A leading innovation scholar explains the growing phenomenon and
impact of free innovation, in which innovations developed by consumers
and given away "for free."
In this book, Eric von Hippel, author of the influential Democratizing
Innovation, integrates new theory and research findings into the
framework of a "free innovation paradigm." Free innovation, as he
defines it, involves innovations developed by consumers who are
self-rewarded for their efforts, and who give their designs away "for
free." It is an inherently simple grassroots innovation process,
unencumbered by compensated transactions and intellectual property
rights.
Free innovation is already widespread in national economies and is
steadily increasing in both scale and scope. Today, tens of millions of
consumers are collectively spending tens of billions of dollars annually
on innovation development. However, because free innovations are
developed during consumers' unpaid, discretionary time and are given
away rather than sold, their collective impact and value have until very
recently been hidden from view. This has caused researchers,
governments, and firms to focus too much on the Schumpeterian idea of
innovation as a producer-dominated activity.
Free innovation has both advantages and drawbacks. Because free
innovators are self-rewarded by such factors as personal utility,
learning, and fun, they often pioneer new areas before producers see
commercial potential. At the same time, because they give away their
innovations, free innovators generally have very little incentive to
invest in diffusing what they create, which reduces the social value of
their efforts.
The best solution, von Hippel and his colleagues argue, is a division of
labor between free innovators and producers, enabling each to do what
they do best. The result will be both increased producer profits and
increased social welfare--a gain for all.
