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.
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Table of Contents
Overview of Free Innovation
Evidence for Free Innovation
Viability Zones for Free Innovation
Pioneering by Free Innovators
Diffusion Shortfall in Free Innovation
Division of Labor between Free Innovators and Producers
Tightening the Loop between Free Innovators and Producers
The Broad Scope of Free Innovation
Personality Traits of Successful Free Innovators
Preserving Free Innovators' Legal Rights
Next Steps for Free Innovation Research and Practice
Household Sector Innovation Questionnaire
Modeling Free Innovation's Impacts on Markets and Welfare