IDEAS home Printed from https://ideas.repec.org/a/inm/orstsc/v6y2021i1p75-90.html
   My bibliography  Save this article

Profiting from Enabling Technologies?

Author

Listed:
  • Alfonso Gambardella

    (Department of Management and Technology and Invernizzi Center for Research on Innovation, Organization, Strategy and Entrepreneurship (ICRIOS), Università Bocconi, 20136 Milan, Italy; and Centre for Economic Policy Research, London EC1V 0DX, United Kingdom;)

  • Sohvi Heaton

    (College of Business Administration, Loyola Marymount University, Los Angeles, California 90045;)

  • Elena Novelli

    (Cass Business School, City, University of London, London EC1Y 8TZ, United Kingdom;)

  • David J. Teece

    (Haas School of Business, Institute for Business Innovation, University of California, Berkeley, Berkeley, California 94720)

Abstract

How to profit from innovation has been an important question for both innovation scholars and practitioners over the years. It is certainly a relevant question for all types of technological innovation, including emerging ones. David J. Teece’s profiting from innovation (PFI) framework [Teece DJ (1986) Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Res. Policy 15(6):285–305.] sets forth a theory of the relevant contingencies. However, Teece’s framework focuses on technologies with applications in specific domains. We focus on the question of how to profit from enabling technologies : technologies that are applicable across multiple domains. We argue that capturing value in such circumstances is fundamentally different from profiting from less-enabling technologies and raises new issues with respect to the relevant business models and public policies. This paper’s contribution is threefold. It formally revises and extends the original PFI framework to include the case of enabling technologies, it provides empirical evidence to support the distinction between profiting from enabling and profiting from narrower “discrete” technologies, and it generates perspectives on the appropriate business models for these technologies and discusses related public policy implications, in light of the fact that the share of the benefits the innovator can capture is likely to be even smaller for enabling than for discrete technologies.

Suggested Citation

  • Alfonso Gambardella & Sohvi Heaton & Elena Novelli & David J. Teece, 2021. "Profiting from Enabling Technologies?," Strategy Science, INFORMS, vol. 6(1), pages 75-90, March.
  • Handle: RePEc:inm:orstsc:v:6:y:2021:i:1:p:75-90
    DOI: 10.1287/stsc.2020.0119
    as

    Download full text from publisher

    File URL: https://doi.org/10.1287/stsc.2020.0119
    Download Restriction: no

    File URL: https://libkey.io/10.1287/stsc.2020.0119?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bresnahan, Timothy F. & Trajtenberg, M., 1995. "General purpose technologies 'Engines of growth'?," Journal of Econometrics, Elsevier, vol. 65(1), pages 83-108, January.
    2. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    3. Hall, B. & Jaffe, A. & Trajtenberg, M., 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," Papers 2001-29, Tel Aviv.
    4. Edwin Mansfield & John Rapoport & Anthony Romeo & Samuel Wagner & George Beardsley, 1977. "Social and Private Rates of Return from Industrial Innovations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(2), pages 221-240.
    5. Merges, Robert P. & Nelson, Richard R., 1994. "On limiting or encouraging rivalry in technical progress: The effect of patent scope decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 25(1), pages 1-24, September.
    6. Paul Klemperer, 1990. "How Broad Should the Scope of Patent Protection Be?," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 113-130, Spring.
    7. Kitch, Edmund W, 1977. "The Nature and Function of the Patent System," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 265-290, October.
    8. Richard Gilbert & Carl Shapiro, 1990. "Optimal Patent Length and Breadth," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 106-112, Spring.
    9. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    10. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    11. Winter, Sidney G., 2006. "The logic of appropriability: From Schumpeter to Arrow to Teece," Research Policy, Elsevier, vol. 35(8), pages 1100-1106, October.
    12. Ashish Arora & Sharon Belenzon & Andrea Patacconi, 2018. "The decline of science in corporate R&D," Strategic Management Journal, Wiley Blackwell, vol. 39(1), pages 3-32, January.
    13. Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67(3), pages 297-297.
    14. Rosenberg, Nathan, 1963. "Technological Change in the Machine Tool Industry, 1840–1910," The Journal of Economic History, Cambridge University Press, vol. 23(4), pages 414-443, December.
    15. Howard F. Chang, 1995. "Patent Scope, Antitrust Policy, and Cumulative Innovation," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 34-57, Spring.
    16. Rahul Kapoor & Shiva Agarwal, 2017. "Sustaining Superior Performance in Business Ecosystems: Evidence from Application Software Developers in the iOS and Android Smartphone Ecosystems," Organization Science, INFORMS, vol. 28(3), pages 531-551, June.
    17. Jan W. Rivkin, 2000. "Imitation of Complex Strategies," Management Science, INFORMS, vol. 46(6), pages 824-844, June.
    18. Cynthia A. Montgomery & Birger Wernerfelt, 1988. "Diversification, Ricardian Rents, and Tobin's q," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 623-632, Winter.
    19. Gambardella, Alfonso & Giarratana, Marco S., 2013. "General technological capabilities, product market fragmentation, and markets for technology," Research Policy, Elsevier, vol. 42(2), pages 315-325.
    20. Teece, David J., 2006. "Reflections on "Profiting from Innovation"," Research Policy, Elsevier, vol. 35(8), pages 1131-1146, October.
    21. Bronwyn H. Hall, 2005. "A Note on the Bias in Herfindahl-Type Measures Based on Count Data," Revue d'Économie Industrielle, Programme National Persée, vol. 110(1), pages 149-156.
    22. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3, Specia), pages 783-832.
    23. Novelli, Elena, 2015. "An examination of the antecedents and implications of patent scope," Research Policy, Elsevier, vol. 44(2), pages 493-507.
    24. Torrisi, Salvatore & Gambardella, Alfonso & Giuri, Paola & Harhoff, Dietmar & Hoisl, Karin & Mariani, Myriam, 2016. "Used, blocking and sleeping patents: Empirical evidence from a large-scale inventor survey," Research Policy, Elsevier, vol. 45(7), pages 1374-1385.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rahul Kapoor & David J. Teece, 2021. "Three Faces of Technology’s Value Creation: Emerging, Enabling, Embedding," Strategy Science, INFORMS, vol. 6(1), pages 1-4, March.
    2. Henkel, Joachim, 2022. "Licensing standard-essential patents in the IoT – A value chain perspective on the markets for technology," Research Policy, Elsevier, vol. 51(10).
    3. Kristina McElheran & J. Frank Li & Erik Brynjolfsson & Zachary Kroff & Emin Dinlersoz & Lucia Foster & Nikolas Zolas, 2024. "AI adoption in America: Who, what, and where," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 33(2), pages 375-415, March.
    4. Gambardella, Alfonso, 2023. "Private and social functions of patents: Innovation, markets, and new firms," Research Policy, Elsevier, vol. 52(7).
    5. Goldfarb, Avi & Taska, Bledi & Teodoridis, Florenta, 2023. "Could machine learning be a general purpose technology? A comparison of emerging technologies using data from online job postings," Research Policy, Elsevier, vol. 52(1).
    6. Ding, Jeffrey, 2022. "Techno-industrial Policy for New Infrastructure: China’s Approach to Promoting Artificial Intelligence as a General Purpose Technology," Institute on Global Conflict and Cooperation, Working Paper Series qt1sb844ws, Institute on Global Conflict and Cooperation, University of California.
    7. Hurmelinna-Laukkanen, Pia & Yang, Jialei, 2022. "Distinguishing between appropriability and appropriation: A systematic review and a renewed conceptual framing," Research Policy, Elsevier, vol. 51(1).
    8. Milan Miric & Hakan Ozalp & Erdem Dogukan Yilmaz, 2023. "Trade‐offs to using standardized tools: Innovation enablers or creativity constraints?," Strategic Management Journal, Wiley Blackwell, vol. 44(4), pages 909-942, April.
    9. Yoruk, Esin & Radosevic, Slavo & Fischer, Bruno, 2023. "Technological profiles, upgrading and the dynamics of growth: Country-level patterns and trajectories across distinct stages of development," Research Policy, Elsevier, vol. 52(8).
    10. Haessler, Philipp & Giones, Ferran & Brem, Alexander, 2023. "The who and how of commercializing emerging technologies: A technology-focused review," Technovation, Elsevier, vol. 121(C).
    11. Nylund, Petra A. & Ferràs-Hernández, Xavier & Pareras, Luis & Brem, Alexander, 2022. "The emergence of entrepreneurial ecosystems based on enabling technologies: Evidence from synthetic biology," Journal of Business Research, Elsevier, vol. 149(C), pages 728-735.
    12. Peters, Bettina & Marks, Hannes & Trunschke, Markus & Grimpe, Christoph & Sofka, Wolfgang & Czarnitzki, Dirk, 2023. "Schwerpunktstudie Technologiemärkte," Studien zum deutschen Innovationssystem 9-2023, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    13. Pundziene, Asta & Gerulaitiene, Neringa & Bez, Sea Matilda & Georgescu, Irène & Mathieu, Christopher & Carrabina-Bordoll, Jordi & Rialp-Criado, Josep & Nieminen, Hannu & Varri, Alpo & Boethius, Susann, 2023. "Value capture and embeddedness in social-purpose-driven ecosystems. A multiple-case study of European digital healthcare platforms," Technovation, Elsevier, vol. 124(C).
    14. Waßenhoven, Anna & Rennings, Michael & Laibach, Natalie & Bröring, Stefanie, 2023. "What constitutes a “Key Enabling Technology” for transition processes: Insights from the bioeconomy's technological landscape," Technological Forecasting and Social Change, Elsevier, vol. 197(C).
    15. Soltanzadeh, Javad & Sahebjamnia, Navid & Khosroshahi, Elnaz Mesma & Bouguerra, Abderaouf, 2024. "Commercializing Covid-19 diagnostic technologies: A review of challenges, success factors, and insights from the profiting from innovation framework," Technovation, Elsevier, vol. 130(C).
    16. Mendonça, Sandro & Damásio, Bruno & Charlita de Freitas, Luciano & Oliveira, Luís & Cichy, Marcin & Nicita, António, 2022. "The rise of 5G technologies and systems: A quantitative analysis of knowledge production," Telecommunications Policy, Elsevier, vol. 46(4).
    17. Bojovic, Neva, 2022. "Strategic framing of enabling technologies: Insights from firms digitizing smell and taste," Research Policy, Elsevier, vol. 51(3).
    18. Conti, Raffaele & Novelli, Elena, 2022. "Not all technologies are created equal for stakeholders: Constituency statutes, firm stakeholder orientation and investments in technology generality," Research Policy, Elsevier, vol. 51(3).
    19. Wen, Wen & Forman, Chris & Jarvenpaa, Sirkka L, 2022. "The effects of technology standards on complementor innovations: Evidence from the IETF," Research Policy, Elsevier, vol. 51(6).
    20. Nylund, Petra A. & Brem, Alexander & Agarwal, Nivedita, 2022. "Enabling technologies mitigating climate change: The role of dominant designs in environmental innovation ecosystems," Technovation, Elsevier, vol. 117(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Novelli, Elena, 2015. "An examination of the antecedents and implications of patent scope," Research Policy, Elsevier, vol. 44(2), pages 493-507.
    2. Teece, David J., 2018. "Profiting from innovation in the digital economy: Enabling technologies, standards, and licensing models in the wireless world," Research Policy, Elsevier, vol. 47(8), pages 1367-1387.
    3. Cohen, Wesley M., 2010. "Fifty Years of Empirical Studies of Innovative Activity and Performance," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 129-213, Elsevier.
    4. Anja, Breitwieser & Neil, Foster, 2012. "Intellectual property rights, innovation and technology transfer: a survey," MPRA Paper 36094, University Library of Munich, Germany.
    5. Heidi L. Williams, 2017. "How Do Patents Affect Research Investments?," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 441-469, September.
    6. Dosi, Giovanni & Palagi, Elisa & Roventini, Andrea & Russo, Emanuele, 2023. "Do patents really foster innovation in the pharmaceutical sector? Results from an evolutionary, agent-based model," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 564-589.
    7. Huang, Kenneth Guang-Lih & Huang, Can & Shen, Huijun & Mao, Hao, 2021. "Assessing the value of China's patented inventions," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
    8. Dosi, Giovanni & Nelson, Richard R., 2010. "Technical Change and Industrial Dynamics as Evolutionary Processes," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 51-127, Elsevier.
    9. Cevikarslan, Salih, 2013. "Optimal patent length and patent breadth in an R&D driven market with evolving consumer preferences: An evolutionary multi-agent based modelling approach," MERIT Working Papers 2013-020, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Fabian Gaessler & Dietmar Harhoff & Stefan Sorg & Georg von Graevenitz, 2024. "Patents, Freedom to Operate, and Follow-on Innovation: Evidence from Post-Grant Opposition," Rationality and Competition Discussion Paper Series 494, CRC TRR 190 Rationality and Competition.
    11. Eric Budish & Benjamin Roin & Heidi Williams, 2013. "Do fixed patent terms distort innovation? Evidence from cancer clinical trials," Discussion Papers 13-001, Stanford Institute for Economic Policy Research.
    12. David Moroz, 2005. "Production of Scientific Knowledge and Radical Uncertainty: The Limits of the Normative Approach in Innovation Economics," European Journal of Law and Economics, Springer, vol. 20(3), pages 305-322, November.
    13. Nancy Gallini & Suzanne Scotchmer, 2002. "Intellectual Property: When Is It the Best Incentive System?," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 51-78, National Bureau of Economic Research, Inc.
    14. Harabi, Najib, 1994. "Technischer Fortschritt in der Schweiz: Empirische Ergebnisse aus industrieökonomischer Sicht [Technischer Fortschritt in der Schweiz:Empirische Ergebnisse aus industrieökonomischer Sicht]," MPRA Paper 6725, University Library of Munich, Germany.
    15. Schwiebacher, Franz, 2013. "Does fragmented or heterogeneous IP ownership stifle investments in innovation?," ZEW Discussion Papers 13-096, ZEW - Leibniz Centre for European Economic Research.
    16. Encaoua, David & Guellec, Dominique & Martinez, Catalina, 2006. "Patent systems for encouraging innovation: Lessons from economic analysis," Research Policy, Elsevier, vol. 35(9), pages 1423-1440, November.
    17. Giacomo A. M. Ponzetto, 2008. "Intellectual property rights and efficient firm organization," Economics Working Papers 1254, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2014.
    18. Laursen, Keld & Salter, Ammon J., 2014. "The paradox of openness: Appropriability, external search and collaboration," Research Policy, Elsevier, vol. 43(5), pages 867-878.
    19. Koellinger, Philipp, 2008. "The relationship between technology, innovation, and firm performance--Empirical evidence from e-business in Europe," Research Policy, Elsevier, vol. 37(8), pages 1317-1328, September.
    20. Koellinger, Ph.D., 2008. "The Relationship between Technology, Innovation, and Firm Performance: Empirical Evidence on E-Business in Europe," ERIM Report Series Research in Management ERS-2008-031-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orstsc:v:6:y:2021:i:1:p:75-90. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.