Innovation collaboration and appropriability by knowledge-intensive business services firms

Marcela Miozzo,Panos Desyllas,Hsing-Fen Lee,Ian Miles

doi:10.1016/j.respol.2016.03.018

Abstract

We uncover a “paradox of formal appropriability mechanisms” in the case of knowledge-intensive business services (KIBS) firms. Despite evidence that KIBS firms do not typically consider formal appropriability mechanisms, such as patents, to be central mechanisms for capturing value from innovation, we show that they are nevertheless important for their innovation collaboration. Drawing on an original survey of publicly-traded UK and US KIBS firms, we find a significant positive association between the importance of innovation collaboration and the importance of formal appropriability mechanisms. We interrogate the evidence for clients, as they are the most important partners for innovation collaboration. We find that the importance of innovation collaboration with clients goes hand-in-hand with the importance of formal appropriability mechanisms, although a negative relation appears when firms assign very high importance to formal appropriability mechanisms. Thus, modest levels of emphasis on formal appropriability mechanisms may prevent conflicts over ownership of jointly developed knowledge assets and knowledge leakages, while also avoiding the possibly negative effects of overly strict controls by legal departments on innovation collaboration. As well as exploring formal appropriability mechanisms, we also investigate the relationship between contractual and strategic appropriability mechanisms and innovation collaboration for KIBS firms.

Highlights

Collaboration for innovation has long been the norm for services firms (Arundel et al, 2007; Chesbrough, 2011), and especially for knowledge-intensive business services (KIBS) firms, which rely heavily on technical or professional knowledge to solve the problems of their clients (Miles, 2005)
Our study contributes to the understanding of the relation between collaboration for innovation and appropriability strategy for knowledge-intensive business services firms in several ways
Our findings uncover a “paradox of formal appropriability mechanisms” in the case of KIBS firms. Both the existing literature and our own sample firms show that KIBS firms do not regard formal appropriability mechanisms as the most effective methods for protecting their innovations from copying or imitation by competitors, or for otherwise capturing value from their innovation (Andersen and Howells, 2000; Hipp, 2008; Samuelson, 2010)

Summary

Introduction

Collaboration for innovation has long been the norm for services firms (Arundel et al, 2007; Chesbrough, 2011), and especially for knowledge-intensive business services (KIBS) firms, which rely heavily on technical or professional knowledge to solve the problems of their clients (Miles, 2005). Since KIBS firms create knowledge assets regularly and jointly with external partners, they may find value capture even more challenging than firms in other sectors. Continuous search and transfer of knowledge in collaboration with external partners (and especially clients) can expose KIBS firms to regular conflicts in establishing and enforcing ownership over co-produced knowledge assets or preventing leakages of knowledge. Research on firms in manufacturing sectors shows that appropriability mechanisms may be employed to avoid these unwanted spillovers. In the particular case of services firms, an additional challenge concerns conflicts of ownership over knowledge assets which are regularly and jointly created with clients. Few studies of firms’ choice of structures (including governance modes and appropriability mechanisms) to source external knowledge and prevent unwanted spillovers of knowledge have addressed service firms

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