Research Insight | How Sharing Design Secrets Can Boost Profits
To maximize potential returns, firms typically keep their innovation-related knowledge secret (i.e., through trade secrets) or protected (i.e., via patents). Indeed, according to the knowledge-based theory of the firm, maintaining control of knowledge is one of the most crucial elements of competitive advantage that firms can possess.
However, many firms across several industries are now freely revealing innovation-related knowledge. For example, IKEA recently committed to a patent pledge for their new furniture tip-over safety innovation, referred to as “Anchor and Unlock.” As noted by Carl Ervér, patent manager at IKEA, their hope is that “others will adopt Anchor and Unlock for their products as well.” Similarly, Allbirds, a sustainability-focused shoe and apparel company, freely shares their sugarcane-based material technology (SweetFoam®) that allows for carbon-negative production of shoe soles, and the outdoor brand Hummingbird Hammocks invites “anyone and everyone to view, modify, redistribute, and use” their innovation-related knowledge—for free.
According to a Journal of Marketing Research study, consumers view firms who engage in such open design activities as providing a benefit to society and are in turn willing to pay substantially more for such firms’ products. To fully capture this value, companies need to effectively communicate their open design activities—especially their moral motives and the magnitude of their societal impact—by integrating them into product messaging and reports.
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What You Need to Know
- Effectively communicating open design activities to consumers leads to more favorable consumer reactions, including higher click-through rates on social media and increased willingness to pay.
- Consumers see firms that freely reveal innovation-related knowledge as beneficial to society.
- Firms may consider actively integrating their open design activities into marketing and corporate social responsibility communications, as well as in their environmental, social, and governance (ESG) reports.
Abstract
Some firms pursue open design activities, that is, they freely share innovation-related knowledge with the outside world instead of keeping it secret or protected via patents. Through a series of lab and field studies, this research examines consumer beliefs and reactions to firms’ open design activities and documents a positive open design effect: presenting a product as open design (vs. not) increases its attractiveness to consumers. This effect emerges because consumers view firms that freely share innovation-related knowledge as providing benefits to society. Consistent with this societal benefits account, the effect is found to be stronger when (1) moral (vs. selfish) firm motives are made salient and (2) many (vs. few) other firms have already utilized the shared knowledge. Moreover, the evidence suggests that the effect is anchored in the notion that open design activities involve outflows of firm-internal (vs. inflows of firm-external) knowledge. By showing that consumers judge the way firms undertake innovation as more (vs. less) beneficial for society, this research extends the literatures on open design, open innovation, corporate social responsibility, and marketplace morality.
Lukas Maier, Martin Schreier, and Darren W. Dahl, “The Open Design Effect,” Journal of Marketing Research. doi:10.1177/00222437251373034