Proceedings of the 8th International Conference on Intellectual ...

Giedrius Jucevičius
assumption <strong>of</strong> this paper. There is quite a sufficient body <strong>of</strong> research in <strong>the</strong> field regarding <strong>the</strong>
incentives and controls in knowledge partnerships, but <strong>the</strong> issue <strong>of</strong> balance between <strong>the</strong> two has still
been somewhat neglected. It is <strong>the</strong> aim <strong>of</strong> this paper to address <strong>the</strong> observed gap in research and
combine <strong>the</strong> two perspectives.
The following chapters are devoted to discussing <strong>the</strong> proper incentive and safeguard schemes in
knowledge partnerships and <strong>the</strong> potential ways <strong>of</strong> achieving <strong>the</strong>ir proper balance.
2. Knowledge partnership-based business models
There are many possible definitions and forms <strong>of</strong> <strong>the</strong> knowledge partnerships. Knowledge
partnerships can be characterised as associations and networks <strong>of</strong> individuals or organizations that
share a common purpose or goal (Serrat, 2010). They are comprised <strong>of</strong> members who contribute, in a
reciprocal way, knowledge, experience, resources and connections. Successful knowledge
partnerships usually have no formal organizational structure, but are characterised by a high degree
<strong>of</strong> strategic, structural and cultural fit <strong>of</strong> its members who participate voluntarily in <strong>the</strong> exchange.
Therefore, knowledge partnerships cannot be managed in a “top-down” way, but are coordinated by
introducing <strong>the</strong> relevant incentive schemes.
The knowledge partnerships may also vary by <strong>the</strong>ir degree <strong>of</strong> formalization: from ad hoc networks
with no formal structure or member obligations to semi-formal networks with governing bodies and
collective identity, and even to <strong>the</strong> institutionalised contractual inter-organizational agreements with
<strong>the</strong> formally defined roles <strong>of</strong> <strong>the</strong> parties. The more informal <strong>the</strong> knowledge partnership, <strong>the</strong> more
flexible and independent <strong>the</strong> behaviour <strong>of</strong> its members (Serrat, 2010). The informal knowledge
partnerships tend to render individual benefits from network externalities, but usually fail to deliver
strong collective identity, group legitimacy and accumulate substantial shared resources. The more
formal knowledge partnerships tend to have more explicit governance bodies and procedures,
possess stronger external legitimacy and build on more extensive institutional resources that are
important in order to collectively undertake <strong>the</strong> complex projects (e.g. joint R&D).
However, <strong>the</strong> more formalized and institutionalized <strong>the</strong> partnership, <strong>the</strong> greater risk <strong>of</strong> <strong>the</strong>
bureaucratization <strong>of</strong> relations, competition for resources and power – all this at <strong>the</strong> expense <strong>of</strong> trustbased
relations. In o<strong>the</strong>r words, <strong>the</strong> knowledge partnerships <strong>of</strong> business organizations <strong>of</strong>ten have to
strike a delicate balance between <strong>the</strong> organizational hierarchy and network forms <strong>of</strong> governance. It
means that <strong>the</strong> open business models possess some inherent tensions that are caused by <strong>the</strong> need
to resolve <strong>the</strong> extremes <strong>of</strong> openness and corporate control, knowledge sharing and knowledge
appropriation. Teece (1986) claims that when “<strong>the</strong> markets don’t work well, <strong>the</strong> pr<strong>of</strong>its from innovation
may accrue to <strong>the</strong> owners <strong>of</strong> certain complementary assets, ra<strong>the</strong>r than <strong>the</strong> developers <strong>of</strong> intellectual
property”. The so-called “weak appropriability regime” may open leeway to <strong>the</strong> free-riders, destroy
incentives for cooperation and contribute to <strong>the</strong> failures <strong>of</strong> innovating firms.
Chesbrough (2006) characterizes <strong>the</strong> open business models as a new division <strong>of</strong> labour where <strong>the</strong>
value is created by leveraging ideas and concepts from outside <strong>the</strong> organization. There are many
different business models that are based on more or less open knowledge partnerships: open source
business models, <strong>the</strong> co-creation platforms involving customers, experts and even competitors. Some
are non-pr<strong>of</strong>it business models where <strong>the</strong> outcome <strong>of</strong> collaboration is owned by <strong>the</strong> community (e.g.
open source s<strong>of</strong>tware, such as Linux). Yet many are privately controlled business initiatives that seek
to use <strong>the</strong> potential <strong>of</strong> “external resources” for firm’s value creation. It is in <strong>the</strong>se semi-public semiprivate
environments that <strong>the</strong> question <strong>of</strong> balance between <strong>the</strong> participation incentives and value
appropriation is particularly delicate.
This paper does not seek to provide a panacea-type <strong>of</strong> solution to <strong>the</strong> tensions that reside in different
open business models. It instead seeks to discuss <strong>the</strong> possible combinations <strong>of</strong> incentives for
knowledge sharing and <strong>the</strong> corresponding appropriability regimes that underlie some <strong>of</strong> <strong>the</strong>
successful open business models.
3. Private and public value in knowledge partnerships: Questions <strong>of</strong> property
The innovation literature (e.g. Stuermer et al., 2009; von Hippel et al., 2009) distinguishes between
two mainstream models <strong>of</strong> innovation – private investment model and collective action model. Private
investment model suggests <strong>the</strong> presence <strong>of</strong> private investor in innovation, who seeks to appropriate
its outcome (i.e. innovative outcome as a return on private investment). In this case, <strong>the</strong> role <strong>of</strong> <strong>the</strong>
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