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When the innovator fails to capture rents from innovation

Author

Listed:
  • 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.

Suggested Citation

  • Manuel Portugal Ferreira & Fernando Ribeiro Serra & Emerson Maccari, 2013. "When the innovator fails to capture rents from innovation," Working Papers 101, globADVANTAGE, Polytechnic Institute of Leiria.
  • Handle: RePEc:pil:wpaper:101
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    File URL: http://globadvantage.ipleiria.pt/files/2012/08/Working_paper-101_globadvantage.pdf
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    References listed on IDEAS

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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.

    More about this item

    Keywords

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

    JEL classification:

    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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