Market failure in the diffusion of consumer-developed innovations: Patterns in Finland
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von Hippel_Market failure.pdf
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404.57 KB
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Checksum (MD5)
9781f9f3acaa9ebf69a33efb6c3ae8b7
Author(s)
de Jong, Jeroen P.J.
von Hippel, Eric A.
Gault, Fred
Kuusisto, Jari
Raasch, Christina
Date Issued
August 2015
Journal
Research Policy
Publisher
Elsevier
Citation
De Jong, Jeroen P.J., Eric von Hippel, Fred Gault, Jari Kuusisto, and Christina Raasch. “Market Failure in the Diffusion of Consumer-Developed Innovations: Patterns in Finland.” Research Policy 44, no. 10 (December 2015): 1856–1865.
Version
Final published version
Abstract
Empirical studies have shown that millions of individual users develop new products and services to serve their own needs. The economic impact of this phenomenon increases if and as adopters in addition to the initial innovators also gain benefits from those user-developed innovations. It has been argued that the diffusion of user-developed innovations is negatively affected by a new type of market failure: value that others may gain from a user-developed product can often be an externality to consumer-developers. As a result, consumer innovators may not invest in supporting diffusion to the extent that would be socially optimal. In this paper, we utilize a broad sample of consumers in Finland to explore the extent to which innovations developed by individual users are deemed of potential value to others, and the extent to which they diffuse as a function of perceived general value. Our empirical analysis supports the hypothesis that a market failure is affecting the diffusion of user innovations developed by consumers for their own use. Implications and possible remedies are discussed.
MIT Department
Sloan School of Management
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Creative Commons Attribution 4.0 International License
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DOI of Published Version
https://doi.org/10.1016/j.respol.2015.06.015
