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Profiting from Voluntary Information Spillovers:
How Users Benefit by Freely Revealing Their Innovations


Dietmar Harhoff


University of Munich - Munich School of Management; Centre for Economic Policy Research (CEPR); Center for European Economic Research (ZEW); Institute for Fiscal Studies (IFS); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Joachim Henkel


TUM School of Management - Technische Universität München (TUM) ; Centre for Economic Policy Research (CEPR)

Eric A. Von Hippel


Massachusetts Institute of Technology (MIT) - Sloan School of Management
September 3, 2009

MIT Sloan Research Paper No. 4749-09

Abstract:     
Empirical studies of innovation have found that end users frequently develop important product and process innovations. Defying conventional wisdom on the negative effects of uncompensated spillovers, innovative users also often openly reveal their innovations to competing users and to manufacturers. Rival users are thus in a position to reproduce the innovation in-house and benefit from using it, and manufacturers are in a position to refine the innovation and sell it to all users, including competitors of the user revealing its innovation. In this paper we explore the incentives that users might have to freely reveal their proprietary innovations. We then develop a game-theoretic model to explore the effect of these incentives on users’ decisions to reveal or hide their proprietary information. We find that, under realistic parameter constellations, free revealing pays. We conclude by discussing some implications of our findings.

Number of Pages in PDF File: 33

Keywords: innovation, spillovers, diffusion, lead users

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Date posted: September 3, 2009  

Suggested Citation

Harhoff, Dietmar, Henkel, Joachim and Von Hippel, Eric A., Profiting from Voluntary Information Spillovers: How Users Benefit by Freely Revealing Their Innovations (September 3, 2009). MIT Sloan Research Paper No. 4749-09. Available at SSRN: http://ssrn.com/abstract=1467786 or http://dx.doi.org/10.2139/ssrn.1467786

Contact Information

Dietmar Harhoff (Contact Author)
University of Munich - Munich School of Management ( email )
Institute for Innovation Research (INNO-tec)
Kaulbachstr. 45
Munich, 80539
Germany
+49 89 2180 2239 (Phone)
+49 89 2180 6284 (Fax)
HOME PAGE: http://www.inno-tec.de
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Center for European Economic Research (ZEW)
P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany
Institute for Fiscal Studies (IFS)
7 Ridgmount Street
London, WC1E 7AE
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
Munich, DE-81679
Germany
Joachim Henkel
TUM School of Management - Technische Universität München (TUM) ( email )
Arcisstr. 21
Munich, D-80333
Germany
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Eric Von Hippel
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
E52-556
Cambridge, MA 02142
United States
617-253-7155 (Phone)
617-253-2660 (Fax)
Feedback to SSRN (Beta)


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