge spillovers; less
secrecy
> firm: restricting information within firm may decrease learnings, postpone success
> technology: more complex technology > firm must weigh costs & benefits of secrecy
> secrecy also depends on type of innovation easy to identify or not)
> firms may disclosure innovation on purpose: show efficiency/quality to reduce competition;
so others can develop complementary technologies
Lead time advantage
Ø Institutional environment: more research needed
Ø Firm: superior ability to acquire and use information may reduce spillover effects &
increase benefit of lead time
Ø Technology: more complex, less chance that competitors can imitate fast à more
likely lead time
Complementary asset
Ø Institutional environment: environment with weak appropriability > need for C.A.
Ø Industry: industry with weak appropriability > need for complementary asset
Ø Firm: firm cant access complementary asset > need to make more themselves
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, Capturing Value for Innovation / Strategic Innovation Management 2023
Ø Technology: radical technology change > more likely successful with complementary
asset
Patent & Secrecy
Ø Weak appropriability regime > firms active in product & process innovation more likely
to do combination
Patent & complementary asset
Ø Strong IP rights enforcement à combination is valuable
Ø Weak IP rights in industry à can support patent
Ø Combination might create firm specific appropriability
Ø High product complexity
Conclusion
1) Use of single mechanism – patent – is often used in literature
2) Propensity of firms using certain mechanisms varies with contextual conditions
3) Differences in effectiveness of mechanisms across industries: patent in industry &
technological environment with strong patent protection; other mechanisms in weak
patent protection environments
4) Strategies that draw on firm specific sources may be more effective than patents
alone: combination can be used in weak and strong appropriability environments
5) Firm specific innovation capabilities may enable firm to capture value: this potential
effect is independent from contextual factors
2
, Capturing Value for Innovation / Strategic Innovation Management 2023
Sofka, W., de Faria, P., & Shehu, E. (2018). Protecting knowledge: How legal requirements to reveal
information affect the importance of secrecy. Research Policy, 47(3), 558-572.
H1: Secrecy is more important for knowledge protection for Firms that are legally required to
disclose information to external partners (than for firms that don’t)
Ø Results support H1 positive and significant
Ø Relative importance of secrecy is roughly 40% higher
H2: Secrecy is more important for knowledge protection for firms that are legally required to
disclose information & this difference is larger for Firms located in technological cluster
Ø Results support H2
Ø But direct effect of technological cluster location on the relative importance of secrecy
is negative: only matters in combination with required disclosure of information
H3: Secrecy is more important for knowledge protection for firms that are legally required to
disclose info & this difference increases with a Firms investment in fixed assets
Ø Results support H3 positive & significant
Ø But direct effect of investment in fixed assets on secrecy is negative
H4: Secrecy is more important for knowledge protection for Firm that are legally required to
disclose information & this difference increases with firms past innovation performance
Ø No support for H4
Significant effects of control variables
Ø Variable measuring R&D intensity & process innovation
Ø Higher relative importance of secrecy for firms operating in discrete manufacturing
technology, medium high-tech, high-tech industries & technological service
Conclusion
Ø Knowledge protection through secrecy is even more important for firms with legal
requirements to disclosure information when they have higher fixed assets & are in
technological cluster
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