Abstract

http://ssrn.com/abstract=2016384
 
 

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When Do User Innovators Start Firms? A Theory of User Entrepreneurship


Sonali K. Shah


University of Washington

Mary Tripsas


Boston College; Harvard University - Entrepreneurial Management Unit

January 31, 2012

REVOLUTIONIZING INNOVATION: USERS, COMMUNITIES, AND OPEN INNOVATION, MIT Press, Forthcoming
Harvard Business School Entrepreneurial Management Working Paper No. 12-078

Abstract:     
A rich and distinguished body of research has documented the importance of user innovations. For the most part, this literature has found that users innovate but do not commercialize their innovations. Instead, users benefit from using their innovations and allow manufacturers to commercialize innovations with financial value. Yet scholars have recently shown that entrepreneurial activity by users is more widespread than previously believed. We present data and statistics documenting the prevalence, technological impact, and economic impact of user entrepreneurship. Then, to reconcile these divergent empirical findings, we develop a theoretical model that explains when user innovations are commercialized by users, by manufacturers, or not commercialized at all. At the core of our model is the notion that users and manufacturers differ along two critical dimensions: their estimates of the financial returns to entering the product market, and their profit thresholds. Depending upon the magnitude of these differences, we propose alternative commercialization outcomes. This model helps to explain why user entrepreneurs are likely to spawn the creation of altogether new product markets and even industries. We illustrate our model with examples from the field of consumer sporting goods. The significance of user entrepreneurship and the implications of our model for theories of innovation, entrepreneurship, and industry emergence are discussed.

Number of Pages in PDF File: 32

Keywords: User entrepreneurship, users, open innovation, user communities, entrepreneurship, innovation, communities, technology commercialization

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Date posted: March 6, 2012  

Suggested Citation

Shah, Sonali K. and Tripsas, Mary, When Do User Innovators Start Firms? A Theory of User Entrepreneurship (January 31, 2012). REVOLUTIONIZING INNOVATION: USERS, COMMUNITIES, AND OPEN INNOVATION, MIT Press, Forthcoming; Harvard Business School Entrepreneurial Management Working Paper No. 12-078. Available at SSRN: http://ssrn.com/abstract=2016384

Contact Information

Sonali K. Shah
University of Washington ( email )
Box 353200
Seattle, WA 98195-3200
United States
Mary Tripsas (Contact Author)
Boston College ( email )
Chestnut Hill, MA 02467
United States
Harvard University - Entrepreneurial Management Unit ( email )
Cambridge, MA 02163
United States
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