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


Strategic Management Journal

July 2012, vol. 33, n°7, pp.773-793

Departments: Strategy & Business Policy, GREGHEC (CNRS)

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

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 publicly disclose IP to dissuade rivals from concurrently investing in innovation and to induce them to wait and imitate, thereby alleviating competitive pressure. This novel result suggests that free revealing may be an optimal strategy more often than expected. In addition, our paper revisits the classical strategy view that interfirm knowledge spillovers essentially benefit imitators. We show that imitators may want to limit the knowhow that they can freely appropriate from innovators ' otherwise, innovators could have few incentives to develop the new technology, thereby slowing down development and, ultimately, imitation. Finally, we show that innovators are faster to market and have more incentives to invest in capabilities that accelerate innovation under concurrent than imitative development.Overall, our theoretical model contributes to the literature on the competitive dynamics of R&D. Unlike most prior work, however, we do not focus on the uncertain nature of research activities, but on the time-consuming and costly ' and more certain ' process of technology development. We derive testable relationships between strategic variables that are empirically observable