Academic journal article Journal of Global Business and Technology

Protection of Radical Innovations - Differences in Domestic and International Markets

Academic journal article Journal of Global Business and Technology

Protection of Radical Innovations - Differences in Domestic and International Markets

Article excerpt

ABSTRACT

The increasingly tight connections between innovation and internationalization, and critical factors in this setting warrant more research. In this study, the focus is turned to protection different types of radical innovations in international and domestic markets. Our results based on literature review and empirical examination of data from 209 firms indicate that while protection mechanisms are typically stronger in internationalized firms than in domestic ones, there are differences with regard to the individual mechanisms that protect different types of innovations in both types of markets. Acknowledging this allows managers to prepare better for utilizing innovations and conducting innovation activities abroad, and helping their firms to grow internationally.

Keywords: Radical innovation, Appropriability regime, Internationalization

INTRODUCTION

An overview of recent literature shows that internationalization and innovation are linked to each other to an increasing extent (e.g. Frenz et al. 2005, Pla-Barber and Alegre 2007, Salomon and Shaver 2005, Zahra and George 2002). Innovative products and services have the potential to promote growth and expansion of firms to new markets, and innovation activities are conducted increasingly in foreign locations in order to improve learning and allow utilizing valuable, yet dispersed knowledge more efficiently (Filippetti et al. 2011). In fact, prior studies have suggested that internationalization yields more radical innovations (Frenz et al. 2005), which can in turn generate new revenue streams. However, considering that competition is likely to intensify in international markets, preserving uniqueness and differentiation for the internationally operating innovator needs to be paid attention to as well. Therefore, protection and innovation appropriation issues become highlighted (e.g. Feinberg and Gupta 2004, Hurmelinna-Laukkanen et al. 2012).

Research has been conducted on the relationship between internationalization and innovation (e.g. Cassiman et al. 2011, Golovko and Valentin] 2011, Kafouros et al. 2008, Knigth and Cavusgil 2004), including also the types of innovation to some extent (e.g., Frenz et al. 2005). Likewise, the relationships between protection (or appropriation) of intellectual assets and internationalization (Delerue and Lejeune 2011, Jain 1996, McGaughey et al. 2000, McGaughey 2002), and innovation protection (and appropriability) and innovation performance in general (e.g., Cohen 1995, Jantunen and Hurmelinna 2005) have been examined, and there are few studies that have considered the effects of protection on different types of innovations as well (e.g., Hurmelinna-Laukkanen et al. 2008, Levin et al. 1987). However, as internationalization, radical innovation, and protection issues have not been systematically researched in the same setting, there is a need for more research that would examine the interplay of types of radical innovation and innovation protection in international context.

In this study, we aim to address this gap in the extant research and examine how different types of radical innovation can be effectively protected against imitation in domestic and international firms with certain protection mechanisms. In exploring this issue, we focus on three types of radical innovations, i.e., technology, market, and business-model innovations, and seven different types of protection and innovation appropriation, i.e., intellectual property rights (IPRs), contracts, employment legislation, human resource management (HRM), secrecy, lead time, and tacitness of knowledge. We start our examination with theoretical discussion on international innovation environment. Following this, we move on to explore empirically the strength of different appropriability mechanisms in firms that operate in domestic and international markets. This first stage of examination precedes examination of the match between the different forms of protection and different types of radical innovations. …

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