Profiting from Voluntary Information Spillovers: How Users Benefit by Freely Revealing Their Innovations

By Dietmar Harhoff, Joachim Henkel, Eric von Hippel. 2003

832 citations recorded by the source corpus.

Empirical studies of innovation have found that end users frequently develop important product and process innovations. Defying conventional wisdom on the negative effects of uncompensated spillovers, innovative users also often openly reveal their innovations to competing users and to manufacturers. Rival users are thus in a position to reproduce the innovation in-house and benefit from using it, and manufacturers are in a position to refine the innovation and sell it to all users, including competitors of the user revealing its innovation. In this paper we explore the incentives that users might have to freely reveal their proprietary innovations. We then develop a game-theoretic model to explore the effect of these incentives on users’ decisions to reveal or hide their proprietary information. We find that, under realistic parameter constellations, free revealing pays. We conclude by discussing some implications of our findings.

Subfields: Management Science and Operations Research, Safety Research, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/1c8fe7749643409dcb09b75e2fe7590540262625

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Citations in the corpus

Extending private-collective innovation: a case study (2009, positive): “Second, Harhoff et al. (2003), modeling the payoff for innovators to freely reveal their innovations find that one of four conditions, “greater generality of the knowledge,” reduces the likelihood of free-revealing by the innovator (see also Muller and Pénin, 2006).”
Comparing Business and Household Sector Innovation in Consumer Products: Findings from a Representative Study in the United Kingdom (2012, background): “A game-theoretical model supporting these conclusions is provided by Harhoff et al. (2003).”
Does Patent Strategy Shape the Long-Run Supply of Public Knowledge? Evidence from Human Genetics (2009, background): “Why and how, for example, do knowledge workers contributing to the public commons respond to firms’ attempts to contribute to or appropriate their work? Do these responses change the types of individuals making such contributions or the types of contributions? An assumption in much of the existing s”
How Firms Capture Value From Their Innovations (2013, background): “…disclosure of new products in the public domain and patents to signal a firm’s technological advantage in product markets (Dranove & Gandal, 2003; Harhoff et al., 2003; Kafouros & Buckley, 2008; Polidoro & Theeke, 2012), little empirical research has explored the effect of secrecy (alone or in…”
Open Source Software and the "Private-Collective" Innovation Model: Issues for Organization Science (2003, neutral): “When the group increases in size, the impact of any individual's participation in producing the collective good is negligible, and a self-intereste d, rational individual will choose to free-ride under these conditions ( Hardin 1971 ).”
Innovation and the evolution of industries (2006, background): “growth, stability of firm size distributions, and persistence in asymmetric firm performance (see the work by Audretsch 1995; Baldwin 1995; Geroski 1994; Bottazzi et al. 2002 among others).”
Managing Distributed Innovation: Strategic Utilization of Open and User Innovation (2012, neutral): “Firms have various ways to search for distributed innovation, while the external stakeholders may approach firms to reveal their innovation on their own initiative (Harhoff et al., 2003; von Hippel, 2007).”
The Lead User method: an outline of empirical findings and issues for future research (2004, neutral): “Unfortunately, empirical research about factors that motivate or discourage users to openly reveal their leading-edge information and to participate in innovation projects is just beginning to evolve (Harhoff et al., 2003; Brockhoff, 2003).”
Selective revealing in open innovation processes: the case of embedded Linux (gekürzte Version) (2006, background): “Those that freely reveal might be motivated to do so by expectations of benefit from development support by a user community (Franke and Shah 2003) or a manufacturer (Harhoff et al. 2003).”