Managing Innovation: Integrating Technological, Market and Organizational Change, 5th Edition

Chapter 12

Capturing the Benefits of Innovation

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In this chapter we examine how organizations, private and public, can better capture the benefits of innovation, and minimize the drawbacks of change. We begin with a discussion of the classic, but rather narrow, view of economists who identify some of the ways in which firms appropriate the benefits of innovation, in particular through returns on product and process innovation. In the second section we identify the relationships between different types of innovation and various forms of financial and market performance. Next we broaden the scope to include the competitive advantages of exploiting knowledge, both tacit and more formal types, including intellectual property. Finally, we review the more fundamental contributions innovation can make to economic and social change, focusing on the potential for economic development, improvement in social services and greater sustainability.

12.1 Creating Value Through Innovation

One of the central problems of managing innovation is how to create and capture value. For example, in Chapter 1 we discussed the recent transitions in the music industry, and changes in how music ...