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Chicago: University of Chichgo Press, pp. 9-52. ‘Vogr, 8 1988. Taxing Consumption as a Fiscal Polley Alternative: & Review of the Debate, Center for the Study of American Busines Werking Paper No, £20, Washington University, St, Lous, 210, July 1988. ‘T1688, The Thxation of Inoue from Capital fey Towards Industry in the United States 7 Strategies for Capturing the Financial Benefits from Technological Innovation Davin J. Teece Despite the supposed existence of “first moves” advantages, frst-to- imarket innovators with new products and processes do not always win. Situations where firme were first to commercialize « new product, but id not participate in the profits thet were subsequently generated from the innovation, ure increasingly common. For instance, transistors, in- tegrated circuits, computer tomography, magnetic resonance imaging, video recorders, and colar television ere among the many advanees made in the West and first embodied in new products in the West. “Yet in each of these areas the Japanese have subsequently geined n song and sometimes dominant position” (Gomory and Schmitt 1988, p. 113). ‘The archetypical example of the phenomenon was the experience of ‘he British company BMT with the body scanner." In the estly 1970s, the U.K. firm Blectrica! Musica Industeies (BM) Ltd. was in @ variety of product Hines including phouogzaphic records, movies, and advanced slectronies. Ini had developed nigh resolution TVs in the 1990s, pio nneered aitborne radar during World War H, and developed the United Kingeou's Grst all solid-state computers in 1052. In the late 1960s, Godfrey Hounsfelé, an BXd senior research engineer, engaged in pattern ‘hina boc onan evr nates of ne tite "Proting hon echo Innovation," published in Research Policy, December 1988. * ia “the GM sory sumsnareet n eked Mace 1994,sot 8@ 0 puney sm BDH HO 5 oupoud tau Qos a8 be 07 9pus eM HOLE ‘poe are 19 Jo Ep oe Ue evn SOO 7 1 prppaqata st worenoutyg a4y ata aa, war svopt ayy Zou pun s8epy Jo LOWEEAKO OM st 1: SO putoae payZGA faq uanjo ura Tee eAdoo pry “hy asv quasar sews Suprord 205 20 “Snpiea sot Serpjoges 2oy swwooresrnba: yorouruy paw (eBoy ays sen oq worsoqord af aptaoad syuazud uy) 53800 GeEpOUE Te PUNO PHHTOAUL, 2q ww syuDpeE MerapE “(LagT sIULA\} Snap pas sroRPOLd eo, toy WE Ua Sw y—NS Fs ‘ Droge op sqmerad yanospye Saquqsudonde zooyred pape woraeyerd Azadoxd enioa[ pny wou UA, pu “pacrilonas quote yo saya ‘Fest fi HCE Ig, 998) eAZOWEPEN ‘eaxD08 scoyed—egsadord[otooqsuy pazuoaes jo saucBazw9 shojva 2 30 aoxRoNR 20 aD eT Ife OU BIEN porosrged eq your ‘ag Berrenotos wv &q podopnap sys PEE MONON ex “cysHOTIND Jo ‘sur zeop oawty souyoora ex stoame cusny-0U SeosoTS Ang, “sPKAILO Trooyrerque#s0 soynoyaned wy ss wots eae Buoy ‘sounyow ayy SRE jeorsiyd apoyo jo uoREAIpIT ay oH sosKTe dorEsORUY TeOPEO|oHNPAL, wowonere HT TT “Afojouyoos sup Jo aanzay oy pers sursruetsENN Hoy -oajoud (pBet jo Abwouye ox ase Sry SuOWIDUOD storon; jeauaEIT srreysodiunt sou omg OU, “sxdoot0a ssonead /sonpoad 31043 PUB EwepT Hots toy Susie sygausq syoese aur axoidondde 01 eqD BOK SUITS fuoo Su, “poweid oF AOR soy RON aN axaysA suOUUONATE Ce ingesocons spre 48 odo 09 (1 S91 SIOUEAOUUY Ages OSWAE oUALTEpUNS ABOW LL, sundoy Aqyiqeisdorddy oy) 30 90H ONL, T ajquioxrvat poo8 ‘angen repented wos seq torTeaoMy apr YANONY waKa sjoyzeU Layo ou PTHOYS exoJOIOG PLT eso} tat stOTeaon Ayan puN UY ereydxs OF pie 'Biq UI zogwroKAy OY LET wohescuny jeoplojompar, mor sryouog, eeu oy BuuMsder) uy Ges pourra pen 9G, St papoestd Gav 1 pedoysaap snneo> Suv ous, “eaet @foquontag surg DEEN ens, Aeay OE Ie GET He ME py veo row siSoyesse 2xapy 04 fos of Ato sou savas AMOPY } syed sf 3 ‘egdaoua0 asaya Tussf “sorSosez;s wowyuxTeqa snszoa Sut “aoenttos pus "siden Jo faummzougdoo ou ‘opto uBisep ays ty ene ane muon |pteo sampqeudoudde 2uyonpox; syfootoa Nou pure pyo Jo >t 1 shoxlene yovoudde ay, “oyymsoddo yaxrem aot o2éau of can HD | sromsouut qoseadée anjeme ue quosep apne sigs Jo APOq SE, penisnpyy 8 Per FYE ‘¥67 J0 PUD AND Ae "MDA Mg-ueDHAE 40} 135543 Sagasede Buypre| ag) 68 SOCCSTA PrUsqeIES pL Teys2DNE Appnomgey sere Oa HET 9m 194 “aop.awId wwOAINE-uoyE wo axmnsNdep nog 8 potapesd sea AFojouypos Fem ayp sux 201 fpeonponty way poouape paloprsioo Sjuowuoo simu Oa Hye fUISHO amp TE poppsqusa Sruskoduco sot aamyoo}nase af 2OY;PON“TSHT 8 poonporr gw AF MoM senor yma 0 ou Oa 8 MH PRL aur ow Y “ALA aK SOFT “rum 0/pu stay} 2q aur aaa ‘Senj oY sEPESOUEY “oBepranpe fava tenusiegns soy wo saqssdzo oy ‘9e] possnostp suoswos 50} “qUIR fa ‘nq “201 Bu Foonpors Hayaoga:0j2q 0820 ef Ons su orourtioo af oft paoapassy ava BE] TBLLOG ory, “semMt “Roy ouvs af Jo 8abos wy BENE EOD PUNILABE 9p OWT, y. 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Yale Papawons oly yEROI soso "wasEKs “84g, #1 GHIM ssoulstg Toqeeia> aoyjo ayn OM AD Su YEA pozoons 0% porfey xosaX, “s8oufsnq yo 3M 7NoM pu ‘sxONYO PUB Prey WLM “eqosmnsysu] Sea], B07 Horo DuBISTAE oF OLGUUEN seas INQ "2079, -topeo wexg0d oy poonpousul Yor|m “vuEMOG apnoU sajduz—xe IQ “Ago qaysur oy ovo ‘Ssquence are] Ginowy ‘sequaduien say sseutsag soUUNNS YD OMY 10 ‘no padtlosp says] area osm pur ‘diysropeay yezEu a0] poy feedtTIOD yp ALOT MY SORMIG PoE YR O% ‘spumna8 VO x Jo Asaxoostp oy 9y2 JO sony Ta - jones penqlagndumoo tes paysTqNssS yO wo! seu we Jo uvae » PuCerdayp sy wy poarnsox yoqyan UsseoRDs wojaT Roan coon TeMed OLETong as the mark doce not Decome generic Words oF aymbole Registration Porpetuity no "ademas Tsformation Dasines that eupporie a competities position Confidentiality "Trade Seat TABLET Some Comparative Characteristics of Four Types of Intellectual Property: (United Staten ony} "Wlerk for Hie." 79 years from date of creation Original wore of authorship fixed fa any vannle medi | used in sacs Feom which the work caw be perceived, eeproducnd of clther diecetly oe wth the id of machine or devicw ‘The wosk mat be arginal Copyright | ‘and useful improvement thoreo! | Stherwise communicated prior to the date of aplication, FT yauss From date of grant ‘composition of rater ot a new ‘the US for mone thes eae year + (2) have boem abandoned Patent ‘Master thas | Tavention er discovery must be Term Capturing the Financia] Benefits from Technological Innovation 179 processes, trade seerats are a viable alternative to patents, Trads secret protection is possible, however, only if a firma ean put its product before the public and still keep the underlying technology secret. Ususlly only chemical formulas and industsial-commorcfal processes can be protected fag trade secrets after they are “out.” 1.2 Nature of the Technology ‘The degree to which knowledge about en innovation is tacit, or easily codified, also affects the ense of imitation, owledge is, by defini- cult to articulate ond so Is hard to fmitate or to pass on untess thoge who poscoss the Imow-how can demonstrate it to others {Polanyi 1962, Teecs 198}, Cediled knowledge is ensier to transmit and receive ‘and is more exposed to industrial espionage Simplletically then, we can divide eppropriabllity regimes into those that aze “weak” (innovations are difficult to protect because they ean ly codified end legat protection of intelectual property 's inet id those that ere “strong” (innovations are easy to protect ‘because knowledge about them is tacit and/or they are well protected Despite recent sirengthening of the protection of intellectual he exception rather than the rule. tual property thought of as the main mechanism to igolave innovators from followers (Winter 1987). However, the number of such Industries ray be expanding because of recent court decisions. "As we shall see, innovators who try to enter markets where intelleo- rotection is good heve a reasonable chance of winning ce strong appropri innovators in most adopt clever mecizet entry strategies if they are to keep Imitators and other foLowers at boy. TOF couse, even Fa stonq potent exes, it ll aventun ‘an enforcacbe patent expices, nlved States, the 1080s have witnend « sacked sirengthening ing patent applications and patent infringement cases from the "This mearare bn bebught both uniformity nd greteretrength