Creating value by giving away: A typology of different innovation revealing strategies

Abstract

The open innovation literature provides compelling evidence of value being created from inbound knowledge flows. Missing from this conversation is an empirical understanding of why firms reveal intellectual property without immediate financial return. Revealing seems contrary to capturing rents from innovation. Using survey data and secondary data from a national intellectual property register and listed company financial reports, we find a significant positive relationship between appropriation and revealing, indicating a firm's willingness to reveal if robust appropriability mechanisms are in place. Revealing, in the presence of appropriability mechanisms, is also associated with higher value creation for customers but lower levels of value capture, as perceived by financial markets. We attribute the negative relationship with value capture to a misalignment between investors and managers regarding the role of revealing as an innovation strategy. We contribute to the open innovation and business model literatures with a typology of strategic relationships between appropriability and revealing, consisting of isolators, givers, takers and ecosystem developers.