An Exploratory Account of Incentives for Underexploitation in an Open Innovation Environment

This paper presents an empirical account of incentives for underexploiting intellectual property in an open innovation setting. In this exploratory empirical account the phenomenon is observed in a research, development and innovation program where participants are required to share intellectual property rights within the consortium. In sum, our argument is that the observed underexploitation is induced by negative incentives for commercialization that follow from setting a coercive open innovation regime that will constrain appropriability of IPR. This phenomenon is named so graphically, because such an event is not only costly in terms of time and resources, but can in fact render IPR effectively worthless in terms of commercial exploitation and block innovation. This finding is pertinent to policy makers designing research, development and innovation instruments, as well as for managers who need to make choices how to implement open practices in innovation.