11. Teece, D.J. (1986), “Profiting from technological innovation: implications for integration, collaboration, licensing and public policy Flashcards
(7 cards)
What is a “complementary asset”?
Complementary assets are services such as marketing, competitive manufacturing, and after-sales support that are needed to successfully commercialize an innovation.
Example: A new software needs good customer support and marketing to be successful.
What is meant by “regimes of appropriability”?
Regimes of appropriability refer to the environmental factors that govern an innovator’s ability to capture the profits generated by an innovation, including the nature of the technology and the efficacy of legal mechanisms of protection.
Example: A company with a strong patent on a new drug can prevent others from making and selling it.
What is the “dominant design paradigm”?
The dominant design paradigm is the stage in industry development where one design or a narrow class of designs emerges as the more promising, leading to competition shifting to price and away from design
Example: The QWERTY keyboard layout became the standard, and now companies compete on price and features rather than layout.
Why might follower firms outperform innovators?
Follower firms might outperform innovators if they are better positioned with respect to critical complementary assets or if they can modify the product in important ways before the emergence of a dominant design.
Example: A company improves on an existing electric car design and sells more cars than the original inventor.
What role do patents play in the appropriability regime?
Patents provide legal protection for new chemical products and simple mechanical inventions, but they are often ineffective at protecting process innovations and can be invented around at modest costs.
Example: A patent on a new type of battery prevents others from making it, but a competitor finds a slightly different way to make a similar battery.
What is the impact of “tight appropriability regimes” on innovators?
Tight appropriability regimes assure innovators of translating their innovation into market value for some period of time, allowing them to access complementary assets without competing with imitators.
Example: A company with a strong patent on a new smartphone feature can make money from it without worrying about competitors copying it immediately.
How do “weak appropriability regimes” affect business strategy?
In weak appropriability regimes, innovators must integrate into specialized and cospecialized assets to keep imitators at bay and ensure commercial success.
Example: A company invents a new software but needs to build its own customer support and marketing teams to succeed because others can easily copy the software.
