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The Handbook of Technology and Innovation Management by Scott Shane

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10.1. Introduction

Scholars of innovation and firm strategy have long recognized that intellectual property shapes the creation and use of new technologies. Although better known for his writings on the personal or 'tacit' dimension of knowledge, Michael Polanyi also emphasized that legal rights to creative works and new discoveries could affect the pace and direction of innovative activity. In a 1944 article on patent reform, he voiced the following concerns:

The law ... aims at a purpose which cannot be rationally achieved. It tries to parcel up a stream of creative thought into a series of distinct claims, each of which is to constitute the basis of a separately owned monopoly. But the growth of human knowledge cannot be divided into such sharply circumscribed phases. Ideas usually develop gradually by shades of emphasis, and even when, from time to time, sparks of discovery flare up and suddenly reveal a new understanding, it usually appears that the new idea has been at least partly foreshadowed in previous speculations. (Polanyi, 1944, pp. 70–71)

Edith Penrose, whose writings on the competitive advantage and growth of firms remain foundational in the field of strategy, shared Polanyi's interest in the relationship between proprietary rights and innovation. In a 1950 article with Fritz Machlup, for example, she reviewed attempts by 19th century scholars to wrestle, somewhat unsuccessfully, with several fundamental questions: Where should governments 'draw the line' between ...

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