Three Innovation Modes

The thinking and the analyses that I will describe in this chapter were first developed in a paper analyzing the viability of user and producer innovation modes (Baldwin and von Hippel 2011). In what follows, I apply this work, with slight modifications to definitions, to analyze the viability of free and producer innovation modes.

Recall from chapters 1 and 2 that free innovation involves innovations developed at private cost by individuals during their unpaid discretionary time and also involves innovation designs that are not protected by their developers and so are potentially acquirable by anyone "for free.” Recall also from chapter 1 that two different modes of innovating occur within the free innovation paradigm: free innovation by single individuals, and free innovation by groups of collaborating individuals. Together with producer innovation, this gives us three basic "modes” of innovation:

  • • A single free innovator is an individual in the household sector of the economy who creates an innovation using unpaid discretionary time and does not protect his or her design from adoption by free riders.
  • • A collaborative free innovation project involves unpaid household sector contributors who share the work of generating a design for an innovation and do not protect their design from adoption by free riders.
  • • A producer innovator is a single, non-collaborating firm. Producers anticipate profiting from their design by selling it. It is assumed that, thanks to secrecy or intellectual property rights, a producer innovator has exclusive control over the innovation and so is a monopolist with respect to its design.
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