Open Innovation and the Implications for Sustainable Profits

Richard Reed () and Susan F. Storrud-Barnes
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Richard Reed: Washington State University
Susan F. Storrud-Barnes: Cleveland State University

Chapter Chapter 11 in New Frontiers in Entrepreneurship, 2009, pp 223-242 from Springer

Abstract: Abstract Using economics and strategic management literature, we analyze how the phenomenon of open innovation and its associated intellectual communities have an impact on traditional income streams derived from monopoly, Ricardian, and entrepreneurial rents. In doing so, we find that our existing models of property rights, barriers to competition, organizational cost structures, and innovation capacity require adjustment to account for these phenomena. Open innovation modifies the sources of rents. Traditional entry, distribution and capital barriers decline with declining property rights, as do market power and scale effects. Switching costs will remain unchanged. However, rents from knowledge, experience effects, and more perfect differentiation are expected to increase. Importantly, capturing rents may be more difficult because the source of the innovation remains outside the firm’s control.

Keywords: Market Power; Open Innovation; Switching Cost; Capital Requirement; Incumbent Firm (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:inschp:978-1-4419-0058-6_11

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DOI: 10.1007/978-1-4419-0058-6_11

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