Strategizing for Dynamic consistency in Digital Innovation: The Role of Intellectual Property

Abstract

IP strategy has moved from a primary focus on value capture to increasingly also consider aspects of value creation, not the least in digital innovation. Digital innovation has created a plethora of business models and enabled business models to change, sometimes rapidly, over time. All of this has complicated the general advice that the IP strategy should be integrated with the business model. In this research, we seek to better understand how digital technology-based startups use IP strategy to support their business models under uncertainty, and especially when business models are likely to change. We study seven digital technology-based startups through 35 semi-structured interviews with elite informants. In addition to IP strategizing for value creation and value capture we find that decision-makers strive to build and maintain dynamic consistency of their IP strategies, meaning that the strategies should be compatible with, and balance between, the firms’ current components of value creation and value capture, while simultaneously being compatible with future changes in the business models. The capability to achieve an IP strategy that is dynamically consistent is a dynamic capability of significant importance for innovative firms facing an uncertain future where business model change is likely to happen. We find several principles used by decision-makers to enable dynamic consistency.