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Teece (1986) - Profiting From Technological Innovation (view source)
Revision as of 14:54, 6 June 2010
, 14:54, 6 June 2010→Channel Strategy Issues
'''Integration gives incentive alignment and control''' (assuming again that the integration contract can be achieved). If the innovator owns the complementary asset then he will recieve the spillover benefits from increased demand too - this makes buying up such assets (or taking futures contracts against them) very attractive. If the protection is iron-clad, the innovator may be able to '''buy at competitive prices'''. Otherwise the assets form a '''bottleneck''', and should be '''ranked in order of their importance'''. Critical assets should be bought first, or traded for a minority position, assuming that this is feasible given the competitive environment. In industries that are changing rapidly, it is unlikely that a single firm will be able to hold all of the assets. Speed is also clearly of the essence.
In summary, if no complementary assets are required, the innovator should '''commercialize immediately'''. If this is not the case then, if the innovator is in a '''weak approbility ''' regime, needs a '''critical specialized asset''', has the '''cash to buy it''', and his '''competitors aren't better positioned''', he should '''buy it''', otherwise he should '''contract for it'''. On page 297, Teece provides a basic grid, in terms of how advantageously positioned the innovator is in terms of complementary assets, how well positioned he is to obtain them and the approbility regime, to "predict" whether the innovator will win the race. It should be noted that there are mixed modes between contracting and integrating, and the decisions may change as either the appropriability changes or the market changes (enters a paradigmatic phase).
It should be noted that there are mixed modes between contracting and integrating, and the decisions may change as either the appropriability changes or the market changes (enters a paradigmatic phase).
==Implications for R&D Strategy, Industry Structure and Trade Policy==
