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The role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin-off companies

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Author Info
Henry Chesbrough
Richard S. Rosenbloom
Abstract

This paper explores the role of the business model in capturing value from early stage technology. A successful business model creates a heuristic logic that connects technical potential with the realization of economic value. The business model unlocks latent value from a technology, but its logic constrains the subsequent search for new, alternative models for other technologies later on--an implicit cognitive dimension overlooked in most discourse on the topic. We explore the intellectual roots of the concept, offer a working definition and show how the Xerox Corporation arose by employing an effective business model to commercialize a technology rejected by other leading companies of the day. We then show the long shadow that this model cast upon Xerox's later management of selected spin-off companies from Xerox PARC. Xerox evaluated the technical potential of these spin-offs through its own business model, while those spin-offs that became successful did so through evolving business models that came to differ substantially from that of Xerox. The search and learning for an effective business model in failed ventures, by contrast, were quite limited. Copyright 2002, Oxford University Press.

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Publisher Info
Article provided by Oxford University Press in its journal Industrial and Corporate Change.

Volume (Year): 11 (2002)
Issue (Month): 3 (June)
Pages: 529-555
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Handle: RePEc:oup:indcch:v:11:y:2002:i:3:p:529-555

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Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
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  1. O'Reilly, Charles A., III & Tushman, Michael, 2007. "Ambidexterity as a Dynamic Capability: Resolving the Innovator's Dilemma," Research Papers 1963, Stanford University, Graduate School of Business. [Downloadable!]
  2. Velu, C. & Iyer, S., 2008. "The Rationality of Irrationality for Managers: Returns- Based Beliefs and the Traveller’s Dilemma," Cambridge Working Papers in Economics 0826, Faculty of Economics, University of Cambridge. [Downloadable!]
  3. Brian Wu & Anne Marie Knott, 2005. "Entrepreneurial Risk and Market Entry," The Office of Advocacy Small Business Working Papers 05bwmk, U.S. Small Business Administration, Office of Advocacy. [Downloadable!]
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This page was last updated on 2009-11-8.


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