Capturing Value From Innovations: The Importance of Rent Configurations


Management Decision

March 2014, vol. 52, n°1, pp.122-143

Departments: Strategy & Business Policy

Keywords: Innovation, Business strategy

Purpose – The purpose of this paper is to devise recommendations for firms to formulate modes of value capture for their product innovations, ex ante. More specifically, the research question is: how can innovators try to maximize, ex ante, the appropriation of the rent they can derive from their innovating projects? Design/methodology/approach – A theoretical framework is developed and proposed to assess modes of value capture of product innovations and two illustrations are provided to show how the framework can work in practice for innovation projects. Findings – This paper presents a practitioner's view based on the development of an original concept of rent configuration and appropriable rent. Research limitations/implications – In terms of research limitations, the possible endogeneity of intellectual property protection and the timing of were not considered. Practical implications – The framework allows a set of predictions regarding modes of value capture for product innovators. Originality/value – The paper's contribution lies in the proposal of an integrative framework based on the concept of rent configuration, separating analytically three dimensions of innovation value, namely volume, profit and duration. This concept allows the authors to present a richer set of recommendations in comparison to previous frameworks, in order to avoid adopting the form of a yes/no decision tree that tends to over simplify the issues at stake. The authors also contemplate not only erosion effects, but also amplification effects on the rent, which constitutes another contribution of this paper.