Innovation Effort as 'Productive Consumption : ' The Power of Participation Benefits to Amplify Innovation

When economists and innovation practitioners think about whether developing an innovation will be worthwhile, they tend to think exclusively about the economic value of the outcome of the innovation process. In this article, we develop and explore the idea that innovators can also gain significant benefits from participation in a development process as well as or even instead of benefits from using or selling the innovation created. When this is the case, the net cost of innovation projects can be much lower for developers – in effect, a portion of project development costs becomes “productive consumption.” We draw on the findings of empirical studies to document that a significant fraction of the benefits that individuals obtain from engaging in innovation projects can consist of benefits derived from participation. We offer an “innovation amplification” metric to quantify the associated cost reductions for project sponsors, and discuss implications for innovation research and practice