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When the innovator fails to capture rents from innovation

  • Manuel Portugal Ferreira

    ()

    (Instituto Politécnico de Leiria)

  • Fernando Ribeiro Serra

    ()

    (Uninove – Universidade Nove de Julho)

  • Emerson Maccari

    ()

    (Uninove – Universidade Nove de Julho)

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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File URL: http://globadvantage.ipleiria.pt/files/2012/08/Working_paper-101_globadvantage.pdf
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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
Contact details of provider: Web page: http://globadvantage.ipleiria.pt

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  1. John H Dunning, 1995. "Reappraising the Eclectic Paradigm in an Age of Alliance Capitalism," Journal of International Business Studies, Palgrave Macmillan, vol. 26(3), pages 461-491, September.
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  7. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  8. Teece, David J., 1996. "Firm organization, industrial structure, and technological innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 31(2), pages 193-224, November.
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