Appropriability of innovation benefit as a predictor of the source of innovation

Abstract

It has been empirically observed that, in some industries product users are the most frequent sources of product innovations while, in other industries, product manufacturers are. I hypothesize that such differences are caused by differences in the ability of these two "functional" categories of innovators to appropriate innovation benefit. I explore this hypothesis by examining the real-world effectiveness of mechanisms (such as patents and lead time) used for the appropriation of innovation benefit and the dependence of this effectiveness on the functional relationship between innovator and innovation.