Geographic scope, isolating mechanisms, and value appropriation

Abstract

Extending extant literature on geographic scope that has primarily focused on its role in value creation, I investigate the value appropriation aspect of geographic scope of knowledge acquisition. I maintain that isolating mechanisms created via geographic scope of knowledge acquisition can help firms prevent competitors from accessing their innovative knowledge and, by doing so, can help firms capture a larger proportion of economic returns from innovation, thus helping them enjoy better financial performance. Mediating and moderating effect analyses with patent- and firm-level data of the semiconductor industry corroborate the value appropriation aspect of geographic scope. Copyright © 2014 John Wiley & Sons, Ltd.