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Innovation Effort as 'Productive Consumption:' The Power of Participation Benefits to Amplify Innovation

14 Pages Posted: 29 Oct 2012 Last revised: 13 Jun 2013

Christina Raasch

Technische Universität München, TUM School of Management

Eric A. von Hippel

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: June 2013

Abstract

When economists and innovation practitioners think about whether developing an innovation will be worthwhile, they tend to think exclusively about the economic value of the outcome of the innovation process. In this article, we develop and explore the idea that innovators can also gain significant benefits from participation in a development process as well as or even instead of benefits from using or selling the innovation created. When this is the case, the net cost of innovation projects can be much lower for developers – in effect, a portion of project development costs becomes “productive consumption.”

We draw on the findings of empirical studies to document that a significant fraction of the benefits that individuals obtain from engaging in innovation projects can consist of benefits derived from participation. We offer an “innovation amplification” metric to quantify the associated cost reductions for project sponsors, and discuss implications for innovation research and practice.

Keywords: Crowdsourcing, User innovation, Motives to innovate, Innovation amplification

JEL Classification: D1, J22, M2, O31

Suggested Citation

Raasch, Christina and von Hippel, Eric A., Innovation Effort as 'Productive Consumption:' The Power of Participation Benefits to Amplify Innovation (June 2013). Available at SSRN: https://ssrn.com/abstract=2167948 or http://dx.doi.org/10.2139/ssrn.2167948

Christina Raasch (Contact Author)

Technische Universität München, TUM School of Management ( email )

Arcisstrasse 21
Muenchen, 80333
Germany

HOME PAGE: http://www.tim.wi.tum.de/

Eric Von Hippel

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E62-455
Cambridge, MA 02142
United States
617-253-7155 (Phone)
617-253-2660 (Fax)

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