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When the innovator fails to capture rents from innovation

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Author Info

  • Manuel Portugal Ferreira

    ()
    (Instituto Politécnico de Leiria)

  • Fernando Ribeiro Serra

    ()
    (Uninove – Universidade Nove de Julho)

  • Emerson Maccari

    ()
    (Uninove – Universidade Nove de Julho)

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.

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Bibliographic Info

Paper provided by globADVANTAGE, Polytechnic Institute of Leiria in its series Working Papers with number 101.

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Date of creation: 29 Sep 2013
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Handle: RePEc:pil:wpaper:101

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Keywords: innovation; innovation rent; network ties; diffusion of knowledge; bandwagon effects; complementary assets;

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Cited by:
  1. Manuel Portugal Ferreira & Fernando Ribeiro Serra & Benny Kramer Costa & Emerson Maccari & Hergos Couto, 2013. "Impact of the types of clusters on the innovation output and the appropriation of rents from innovation," Working Papers 102, globADVANTAGE, Polytechnic Institute of Leiria.

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