Please enable JavaScript.
Coggle requires JavaScript to display documents.
IIDS Lect 4_ Part 1: Entrepreneurial performance: Innovation (What is so…
IIDS Lect 4_ Part 1: Entrepreneurial performance: Innovation
Agenda
Intellectual property rights: Patents
Intellectual property rights: Trademarks
Appropriation of innovation rents
Definition of
“innovation”
“A new way of doing things that is
commercialized
.” (Porter)
“The adoption of ideas that are
new to the adopting organization.
” (Afuah)
“Innovations are qualitatively
new products or processes that differ significantly
[...] from what existed before.” (Hauschildt)
Innovation =
new combination of needs and solutions
Innovation ≠ Invention ≠ R&D
What is so special about innovation? Innovation..
must happen outside routine business operations
is “creative destruction”; often causes resistance
needs protection (not necessarily patents)
usually requires cooperation of many actors
leads to spill-overs to other parties; can be copied
is a new combination of needs and technical solutions
can be very costly
==> The management of innovation requires
different skills, tools, incentives, and organization
than the management of other corporate functions.
is risky (technology, demand, competition)
Invention ≠ Innovation
Walkman
1979: Commercialized and introduced
into the market by SONY
2004: Patent disputes between Sony and Pavel resolved through a settlement
1977: Invented and patented by Andreas Pavel
MP3 Player
First MP3 players by a German firm called „Pontis“
Frauenhofer Institute generates licensing revenues from MP3 format; Consumer electronic firms such as Apple or Samsung use the format and make huge profits
1982: MP3 format developed by Frauenhofer Institute in Erlangen
Appropriation Problem
These three examples show the
appropriation problem
with innovations.
Private return
of innovations ≠
social return
of innovations
Question How can a company benefit from its innovations?
How can it appropriate the returns?