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  • Summer 2013
  • Article
  • California Management Review

IP Modularity: Profiting from Innovation by Aligning Product Architecture with Intellectual Property

By: Joachim Henkel, Carliss Y. Baldwin and Willy C. Shih
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Abstract

Firms seeking to take advantage of distributed innovation and outsourcing can bridge the tension between value creation and value capture by modifying the modular structure of their technical systems. Specifically, this article introduces the concept of "IP modularity," which seeks to protect and capture value from intellectual property. The article defines what it means for a system to be "IP-modular," illustrates the application of this concept in a number of practical situations, and presents a comprehensive framework that can be used to design and evaluate value capture strategies for modular systems.

Keywords

Modularity; Value Appropriation; Distributed Innovation; Open Innovation; Innovation Strategy; Intellectual Property; Value

Citation

Henkel, Joachim, Carliss Y. Baldwin, and Willy C. Shih. "IP Modularity: Profiting from Innovation by Aligning Product Architecture with Intellectual Property." California Management Review 55, no. 4 (Summer 2013): 65–82.
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About The Authors

Carliss Y. Baldwin

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Willy C. Shih

Technology and Operations Management
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