Towards a Theory of Innovation Governance and the Role of IPRs

This paper theorizes about innovation governance, especially about governance of open innovation and the nature and role of IPRs. A reinterpretation of open innovation is offered in terms of the emergence of various types of markets for inputs to and outputs from innovative activities. These open innovation markets are typically markets for ideas, technologies, knowledge and data such as licensing markets, equity markets, and matching markets for innovation collaborations and correspond to various types of open innovation strategies viewed from the inside out in a focal firm's perspective. Open innovation – seen as a set of quasi-integrated organizational forms for innovative activities in between market and hierarchical firm organizations – is then explainable in terms of determinants of supply and demand. Intellectual property rights (IPRs) then play a new role as tools for innovation governance, thereby economizing on governance costs in an extended transaction cost framework. Licensing of usage rights is key to using IPRs for innovation governance. The by now standard property rights approach to rights in intellectual resources has to be challenged, however, and referred to as ‘intellectual rights’ rather than IPRs. In addition, the governing role of IPRs can be improved by combining them with liabilities into a hybrid approach. Organizational responsibilities provide still another institutional arrangement for innovation governance, and integration of rights, liabilities and responsibilities provide a new theoretical perspective on innovation governance – a perspective that also can provide links between organization theory, transaction cost economics and property rights theory.