Abstract

How to benefit from innovation, or, to put it differently, how to turn appropriability — the potential to benefit from innovation, to realized appropriation? In appropriability literature, innovators with a strong appropriability regime and complementary assets are supposed to win in the competition. However, the strong appropriability premises (‘cards with which innovators play’) do not automatically translate into appropriation, and failures arise. In this book chapter, we propose focusing on interactive appropriability (‘playing the cards in relevant contexts’) rather than simply building appropriability (‘obtaining the cards’), and outline and explicate three paths to turn appropriability into appropriation (‘three ways of playing the cards’): exclusion of others, leveraging the appropriability premises, and abandoning of protection. Appropriability has been traditionally viewed from a property view, suggesting the proprietary use of the innovation and the related knowledge assets. We argue that besides exclusivity, leveraging and even abandoning the appropriability premises (constituted with appropriability mechanisms and complementary assets) can also be relevant ways for realizing appropriation. Placed in a networked context with collaboration and competition, innovators can co-create value with other players and capture value from the collective payoffs. Leveraging refers to treating appropriability premises as vehicles for transaction and knowledge sharing. On the other hand, appropriability premises can be deliberately abandoned, periodically or permanently, to attract contributions from outside. Within certain boundaries, a firm can also shift between the paths. We present and explicate a framework addressing the three paths and suggest how it can help innovators adjust their appropriability portfolios and align the appropriability premises with the ways in which they are utilized. This adds to appropriability theory dynamic and open elements it has lacked in the past.