This situation can be seen as a market failure, and an issue of appropriability.

There is a high level of appropriability due to the tacit nature of the knowledge.

Appropriability and complementary assets may be necessary ingredients of success (Teece, 1987).

The main methods of appropriability used by firms include patents, secrecy, lead time, learning curve advantages, and marketing efforts.

Sources of innovation may be both internal and external to the firm with a medium-level of appropriability.

Further, problems of appropriability may be particularly acute in competitive markets, where numerous rivals are ready (and able) to exploit any technological spillovers that occur.

Firms in this sector develop new products or processes and have a high degree of appropriability from patents, secrecy, and tacit know-how.

The evidence on problems of appropriability and the extent of spillovers suggests that such problems exist, but that they may be easy to exaggerate.

Encapsulated knowledge is distinguishable from codified knowledge primarily along the dimension of observability which has implications for the appropriability of value.

The most venerable, which goes by jargon "appropriability," holds that an innovative company may fail to invest for fear it will not capture the full fruit of its labors.

Commercial Free and Open Source Software: Knowledge Production, Hybrid Appropriability, and Patents.

Pavitt's Taxonomy categorizes mostly large industrial firms along trajectories of technological change according to sources of technology, requirements of the users, and appropriability regime (Pavitt 1984).

This last observation suggests that popular discussions of technological spillovers and 'the appropriability problem' may have exaggerated the ease with which information generated from a firm's innovative activities spills over to other firms.

Finally, although it seems clear that many methods of appropriability are far from perfect (patents, for example, offer only limited protection in most sectors), firms can exert at least some control over their knowhow.

Geroski's review of empirical studies suggests that the effectiveness of patents in ensuring appropriability is generally quite weak, that imitation lags are short, and imitation costs low compared to innovation costs.

Put another way, appropriability problems created by spillovers may affect R activities more than D activities, and they may lessen in importance the closer R&D output gets to a specific product market.