nitip kutipan ttg digital complementary assets

1. In his landmark paper (Teece 1986), David Teece explores the circumstances under which innovating firms actually harvest the economic gains of their innovation. He investigates ‘three fundamental building blocks’, the appropriability regime (nature of technology, legal mechanism of protection), the dominant design paradigm and the role of complementary assets and how innovators can engage with them. Our paper studies the role of complementary assets and regimes of appropriability in the current innovation ecosystem. In particular, we are interested to explore if large service providers such as Google, Twitter or Facebook can be seen as digital complementary assets facilitating innovations (Rosemann, 2011).

2. Teece’s framework identifies three aspects from which a firm or organisation could gain benefits from an innovation: appropriability regime, dominant design paradigm and complementary assets.
– The appropriability regime refers to environmental factors that govern an innovator’s ability to capture the profits generated by an innovation. Teece lists two factors as critical; (i) the degree of difficulty of imitating the core technology and (ii) the efficacy of legal mechanisms of protection (e.g., patents, copyrights). The nature of technology may be thought of as the location along a spectrum ranging from highly accessible to highly inaccessible technology. The less accessible the technology, the better suited it is to appropriate private returns on innovation because imitation is more difficult, even without the
benefit of efficient legal mechanisms of protection. This second aspect of appropriability varies across industries and from one technology to another. In some environments the appropriability regime is “tight” (technology is relatively easy to protect) and in others it is “weak” (technology is almost impossible to protect) (Teece 1986:287).

– The dominant design paradigm refers to the evolutionary nature of product development (Anderson and Tushman 1990). In the early “pre-paradigmatic” stages of any industry development, product designs are fluid, manufacturing processes loosely and adaptively organized, and generalized tools and infrastructure used in the production. Competition amongst stakeholders manifests itself in competition amongst designs, which are markedly different form each other. After considerable trial and error in the marketplace, the most promising designs begin to merge. This evolved design is at some point able to meet a whole set of user needs in a relatively complete fashion, and this design becomes dominant. Innovation is not necessarily halted once the dominant design emerges, it could occur lower down in the design hierarchy, shaping the original innovation (Henderson and Clark 1990).

– Finally, complementary assets are vital building blocks to the successful commercialization of an innovation. Of all of the parts of the framework, it is Teece’s definition of complementary assets that has perhaps had the most prominent impact in literature. However, what actually constitutes a
omplementary asset is not entirely clear. Though there are examples given in his seminal 1986 paper, there are at the same time later papers that use ‘capabilities’ (a concept appropriated in the influential 1997 paper (Teece et al. 1997) interchangeably (Wade and Hulland 2004). In this paper, we adopt the
view from the 1986 paper, that a complementary asset is a tangible good, IP property, and/or service, perceivable by customers, competitors, and partners alike. Teece (1986) argues that complementary assets take one of three relational forms: (a) “general purpose” assets which do not need to be tailored to a particular innovation, (b) specialized assets with unilateral dependence to the innovation, and (c) cospecialized assets with bilateral dependence. For instance, a startup innovator may lack the capability to manufacture or distribute its product, which leads to a business agreement with established firms that could provide such capabilities. Alternatively, complementary technologies might be necessary to realize value from the core innovation. This might or might not necessitate adaptation of the asset in question. Specialized complementary assets are generally acquired over long periods of time, path dependent, andspecific to the context (Teece et al. 1997). Such resources are valuable and difficult to imitate and form a source of competitive advantage (Barney 1991).

3. What is digital complementary assets?
Digital complementary assets (DCAs) are the unit of analysis in this paper and belong to the category of general purpose assets (Teece 1986). As generic assets they are not tailored to the specific requirements of a corporate innovation. The service provided is uniform in its capability for all customers. This does not mean that customers cannot modify or configure this service (e.g., setting favorites, specifying advanced search queries), but this is not a service that is done by the DCA. Digital complementary assets (DCAs) are the unit of analysis in this paper and belong to the category of general purpose assets (Teece 1986). As generic assets they are not tailored to the specific requirements of a corporate innovation. The service provided is uniform in its capability for all customers. This does not mean that customers cannot modify or configure this service (e.g., setting favorites, specifying advanced search queries), but this is not a service that is done by the DCA.

4. What are the characteristics of DCA?
– Non-excludeability : it has non technical, price and contractual constrains.
– Non-rivalry: serve the same as common public good, in which user don’t need to compete because the source is unlimited.
– Versatility: can be used easily based on the principles: abstraction, messaging, composability.
– Positive networks effects: it correlates to the big amount of user, based on (1). Prosumer (Toffler, 1980) and (2) the quality of service provided.

4. Contribution of the new theory on Teece’s framework.
– extent the idea of engagement into three aspects: consumption (individual vs corporate), partnership (operational vs strategic) and internalization (acquisition vs development).

5. Case studies of appropriability regime:
– Facebook vs Spotify
– Facebook vs Flickr
– Facebook vs Skype