IIDS Lect 4_ Part 1: Entrepreneurial performance: Innovation (What is so…
IIDS Lect 4_ Part 1: Entrepreneurial performance: Innovation
Intellectual property rights: Patents
Intellectual property rights: Trademarks
Appropriation of innovation rents
“A new way of doing things that is
“The adoption of ideas that are
new to the adopting organization.
“Innovations are qualitatively
new products or processes that differ significantly
[...] from what existed before.” (Hauschildt)
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
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
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
These three examples show the
of innovations ≠
Question How can a company benefit from its innovations?
How can it appropriate the returns?