When the innovator fails to capture rents from innovation

Manuel Ferreira (), Fernando Ribeiro Serra () and Emerson Maccari ()
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Fernando Ribeiro Serra: Uninove – Universidade Nove de Julho
Emerson Maccari: Uninove – Universidade Nove de Julho

No 101, Working Papers from globADVANTAGE, Polytechnic Institute of Leiria

Abstract: Innovating firms face the dilemma of knowing when they will be able to appropriate the rents accruing from their innovations. Only the future value of the rents creates an incentive to innovate, and all innovations that are either imitated or improved upon by competitors preempt the innovator firms from capturing their rents. In this conceptual paper, we observe boundary conditions under which protection guarantees appropriation. A paradox emerges in that innovators benefit from networking and bandwagon effects but not from total diffusion of the knowledge. While networks are excellent vehicles for innovation, the business and social ties connecting firms deepen the hazards associated to the appropriation of rents.

Keywords: innovation; innovation rent; network ties; diffusion of knowledge; bandwagon effects; complementary assets (search for similar items in EconPapers)
JEL-codes: M0 M1 (search for similar items in EconPapers)
Date: 2013-09-29
New Economics Papers: this item is included in nep-cse, nep-ino, nep-ipr, nep-pr~, nep-knm, nep-sbm, nep-tid and nep-ure
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Citations: View citations in EconPapers (1)

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