Incentives to innovate is a central element of innovation theory. In the private-investment model, innovators privately fund innovation and then use intellectual property protection mechanisms to appropriate returns from these investments. In the collective-action model, public subsidy funds...

Currently, two models of innovation are prevalent in organization science. The “private investment” model assumesreturns to the innovator result from private goods and efficient regimes of intellectual property protection. The “collective action” model assumes that under conditions of...