Summary Class notes - Capturing Value from Innovation

- Capturing Value from Innovation
- Thijs Broekhuizen
- 2015 - 2016
- Rijksuniversiteit Groningen (Rijksuniversiteit Groningen, Groningen)
- Bedrijfskunde
232 Flashcards & Notes
1 Students
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Summary - Class notes - Capturing Value from Innovation

  • 1454626800 Introduction into Value Appropriation

  • What are the course aims?
    • To learn how firms can capture and protect value from their innovations: appropriability
    • To learn about the effectiveness of both formal (legal) and informal mechanisms to capture and protect value
  • What are examples of open innovation?
    • Mozilla Firefox
    • Wikipedia
    • Kickstarter Crowdfunding
    • VLC Player
    • WordPress
  • What are the goals of the introduction lecture?
    • Definitions of innovation and intellectual property rights
    • Imitation - from counterfeit to following a trend
    • The effectiveness of formal and informal instruments to prevent imitation & enhance value appropriation
    • Value Chain Envy   
  • What is this course considered as innovation?
    A firm that introduces something that is new to the industry
  • When is it innovation?
    When no identical or similar products have been introduced at an earlier date by other firms operating in the same industry
  • When is it imitation?
    When competitors copy the innovator (without consent), even though it is something new for them
  • What is diffusion?
    The adoption of an innovation
  • How is diffusion by buyers called?
    Buyer diffusion
  • How is diffusion by competitors called?
    Seller diffusion
  • What is the role of the innovator on seller diffusion?
    • It may be initiated and stimulated by the innovator (dissemination)
    • It may be deterred or prevented by the innovator (prevention of imitation)
  • What for effects do increasing returns in a network industry have?
    Direct & Indirect network effects
  • What is the result of direct & indirect network effects
    Easier to attain legitimacy & produce next line product, but danger for society of premature lock-in of inferior system standards
  • What is intellectual property?
    Legal field that refers to creations of the mind such as musical, literary, and artistic works; inventions; and symbols, names, images, and designs used in commerce
  • To what are intellectual property rights usually limited to?
    To non-rival goods
  • What do intellectual property rights give creators?
    Exclusive rights to their creations, thereby providing an incentive for the author or inventor to develop and share the information rather than keep it secret.
  • What are non-rival goods?
    Goods which can be used or enjoyed by many people simultaneously - the use by one person does not exclude use by another. This is compared to rival goods which may only be used by one person at a time.
  • When does an innovator get copyrights?
    Creator of an original work of authorship gets exclusive rights to control its distribution for a certain time period, after which the work enters the public domain
  • What is a trademark?
    A distinctive sign which is used to prevent consumer confusion among products in the marketplace
  • What is a patent?
    Protection for new, useful, and non-obvious invention, in exchange of public disclosure
  • What is an example of related rights?
    Trade secret
  • Which certain exclusive rights has a holder of IPs?
    Right to distribute, cope, exclude others form producing
  • What are intellectual property rights called?
    A form of 'temporary monopoly' enforced by the state
  • Copyright gives the owner of a document, musical composition, book, or other piece of information ...
    The right to decide what others can do with it
  • Copyrights are exclusive rights to
    Use or authorize others to use the work on agreed terms
  • Is an application needed for copyright?
    No, it is automatically granted
  • What does copyright not cover?
    A song that is just in your head. It only covers work that are a form of material expansion (e.g., compositions that are recorded)
  • What is the duration of a copyright?
    • 70 years after the author's death
    • 70 years after first publication, if the author is an organization
  • What are exceptions to copyrights?
    • Fair use/citation (parts of the work only)
    • Private copy
    • Educational use
    • Parody (e.g., spoofs)
    • Reselling legal copies 
  • What are examples of copyrights?
    • Writings
    • Music
    • Drawings
    • Computer programs
    • Architectural buildings
    • Movies
    • Data bases
  • What is not included in copyrights?
    • Ideas
    • Concepts
    • Principles 
    • 'Brute' facts
    • (tacit) knowledge    
  • What does copyright protect in contrast to patents?
    The particular way in which an idea is expressed - moderations of the idea that are sufficiently different may be developed by third parties without further ado.
  • What is a trademark?
    A distinctive sign used by an organization to identify that its products/services with which the trademark apprears originate from a unique source of origin in order to distinguish its products/services form competitors
  • What are examples of trademarks?
    • Name
    • Word
    • Phrase
    • Logo
    • Symbol
    • Design
    • Image
    • Audible sign
    • Combination of these elements
  • Is an application needed for trademarks?
    No it is not required, but is possible at federal offices/trademark centers.
  • How do you see that a trademark is applied?
  • How do you see that a trademark is not applied?
  • In lawsuits, organizations need to prove that they have invested in the trademark
  • How long do trademarks last?
    They can last indefinitely as long as they are used in commerce.
  • There are costs for application and renewal of trademarks
  • What is a patent?
    A set of exclusive rights granted by a state to an inventor for a fixed period of time in exchange for a disclosure of an invention.
  • Protection of the idea itself in a certain area for a given time (max. 20 years)
  • Which types of patents do exist?
    1. Utility patent
    2. Design patent
    3. Plant patent
  • What is a utility patent?
    Protects the functionality of a given item
  • What is a design patent?
    Covers the ornamental design for an object, including designs of beverage containers, furniture, computer icons: industrial designs
  • What is a plant patent?
    Protects distinct a new variety of plant
  • A patent is the most powerful protection: exclusive rigth granted to a patentee to exclude others from making, using, selling, offering to sell or importing the invention
  • What are the criteria patent offices use?
    • Idea must represent a new, non-obvious development compared to 'prior art'
    • An application needs to offer the possibility for industrial application
    • A physical component must be involved (not always required: US --> software)  
  • Why are the costs for application & protection are high:
    • Yearly costs for renewal of the application
    • Costs to search for possible infringement
    • Costs associated with the legal action needed to redress infringement
  • What is the difference between a utility patent and a design patent?
    Utility patents protect the functional features of an invention
    Desing patent protect nonfunctional appearance of an invention
  • What do utility patents include?
    • Detailed description
    • Drawings
    • Multiple claims
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What are the risks of relationship?
  • Will publisher deploy its resources effectively?
  • Exploitation risk (stealing of idea): low risk due to strong copyright protection
  • Dependency on large incumbent's resources: moderate risk
Why strategic alliance?
  • Negotiating/sharing of revenues (-)
  • Access/use of alliance partner's complementary assets (+)
  • Endorsement/reputational transfer (+)
What are the two commercialization strategies used in the article about VA in video game industry?
  1. Artist-led distribution
  2. Strategic alliance
What is habituation?
Degree of satiation or boredom
What is generalization?
Degree to which thoughts, feelings, and memories produced by one stimulus carry over to other stimulus
What is the increment-then-innovate rule?
First sequel: high generalization, low habituation;
Later sequels: lower transfer (waning novelty) & habituation high --> need for innovativeness
What are sequels?
Sequels try to capitalize on success of parent by reusing characters, story line or other features. Sequels more successful than nonsequels
Do stars drive success?
Star participation positively impacts movie revenue (box office) and media attention (#reviews). However, no support for stars driving movie profitability (Elberse, 2007; Ravid, 1999) → stars capture their rent and appropriate their added value.
Awards more effective as means of certification if they are adapted to the selection system dominating the purchase behavior in the industry segment. Why?
Because of high source credibility and salience in the case of ‘fit’.
What is the selection system for awards?
  • Market selection
  • Peer/media selection
  • Expert selection