User community vs. producer innovation development efficiency: A first empirical study

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Citation Hienerth, Christoph; von Hippel, Eric and Berg Jensen, Morten. “User Community Vs. Producer Innovation Development Efficiency: A First Empirical Study.” Research Policy 43, no. 1 (February 2014): 190–201 © 2013 Elsevier B.V.

As Published http://dx.doi.org/10.1016/j.respol.2013.07.010

Publisher Elsevier

Version Author's final manuscript

Citable link http://hdl.handle.net/1721.1/109425

Terms of Use Creative Commons Attribution 4.0 International License

Detailed Terms http://creativecommons.org/licenses/by/4.0/ MIT Sloan School of Management

MIT Sloan School Working Paper 4926-11

User community vs. producer innovation development efficiency: A first empirical study

Christoph Hienerth, Eric von Hippel, and Morten Berg Jensen

This work is licensed under a Creative Commons Attribution-NonCommercial License (US/v4.0)

http://creativecommons.org/licenses/by-nc/4.0/ Date

The electronic copy of this paper is available for download without charge from the Social Science Research Network Electronic Paper Collection at: http://ssrn.com/abstract=1916319 User community vs. producer innovation development efficiency: A first empirical study

Christoph Hienerth*, Eric von Hippel**, and Morten Berg Jensen***

MIT Sloan Working Paper # 4926-11 Original paper August 2011, this revision June, 2013

ABSTRACT

In this paper we report upon a first empirical exploration of the relative efficiency of innovation development by product users vs. product producers. In a study of over 50 years of product innovation in the whitewater field, we find users in aggregate were approximately 3X more efficient at developing important kayaking product innovations than were producers in aggregate. We speculate that this result is driven by what we term “efficiencies of scope” in problem-solving. These can favor an aggregation of many user innovators, each spending a little, over fewer producer innovators benefitting from higher economies of scale in product development. We also note that the present study explores only one initial point on what is likely to be a complex efficiency landscape.

Acknowledgements: We are very grateful to Sue Taft and Kent Ford, historians, and to and Corran Addison, founders of important and innovative whitewater kayaking firms. All gave us extensive and very generous help in documenting the innovation history of whitewater kayaking. We are also very grateful to Dr. Christina Raasch, MIT Visiting Scholar, and to Professor Scott Stern, for their very helpful suggestions.

*WHU Otto Beisheim School of Management, Vallendar, Germany. [email protected] **MIT Sloan School of Management, Cambridge, MA, USA. [email protected] ***Department of Economics and Business, Aarhus University, Denmark. [email protected]

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Electronic copy available at: http://ssrn.com/abstract=1916319 User community vs. producer innovation development efficiency: A first empirical study

1. Introduction and overview Representative national surveys have established that millions of users in the household sectors of the U.S., Japan, and the UK spend billions of dollars per year in aggregate in order to create and improve products for their own use (von Hippel, Ogawa and de Jong 2011, von Hippel, de Jong and Flowers 2012). Of course, it is also true that producers spend billions of dollars per year to develop products for sale to users. Given the large scale of innovation by users, the relative efficiency of user vs. producer product development becomes an important matter. Practitioners would like to know whether innov