Market Failure in the Diffusion of Consumer-Developed Innovations: Patterns in Finland

By J. P. Jong, Eric von Hippel, Fred Gault, Jari Kuusisto, C. Raasch. 2015

143 citations recorded by the source corpus.

Empirical studies have shown that millions of individual users develop new products and services to serve their own needs. The economic impact of this phenomenon increases if and as adopters in addition to the initial innovators also gain benefits from those user-developed innovations. It has been argued that the diffusion of user-developed innovations is negatively affected by a new type of market failure: value that others may gain from a user-developed product can often be an externality to consumer-developers. As a result, consumer innovators may not invest in supporting diffusion to the extent that would be socially optimal. In this paper, we utilize a broad sample of consumers in Finland to explore the extent to which innovations developed by individual users are deemed of potential value to others, and the extent to which they diffuse as a function of perceived general value. Our empirical analysis supports the hypothesis that a market failure is affecting the diffusion of user innovations developed by consumers for their own use. Implications and possible remedies are discussed.

Subfields: Computer Science Applications, Management of Technology and Innovation, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/c0ef6edd361cba5d149a7defd736e0141bfdcf75

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Computer Science Applications

1. Ruth Stock
2. Eric von Hippel
3. Joel West
4. Martin Schreier
5. H. Chesbrough
6. Frank T. Piller
7. Georgvon Krogh
8. Carliss Y. Baldwin

In Management of Technology and Innovation

1. Eric von Hippel
2. Ruth Stock
3. N. Gillert
4. Frank T. Piller
5. Martin Schreier
6. Johann Füller
7. Vladimir Zwass

In Management Science and Operations Research

1. Eric von Hippel
2. Ruth Stock

Citations in the corpus

• Impacts of Personality Traits on Consumer Innovation Success (2016, background): “Consistent with recent studies on diffusion of consumerdeveloped innovations (de Jong et al. 2015; von Hippel, de Jong, and Flowers 2012; von Hippel, Ogawa, and de Jong 2011), successful diffusion refers to the adoption by others, either commercially or peer-to-peer.”