Some Like it Free: Innovators' Strategic Use of Disclosure to Slow Down Competition

Pacheco de Almeida, G., P. Zemsky. 2012. Some Like It Free: Innovators’ Strategic Use of Disclosure to Slow Down Competition. Strategic Management Journal 33(7), 773–793.

HEC Paris Research Paper No. SPE-2017-1196

45 Pages Posted: 19 Mar 2012 Last revised: 24 Mar 2017

See all articles by Gonçalo Pacheco-de-Almeida

Gonçalo Pacheco-de-Almeida

HEC Paris - Strategy & Business Policy

Peter B. Zemsky

INSEAD - Strategy; Centre for Economic Policy Research (CEPR)

Date Written: March 12, 2012

Abstract

Why do some innovators freely reveal their intellectual property? This empirical puzzle has been a focal point of debate in the R&D literature. We show that innovators may share proprietary technology with rivals for free - even if it does not directly benefit them - to slow down competition. By disclosing IP, innovators indirectly induce rivals to wait and imitate instead of concurrently investing in innovation, which alleviates competitive pressure. In contrast with the classical strategy view, our paper also shows that imitators may not always benefit from interfirm knowledge spillovers. Specifically, imitators may want to limit the knowhow that they can freely appropriate from innovators. Otherwise, innovators have fewer incentives to quickly develop new technologies, which, ultimately, reduces the pace and profits of imitation. Our theoretical model contributes to the literature on competitive dynamics of R&D. The main propositions establish testable relationships between strategic variables that are empirically observable.

Keywords: R&D and technology, innovation dynamics, timing games, time compression diseconomies, firm spillovers, capabilities

JEL Classification: D21, M20, O30, O31, O32, O34

Suggested Citation

Pacheco-de-Almeida, Gonçalo and Zemsky, Peter B., Some Like it Free: Innovators' Strategic Use of Disclosure to Slow Down Competition (March 12, 2012). Pacheco de Almeida, G., P. Zemsky. 2012. Some Like It Free: Innovators’ Strategic Use of Disclosure to Slow Down Competition. Strategic Management Journal 33(7), 773–793., HEC Paris Research Paper No. SPE-2017-1196, Available at SSRN: https://ssrn.com/abstract=2025367

Gonçalo Pacheco-de-Almeida (Contact Author)

HEC Paris - Strategy & Business Policy ( email )

Jouy-en-Josas Cedex, 78351
France
(+33) (0)1 39 67 97 62 (Phone)

HOME PAGE: http://www.hec.edu/en/faculty-research/faculty-directory/faculty-member/pachecodealmeida-goncalo

Peter B. Zemsky

INSEAD - Strategy ( email )

Boulevard de Constance
77305 Fontainebleau
France
+33 1 60 72 4162 (Phone)
+31 1 60 74 5500 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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