Managing Value Capture: Empirical Analyses of Managerial Challenges in Capturing Value

242 Pages·2011·2.26 MB·English

by  Timo Fischer (auth.)

Timo Fischer
Managing Value Capture
GABLER RESEARCH
Innovation und Entrepreneurship

Herausgegeben von
Professor Dr. Nikolaus Franke,
Wirtschaftsuniversität Wien,
Professor Dietmar Harhoff, Ph.D.,
Universität München, und
Professor Dr. Joachim Henkel,
Technische Universität München
Innovative Konzepte und unternehmerische Leistungen sind für Wohlstand und
Fortschritt von entscheidender Bedeutung. Diese Schriftenreihe vereint wissen-
schaftliche Arbeiten zu diesem Themenbereich. Sie beschreiben substanzielle
Erkenntnisse auf hohem methodischen Niveau.
Timo Fischer
Managing Value Capture

Empirical Analyses
of Managerial Challenges
in Capturing Value
With a Foreword by Univ.-Prof. Dr. Joachim Henkel
RESEARCH
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detailed bibliographic data are available in the Internet at http://dnb.d-nb.de.
Dissertation Technische Universität München, 2011

1st Edition 2011
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Preface
Innovation aims at creating value. Yet, even successful value creation will fail to result in
profits if the innovator is unable to capture a sufficient share of this value. The question of
how to manage value capture is thus of central importance to practitioners and scholars alike.
Numerous studies have addressed this issue, identifying, among others, lead time,
complementary assets, secrecy, and patents as mechanisms that enable a firm to capture value
from innovation.
However, the extant literature is largely silent on interactions between these
mechanisms. Only select pairwise interactions, such as those between copyright and
trademark protection have been studied, despite the fact that the concept of resource bundles
plays an important role in the resource-based view of the firm. Furthermore, existing studies
mostly assume that the innovator competes for the value created by its innovation with market
competitors, suppliers, and customers. In doing so, they mostly neglect firms—non-practicing
entities (NPEs), sometimes referred to as “patent trolls”—that base their business model
entirely on intellectual property rights and focus on enforcing these rights against infringers.
Timo Fischer addresses the above issues in this book. Using sophisticated and original
methods, impressive and unique data sets, and thoughtful interviews with practitioners he
identifies various interaction effects between patents and other appropriability mechanisms,
analyzes differences in the perception of value appropriation between corporate functions, and
provides evidence that the business model of NPEs is sustainable in the long run. With these
studies, he makes significant contributions to the field.
This book is Timo Fischer’s doctoral thesis at Technische Universität München. Its
insights are important for firms as for researchers, and I strongly recommend it to
practitioners and academics alike.

Munich, July 2011

Prof. Dr. Joachim Henkel
Foreword
I would like to take this opportunity to thank all those who have assisted me in creating this
dissertation.
First of all, I would like to thank my advisor Joachim Henkel for his encouraging
support and numerous discussions. Without his guidance this dissertation would not have
been possible. I am also indebted to him for co-authoring four papers that underlie this
dissertation. I also thank my second advisor Christoph Kaserer for providing a thorough seond
opinion on my dissertation and Holger Patzelt for chairing my dissertation committee.
For sharing thoughts and giving me valuable feedback, I would like to thank participants
at numerous conferences and seminars where I got the opportunity to present my work.
Likewise, I thank all the friendly reviewers and referees at journals and conferences who
spent time on my work and who pointed me to opportunities to further develop my papers.
Furthermore, I would like to thank the whole team at the Schöller Chair in Technology
and Innovation Management for a unique atmosphere that stimulated my research, and in
particular my fellow PhD student Manuel Sojer for numerous helpful discussions. I would
also like to thank all my student assistants for their great support. Furthermore, I would like to
thank Stefan Hörmann and Camilla Malcher whose Diplom and Master’s theses provided
valuable inputs for parts of this dissertation.
I also thank numerous interviewees and practitioners who provided me with valuable
information. Furthermore, I thank Robert Nöckel for proofreading and his support. I would
also like to thank Eric von Hippel who graciously supported my survey.
For giving me the wonderful opportunity to spend five months at the Economics
department at the University of California at Berkeley I thank Bronwyn Hall. Furthermore, I
would like to thank Beth Webster and Gaétan de Rassenfosse for inviting me to the
Melbourne Institute of Applied Economic and Social Research at the University of
Melbourne. I am also indebted to the DAAD for granting me scholarships for these research
stays.
Finally, I thank my parents and Andrea Berndt for enduring support.
— Timo Fischer, July 2011
Table of Contents
List of Figures.....................................................................................................................XIII
List of Tables.....................................................................................................................XVII
List of Abbreviations..........................................................................................................XIX
Zusammenfassung..............................................................................................................XXI
Abstract............................................................................................................................XXIV
1. Introduction........................................................................................................................1
1.1. Motivation...................................................................................................................1
1.2. Research Objectives....................................................................................................3
1.3. Structure of this Dissertation.......................................................................................7
2. Theoretical Foundations of Value Capture......................................................................9
2.1. Definition of Value Capture versus Value Creation...................................................9
2.1.1. Basic Definitions.............................................................................................9
2.1.2. The Concept of Value Creation....................................................................11
2.1.3. The Concept of Value Capture......................................................................12
2.2. Value Capture in the Resource-Based View of the Firm..........................................14
2.2.1. The Resource-Based View of the Firm.........................................................14
2.2.2. Competition on Capturing Value Created.....................................................15
2.3. Value Capture in the Literature on Profiting from Technological Innovation..........18
2.3.1. Profiting from Technological Innovation.....................................................18
2.3.2. Appropriability Mechanisms.........................................................................21
2.3.3. Empirical Studies..........................................................................................28
2.4. A Resource Management Focus on Value Capture..................................................30
2.4.1. Managing Firm Resources to Create Value..................................................31
2.4.2. Managing Firm Resources to Capture Value................................................33
3. Non-Linearities and Interactions in Value Capture......................................................36
3.1. Introduction...............................................................................................................37
3.2. Hypotheses Development.........................................................................................39
3.2.1. Relevant Appropriability Mechanisms.........................................................39
3.2.2. Hypotheses on Interactions between Appropriability Mechanisms..............42
3.3. Data and Method.......................................................................................................44
X TABLE OF CONTENTS

3.3.1. Empirical Approach......................................................................................44
3.3.2. Empirical Setting...........................................................................................46
3.3.3. Choice Experiments......................................................................................55
3.3.4. Sample...........................................................................................................56
3.3.5. Estimation Method........................................................................................60
3.3.6. Limitations....................................................................................................63
3.4. Non-Linearities in the Effectiveness of Appropriability Mechanisms.....................64
3.4.1. Method of Analysis.......................................................................................64
3.4.2. Results...........................................................................................................65
3.4.3. Discussion.....................................................................................................76
3.5. Interactions between Appropriability Mechanisms..................................................79
3.5.1. Method of Analysis.......................................................................................79
3.5.2. Results...........................................................................................................94
3.5.3. Discussion.....................................................................................................96
3.6. Summary...................................................................................................................98
4. Diverging Perceptions of R&D and Marketing Managers of Value Capture..........100
4.1. Introduction.............................................................................................................101
4.2. Hypotheses Development.......................................................................................102
4.2.1. Departmental Control of Appropriability Mechanisms..............................102
4.2.2. Departmental Thought Worlds....................................................................103
4.2.3. Social Identity Theory and Attribution Theory...........................................104
4.2.4. Diverging Perceptions of Appropriability Mechanisms.............................105
4.3. Data and Method.....................................................................................................107
4.3.1. Sample.........................................................................................................107
4.3.2. Group Comparison......................................................................................109
4.4. Results .....................................................................................................................112
4.4.1. Marketing and R&D Managers...................................................................112
4.4.2. All Marketing and R&D Employees...........................................................120
4.5. Summary and Discussion........................................................................................126
5. Legal Sustainability of the Patent Troll Business – New Competitors in Value
Capture.....................................................................................................................131
5.1. Introduction.............................................................................................................131
5.2. Hypotheses Development.......................................................................................133
5.2.1. The Patent Troll Business Model................................................................133
5.2.2. Legal Sustainability of the Troll Business..................................................134
5.2.3. Trolls’ vs. Practicing Firms’ Patent Acquisitions.......................................136
TABLE OF CONTENTS XI

5.3. Data and Method.....................................................................................................138
5.3.1. Data.............................................................................................................138
5.3.2. Variables.....................................................................................................142
5.3.3. Controls.......................................................................................................146
5.3.4. Descriptive Results.....................................................................................147
5.3.5. Model Specification....................................................................................150
5.4. Results .....................................................................................................................151
5.4.1. Findings from Main Models.......................................................................151
5.4.2. Robustness Checks......................................................................................154
5.5. Summary and Discussion........................................................................................157
6. Summary and Conclusion..............................................................................................161
Appendix..............................................................................................................................167
A.1. Choice Experiments................................................................................................168
A.2. STATA Code for Analyzing Discrete Choice Data................................................177
Bibliography........................................................................................................................195