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Commercializing user innovations by vertical diversification: The user–manufacturer innovator

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  • Block, Jörn H.
  • Henkel, Joachim
  • Schweisfurth, Tim G.
  • Stiegler, Annika

Abstract

This paper explores a pathway to commercializing user innovations hitherto not studied, namely, the vertical diversification of a user firm into an upstream industry supplying capital goods, and subsequent coexistence of user and manufacturing units. Such coexistence creates synergies regarding innovation, marketing, and financials. It enables the manufacturing unit to benefit from user innovations in its new product development, while the user unit profits from improved tools. Yet, selling the firm's own user innovations risks loss of the competitive advantage originating from use of these innovations. We employ case evidence from firms in the fields of foundation engineering, tunnel construction, tea-packaging, and geological surveying to derive a set of five propositions regarding the conditions under which user–manufacturer diversification is attractive and viable in the long run. These conditions relate to innovation, marketing, the organization, and financial aspects. Our study offers three contributions. We show how user entrepreneurship can originate from established corporations rather than from individual user innovators; we carve out factors that favor the move toward and the success of user–manufacturer diversification; and we link user innovation and corporate strategy by showing how user innovation can affect the boundaries of organizations.

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  • Block, Jörn H. & Henkel, Joachim & Schweisfurth, Tim G. & Stiegler, Annika, 2016. "Commercializing user innovations by vertical diversification: The user–manufacturer innovator," Research Policy, Elsevier, vol. 45(1), pages 244-259.
    • Handle: RePEc:eee:respol:v:45:y:2016:i:1:p:244-259
    DOI: 10.1016/j.respol.2015.09.007
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    Cited by:

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    2. Konstantin Fursov & Thomas Thurner, 2016. "God Helps Those Who Help Themselves! A Study of User-Innovation in Russia," HSE Working papers WP BRP 59/STI/2016, National Research University Higher School of Economics.
    3. Bradonjic, Philip & Franke, Nikolaus & Lüthje, Christian, 2019. "Decision-makers’ underestimation of user innovation," Research Policy, Elsevier, vol. 48(6), pages 1354-1361.
    4. Schweisfurth, Tim G., 2017. "Comparing internal and external lead users as sources of innovation," Research Policy, Elsevier, vol. 46(1), pages 238-248.
    5. Wu, Chia-huei & de Jong, Jeroen P.J. & Raasch, Christina & Poldervaart, Sabrine, 2020. "Work process-related lead userness as an antecedent of innovative behavior and user innovation in organizations," Open Access Publications from Kiel Institute for the World Economy 228657, Kiel Institute for the World Economy (IfW Kiel).
    6. Chong Yu & Masatoshi Kato, 2024. "Does user entrepreneurship matter for start-up financing? Evidence from Japan," Discussion Paper Series 275, School of Economics, Kwansei Gakuin University.
    7. Svensson, Peter O. & Hartmann, Rasmus Koss, 2018. "Policies to promote user innovation: Makerspaces and clinician innovation in Swedish hospitals," Research Policy, Elsevier, vol. 47(1), pages 277-288.
    8. Christian Arnold & Daniel Kiel & Kai-Ingo Voigt, 2016. "How The Industrial Internet Of Things Changes Business Models In Different Manufacturing Industries," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(08), pages 1-25, December.
    9. Konstantin Fursov & Thomas Wolfgang Thurner, 2017. "Make it work!—a study of user innovation in Russia," Science and Public Policy, Oxford University Press, vol. 44(3), pages 392-402.
    10. Schweisfurth, Tim G. & Raasch, Christina, 2018. "Absorptive capacity for need knowledge: Antecedents and effects for employee innovativeness," Research Policy, Elsevier, vol. 47(4), pages 687-699.
    11. Goeldner, Moritz & Herstatt, Cornelius, 2016. "Are patients and relatives the better innovators? The case of medical smartphone applications," Working Papers 91, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
    12. Preißner, Stephanie & Raasch, Christina & Schweisfurth, Tim, 2023. "When necessity is the mother of disruption: Users versus producers as sources of disruptive innovation," Open Access Publications from Kiel Institute for the World Economy 293964, Kiel Institute for the World Economy (IfW Kiel).
    13. Eun Hwa Lee & Choo Yeon Kim & Jae Wook Yoo, 2020. "Relationship between User Innovation Activities and Market Performance: Moderated Mediating Effect of Absorptive Capacity and CEO’s Shareholding on Innovation Performance," Sustainability, MDPI, vol. 12(24), pages 1-18, December.
    14. Wu, Chia-huei & de Jong, Jeroen P.J. & Raasch, Christina & Poldervaart, Sabrine, 2020. "Work process-related lead userness as an antecedent of innovative behavior and user innovation in organizations," Research Policy, Elsevier, vol. 49(6).
    15. Kiel, Daniel & Arnold, Christian & Voigt, Kai-Ingo, 2017. "The influence of the Industrial Internet of Things on business models of established manufacturing companies – A business level perspective," Technovation, Elsevier, vol. 68(C), pages 4-19.
    16. Schweisfurth, Tim G. & Raasch, Christina, 2018. "Absorptive Capacity for Need Knowledge: Antecedents and Effects for Employee Innovativeness," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 47(4), pages 687-699.

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    More about this item

    Keywords

    User innovation; Commercialization of user innovations; Vertical diversification; User entrepreneurship; Case study;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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