Democratizing Innovation

Abstract

Innovation is rapidly becoming democratized. Users, aided by improvements in computer and communications technology, increasingly can develop their own new products and services. These innovating users - both individuals and firms - often freely share their innovations with others, creating user-innovation communities and a rich intellectual commons. In Democratizing Innovation I look closely at this emerging user-centered innovation system, which is affecting both information products and physical products.

Drawing on work done with several coauthors, I explore why and when users find it profitable to develop new products and services for themselves, and why it often pays users to reveal their innovations freely for the use of all. Drawing on work with Nikolaus Franke, Pam Morrison and others, I document that product and service development is concentrated among lead user firms and individuals. Lead users that are ahead on marketplace trends do not replicate manufacturer development efforts.

Instead, they develop products that are not yet available. Later manufacturers find many of these user-developed products to be the basis for commercial products. Drawing upon work with Dietmar Harhoff, Joachim Henkel and others, I report that user innovation has a positive impact on social welfare, and propose that government policies, including R&D subsidies and tax credits, should be realigned to eliminate biases against it.

An electronic version of this book is available under a Creative Commons license.

Keywords: User Innovation, Lead User, Open Source Software, Open Innovation