Can entrepreneurial firms benefit from product piracy?

Abstract

We examine the potential benefits of product piracy to entrepreneurial firms. Specifically, we use a resource-based perspective to show that a decrease in the inimitability of an entrepreneurial firm's intellectual property does not necessarily diminish performance when piracy increases the value of this resource, and an information economics perspective to explain why and when imitation can increase the value of an intellectual property resource. This explanation reconciles empirical studies that indicate mixed results. It also expands the resource-based view by suggesting that reducing the value of one resource can directly increase the value of another.