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Valuation of Innovation and Intellectual Property: The Case of i P hone
Author(s) -
Korkeamäki Timo,
Takalo Tuomas
Publication year - 2013
Publication title -
european management review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.784
H-Index - 32
eISSN - 1740-4762
pISSN - 1740-4754
DOI - 10.1111/emre.12016
Subject(s) - valuation (finance) , business , intellectual property , dynamic capabilities , value capture , resource based view , industrial organization , competitive advantage , supply chain , marketing , value (mathematics) , stock (firearms) , value creation , business administration , accounting , computer science , engineering , operating system , machine learning , mechanical engineering
We use data on both daily stock returns and internet activity to estimate the value of Apple's i P hone and related intellectual property. We find the private value of i P hone to be 10%–13% of A pple's market cap. Grounded in the resource‐based theory, we argue that much of this value stems from A pple's managerial capabilities to capitalize on the product, as proprietary technology explains about 25% of the private value. This effect arises from patent applications, rather than grants or trademarks. Our analysis of the global supply chain of i P hone suggests that besides Apple, firms in the supply chain are able to capture very limited value from i P hone. These results support the theory of dynamic capabilities, maintaining that a firm's unique dynamic managerial and organizational capabilities are crucial for value creation in globally competitive innovative industries.