When the innovator fails to capture rents from innovation

Ferreira, Manuel Portugal; Serra, Fernando Ribeiro; Maccari, Emerson A.

http://hdl.handle.net/10400.8/6174

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Authors

Ferreira, Manuel Portugal

Serra, Fernando Ribeiro

Maccari, Emerson A.

Abstract(s)

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 innovator firms from capturing the rents. In this conceptual article, we observe boundary conditions under which protection ensures 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, business and social ties connecting firms deepen the hazards associated with the appropriation of rents.

Keywords

Bandwagon effects Complementary assets Diffusion of knowledge Innovation Innovation rent Network ties

URI

http://hdl.handle.net/10400.8/6174

Citation

Ferreira, M. P., Serra, F. R. & Maccari, E. A. (2012). When the innovator fails to capture rents from innovation. Latin American Business Review, 13, 199-207.