A conceptual framework for proprietary-leveraged innovation capabilities

Proprietary-leveraged innovation (PLI) is proposed to meet the challenges in 21st century. However, current research has not reached a consensus. Based on literature reviews, this paper identifies that the core of PLI is to pursue appropriability or distribution on abnormal profit originating from innovation rather than intellectual property per se. From the perspective of dynamic theory of knowledge creation, this paper deconstructs the connotation of PLIC theoretically. Given the relationship between the capabilities along the innovation chain and the potentials of appropriability rights on abnormal profit originating from innovation, the critical foundation of capability which can retain the innovation activities with the characteristics of “proprietary-leveraged” has been identified. The present paper proposes a framework of an enterprise's PLIC, which are composed of the capabilities of sense-making, information interpretation, decision-making, and implementation and realization. In theoretically, the stronger the capabilities in the front end of innovation chain, the greater potential of appropriability on abnormal profit that an enterprise can gain. Finally, the conclusion is given and managerial implications and future research is discussed.