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When Do User-Innovators Start Firms? Towards a Theory of User Entrepreneurship

Author

Listed:
  • Shah, Sonali

    (U of Illinois at Urbana-Champaign)

  • Tripsas, Mary

    (Harvard U)

Abstract

Users of products and services often make product-related innovations that become taken-for-granted product features. Early research in this area found that while product users--be they firms or individuals--innovated, it was existing manufacturers who commercialized the innovation. Users benefited from using the innovation they created, while existing manufacturers reaped the financial rewards. More recent empirical work and anecdotal evidence however finds that users innovate and sometimes also start firms to produce the innovation for sale to others; thereby allowing the innovator to profit from her innovation both financially and through use. What accounts for this discrepancy in empirical findings--and more importantly what does this imply for existing models of entrepreneurship and industry emergence? In order to begin addressing these questions, this paper proposes a theoretical model that identifies the factors that influence user-innovators to start their own firms, that is, to become entrepreneurs or license their work rather than share their work with existing manufacturers. We illustrate our model with examples from the field of consumer sporting goods.

Suggested Citation

  • Shah, Sonali & Tripsas, Mary, 2004. "When Do User-Innovators Start Firms? Towards a Theory of User Entrepreneurship," Working Papers 04-0106, University of Illinois at Urbana-Champaign, College of Business.
    • Handle: RePEc:ecl:illbus:04-0106
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    Cited by:

    1. von Hippel, Eric, 2010. "Open User Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 411-427, Elsevier.
    2. Volker Bilgram & Alexander Brem & Kai-Ingo Voigt, 2019. "User-centric Innovations in New Product Development — Systematic Identification of Lead Users Harnessing Interactive and Collaborative Online-tools," World Scientific Book Chapters, in: Alexander Brem & Joe Tidd & Tugrul Daim (ed.), Managing Innovation Understanding and Motivating Crowds, chapter 7, pages 173-212, World Scientific Publishing Co. Pte. Ltd..
    3. Weterings, Anet & Koster, Sierdjan, 2007. "Inheriting knowledge and sustaining relationships: What stimulates the innovative performance of small software firms in the Netherlands?," Research Policy, Elsevier, vol. 36(3), pages 320-335, April.
    4. Sierdjan Koster, 2009. "Taking The First Hurdle In New Firm Formation. The Effects Of Industry-Specific Skills And Support On Survival During The Founding Process," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 3(1), pages 36-62, JUNE.
    5. Viktor Braun & Cornelius Herstatt, 2008. "The Freedom-Fighters: How Incumbent Corporations Are Attempting To Control User-Innovation," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 12(03), pages 543-572.
    6. Sánchez-González, Gloria & González-Álvarez, Nuria & Nieto, Mariano, 2009. "Sticky information and heterogeneous needs as determining factors of R&D cooperation with customers," Research Policy, Elsevier, vol. 38(10), pages 1590-1603, December.
    7. Elena M. Chernovich & Valentina V. Polyakova, 2014. "Innovative Agency Flow: The Case Of Whitewater Paddling Community," HSE Working papers WP BRP 30/STI/2014, National Research University Higher School of Economics.

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