User:Maemst/Private-Collective Model of Innovation

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The term private-collective model of innovation was coined by

Organization Science [1]
. This innovation model represents a combination of the private investment model and the collective-action innovation model.

In the private investment model innovators appropriate financial returns from innovations through

intellectual property rights such as patents, copyright, licenses, or trade secrets. Any knowledge spillover
reduces the innovator's benefits, thus freely revealed knowledge is not in the interest of the innovator.

The

free-riding
occurs. In response to this problem, the cost of innovation has to be distributed, therefore governments typically invest into public goods through public funding.

As combination of the these two models the private-collective model of innovation explains the creation of public goods through private funding. The model is based on the assumption that the innovators privately creating the public goods benefit more than the free-riders only consuming the public good. While the result of the investment is equally available to all, the innovators benefit through the process of creating the public good. Therefore, private-collective innovation occurs when the process-related rewards exceed the process-related costs[2].

Example: Development of Free and Libre Open Source Software

The development of

non-excludable
because FLOSS licenses enable everyone to use, change and redistribute the software without any restriction.

While FLOSS is created by many unpaid individuals it has been shown [3] [4] that technology firms invest substantially in the development of FLOSS. These companies release previously proprietary software under FLOSS licenses, employ programmers to work on established FLOSS projects, and fund entrepreneurial firms to develop certain features. In this way, private entities invest into the creation of public goods.


References

  1. ^ Eric von Hippel and Georg von Krogh (2003) "Open Source Software and the 'Private-Collective' Innovation Model: Issues for Organization Science" Organization Science 14, 209-223.
  2. ^ Georg von Krogh (2008) "Researching the Private-Collective Innovation Model" The SAGE Handbook of New Approaches in Management and Organization, Daved Barry and Hans Hansen (ed.) Sage, 396-397.
  3. ^ Matthias Stuermer, Sebastian Spaeth, and Georg von Krogh, G. (2009) "Extending private-collective innovation: a case study" R&D Management 39(2), 170-191.
  4. ^ Sebastian Spaeth, Matthias Stuermer, Georg von Krogh (2010) "Enabling Knowledge Creation Through Outsiders: Towards a Push Model of Open Innovation" International Journal of Technology Management (Forthcoming Special Issue on Open Innovation).
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