Discussion

Recall that a basic distinction between the free innovation paradigm and the producer innovation paradigm is the absence of compensated transactions in the former: Due to its self-rewarding nature, free innovation is viable without either establishing intellectual property rights or selling to others via transactions. This inbuilt difference does not make one paradigm "better” than the other. It simply means that the types of innovations done within the two paradigms can differ systematically.

As we have seen in this chapter, one systematic difference is that free innovators tend to enter a new field early, pioneering new applications and markets by serving their own needs. Through their efforts, whether there is a potentially profitable commercial market becomes clearer. If the activities of the free innovators do reveal commercial potential, producers will respond by entering later, and then will focus their innovation development efforts on general needs such as convenience and reliability. If no potentially profitable market is revealed, free innovators will be the only ones to enter the field, and any diffusion will be via free peer-to-peer transfer only (Hyysalo and Usenyuk 2015).

The focus of free innovators on pioneering means that, at the time of development, free innovations will tend to be less "commercially important” in terms of immediate profits for producers than innovations producers develop (Riggs and von Hippel 1994; Arora, Cohen, and Walsh 2015). This is because, as we have seen in this chapter, producers enter later than free user innovators, when new markets are larger. For example, the commercial value of initial aircraft designs developed by free innovator hobbyists was essentially nil relative to the very large markets for present-day aircraft designs (Meyer 2012). However, the profit metric of innovation importance clearly must be seen in the larger context of free innovator pioneering. For a new development or market to become commercially important, it must first be pioneered— and here, as we have seen, free innovators play a very important role.

 
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