In innovation, firms need to balance value appropriation with technological influence. While intellectual property rights may effectively preserve the appropriability of innovation, but it may prompt competitors to search for alternative knowledge and render a firm’s knowledge obsolete. Addressing this tension, we explore how firms strategize their subsequent innovation based on the appropriability of their current technologies through the case of patent invalidation incidences. We argue that the loss of value capture potential of existing technologies aggravates a firm’s tendencies to search more intensively in the domain of invalidated patents, in order to leverage the influences of the invalidated patent as the public knowledge, to preserve the value appropriation potential. We plan to test our propositions using U.S. patent invalidation data from 2003 to 2016.

qjoanne@ceibs.edu