research@hec - Issue #24 - (Page VI)
Gonçalo Pacheco de Almeida
to share or not to share?
“The whole idea behind R&D is to invest time and money in a technology in order to bring it to market to make a profit,” says Pacheco de Almeida. And the window of competitive advantage that exists when a company brings a new technology to market before everyone else is one of the primary incentives for a company to make that investment. So why do some companies, once they have gone to market, freely reveal their research findings (thereby narrowing their window of competitive advantage)? Surprisingly, Pacheco de Almeida’s research shows that, in fact, sharing IP can benefit innovators more than withholding it, and, at the same time, that imitators have reason to limit how much IP they appropriate from others. “It all depends on the amount of IP that is being shared,” he says.
Appropriating the new technologies of another company is always beneficial for imitators and detrimental to innovators — right? Actually, neither of those two views is correct, say Gonçalo Pacheco de Almeida and Peter Zemsky. Their research shows that, in certain situations, it is more beneficial for innovators to wise for imitators to limit the amount of intellectual property they absorb from
Gonçalo Pacheco de Almeida is a professor of strategy and business policy at HEC Paris. He received his PhD in strategic management from INSEAD in 2002 and his BA in economics from the Universidade Nova de Lisboa in 1995. Gonçalo Pacheco de Almeida is a prolific researcher and writer, and he received an honorable mention as a finalist for the 2010 annual Strategic Management Society Best Conference Paper Prize.
CONCURRENT VERSUS IMITATIVE DEVELOPMENT Under concurrent development, companies start developing technologies at the same time and do not share any significant IP with each other. Conversely, under imitative development, the innovator completes its development process and goes to market before imitators start – usually either because a company saw an opportunity that others missed, or because imitators are waiting to benefit from the innovator’s research. A significant difference between the two is that there is no
share than to protect their secrets, and, perhaps even more surprising, that it is
TRADEOFF BETWEEN TIME AND COST When a company brings a technology to market, its flow of profits from the market increases and the profit flow to other companies with the same offering (at least weakly) decreases. In other words, the longer an innovator is the only one on the market, the more revenue it stands to make from a given innovation; put another way, the longer the window of competitive advantage, the more incentive an innovator has to invest in R&D. This constitutes one of Pacheco de Almeida’s primary observations of how timing influences the benefits of a new technology, and it suggests that innovators do in fact have reason to limit the amount of IP they reveal, since the more they reveal, the faster followers will be able to catch up and go to
race between innovators and imitators to go to market under imitative development. To eliminate the pressure to move fast, therefore, innovators can share just enough IP to encourage followers to adopt imitative versus concurrent development: this is one of the major premises of Pacheco de Almeida’s research. Alternatively, when an innovator excessively limits the access of imitators to their IP, it pushes competitors (who, at that point, do not stand to gain enough to make it worth their while to wait) to switch to concurrent development — to “race.”
• december - january 2012
Table of Contents for the Digital Edition of research@hec - Issue #24
Cover & Contents
Redesign your logo to rejuvenate your brand
Waterloo: Rational choice theory clarifies history and strategy
Intellectual property: to share or not to share?
HEC PARIS News
research@hec - Issue #24