Sources of innovation Natasha bank & Eduardo Cadorin

Classics in Innovation and Entrepreneurship
Linköping University, April 05, 2016
Natasha Bank
Eduardo Cadorin

2016-04-05 2Eric von Hippel – The Sources of Innovation
Do you see any connections/discrepancies between Von Hippels work and the
previous classic works that we have been reading in the course?
Please comment on and discuss the role of empirical evidence and methodology
in Von Hippels work.
What are the implications of Von Hippels sources of innovation for the boundaries
ofthe firm (and its related theories e.g. RBV, TCE etc.)?
What is the role of informal know-how trading? What are the implications for
innovation management?
What are major differences and similarities between Von Hippel s contribution on
user innovation and the open innovation concept coined by Chesbrough?
What implications does the notion of architectural innovation (in Henderson
and Clark s article) have for innovation management? And for inter-firm
collaboration?

The innovator:
Is the individual or firm that first develops an
innovation to a useful state as proven by
documented, useful output.
User innovation:
The innovator benefits from using the innovation
Manufacturer innovation:
When the developer expects to benefit by selling the
innovation

The traditional producer innovation paradigm
”It is the producer who as a rule initiates economic
change, and consumers are educated by him if
necessary” (Schumpeter 1934, p.65)

Innovations can come from many different
sources and different industry innovate from
different sources or funnels
Innovators are most often users
Joint user/manufacturer (The locus of almost the
entire innovation process is centered on the
user. Only commercial diffusion is carried out
by the manufacturer.)
Manufacturer ( tractor shovel)
Suppliers ( wire termination machinary)

Innovators are most often users

Schumpeter argued those who succeed at
innovating are rewarde by having temporary
monopoly control over what they have created
leading to enhanced position in market and
temporary profits.
Necessary preconditions
Difficult for innovators to adopt new functional
relationships to their inovations
Innovators must have a poor ability to capture rent
by licensing their innovation-related knowledge to
others

Routes of capturing rent from an innovation for
the innovator
Exploiting the innovation himself while preventing others
from doing so ( property rights) Patent
Licensing others to use his innovation-related knowledge for
a fee
Licencing conveys an innovator´s right to innovation-related
nonembodied knowledge to another) trade secret
legislation
The patent grant has little value to innovators in most fields

Informal Know-how trading
 Even among rivals !!
 Little competitive advantage
 No formal agreements
 R > ∆R
 Good for the whole industry

Implications for innovation management
 How to choose the partners?
 How to choose what should be shared or not?
 How to share the new knowledge within the firm?

Henry Chesbrough is known for
coining the term open innovation
”is the use of purposive inflows and
outflows of knowledge to accelerate
internal innovation and expand the
markets for external use of innovation”

Von Hippel vs Henry Chesbrough
Similarities:
 Von Hippel’s ideas contributed to creation of
the concept of the Open Innovation: user
innovation, free revealing...
 Innovation can arise outside the firm
(suppliers, customers, partners, community...)

Von Hippel vs Henry Chesbrough
Differences:
 VH: the knowlegde should be shared freely! All
users are benefited from innovation.
 HC: Business models to support investment in
a project and allow it to scale over time.
 VH: little or no IP protection for innovation.
 HC: IP is a new class of assets that can deliver
additional revenues. Buyer vs Seller.
( free vs open )

Henderson and Clark
Architectural Innovation: The Reconfiguration
of Existing Product Technologies and the
Failure of Established Firms

Henderson and Clark
’’
 Product development requires:
• Component knowledge
• Architectural knowledge
 Two new types of innovation: (p.12)
 Modular Innovation: ”changes only the core
design concepts of a technology.”
 Architectural Innovation ”is the reconfiguration
of an established system to link together
existing components in a new way”.

Henderson and Clark - Architectural Innovation
’’
AIR FAN ROOMS
Improvements in
Blade or Motor
Design
Completely new
design of blade
Portable Fans Air conditioners
Xerox and small copiers
RCA and portable radios

’’
 Incremental:
• reinforce the competitive positions of established firms
• built on core competences and existing architectural
 Radical:
• destroys the usefulness of their existing capabilities
• destroys the usefulness both architectural and
component knowledge
 Architectural:
• Much of the firm know-how is useful and needs to be
applied. But… some is not useful and actually
handicap the firm.

’’
 Implications for innovation management:
• Difficult to recognizing what is useful or not, when
acquiring and applying new knowledge;
• Dominant design.
• Architectural knowlegde: knowledge and capability
are around the recurrent tasks that they perform.

Development of both
knowledge: components
and architecture
Single architecture.
Refinements in components
Practices and procedures
are embedded in the
organization

INCUMBENTS FIRMS
USERS
SUPPLIERS
NEW ENTRANTS

INDUSTRY PIONEERS
PRODUCT USERS
MANUFACTORS
USERS
SUPPLIERS

www.liu.se
Natasha Bank: natasha.bank@liu.se
Eduardo Cadorin: eduardo.cadorin@liu.se

Sources of innovation Natasha bank & Eduardo Cadorin

Recommended

Recommended

More Related Content

What's hot

What's hot (19)

Similar to Sources of innovation Natasha bank & Eduardo Cadorin

Similar to Sources of innovation Natasha bank & Eduardo Cadorin (20)

Recently uploaded

Recently uploaded (14)

Sources of innovation Natasha bank & Eduardo Cadorin

Editor's Notes