Abstract:    With shortened technological lifecycle and rapid technological change, it is a major challenge for firms to continuously benefit from innovation. Technological inventions not only have an intrinsic value as solutions to specific technical problems, but also create generative value as the knowledge base and springboard for future technological inventions. Many existing studies focus on the primary appropriability to obtain revenues from technological inventions by incorporating them into products and licensing them in the market for technology. However, to continuously benefit from innovation, firms must also consider how to enhance generative appropriability, i.e., enhance the effectiveness of capturing greatest share of value from existing inventions by spawning from these existing technologies to generate future inventions. On the one hand, firms should promote sequential inventions and prevent their inventions from being imitated and exploited by competitors to sustain their competitive advantages. On the other hand, building on prior inventions would help firms to obtain subsequent products with improved performance, create higher commercial prospects than the original ones, and capture more revenue from their prior innovation efforts. Thus, enhancing generative appropriability is vital for firms to continuously benefit from innovation and sustain competitive advantage. Most existing literature focuses on primary appropriability. However, studies on generative appropriability remain relatively few. How to capture the generative value of inventions and continuously benefit from innovation is still under-explored. While primary appropriability emphasizes the effectiveness of achieving profits from innovation by commercializing inventions, generative appropriability highlights the importance of capturing value from subsequent technologies spawned by a firm′s existing technologies. There are still some theoretical gaps to be filled. First, prior literature indicates that appropriability mechanisms such as intellectual property regimes, trade secrets and complementary assets help protect and commercialize inventions to enhance primary appropriability. The effectiveness and potential roles of other types of informal appropriability mechanisms, such as internal networks, has yet to be thoroughly analyzed. To enhance generative appropriability, firms may need to dynamically change the structure of their internal knowledge network and collaboration network to promote sequential innovation and prevent imitation from competitors. Second, although prior literature has extensively investigated the impact of internal networks on innovation performance, relatively few studies have examined how internal network influence value capture, especially the dynamics of internal networks.To address these gaps, this study integrates profiting from innovation framework and internal network perspective to examine the impact of the dynamics of a firm′s internal knowledge network and collaboration network on generative appropriability. We argue that internal knowledge network dynamics, which promote knowledge recombination and sequential innovation and form imitation barriers, will lead to higher generative appropriability. Internal collaboration network dynamics also enhance generative appropriability by facilitating learning among inventors to effectively exploit existing technology, as well as by intensifying social complexity and increasing the imitation cost of competitors. In addition, the two positive relationships are weakened when the firm′s inter-organizational R&D network centrality is high due to frequent knowledge outflow and inter-organization interactions.We conduct an empirical analysis using a panel dataset of 965 Chinese pharmaceutical companies from 2005 to 2020. Results based on the panel data fixed effects model show that both the dynamics of the internal knowledge network and collaboration network help firms to capture the generative value of their technological inventions, but this positive effect is weakened when the inter-organizational R&D network centrality of firms is high. The results show that by dynamically adjusting the internal network structure, firms can better adapt to the rapid changes in the technological environment and continuously profit from innovation. This paper′s contributions are twofold. First, this paper enriches the studies on profiting from innovation by identifying internal knowledge network and collaboration network dynamics as the antecedents of generative appropriability. Secondly, this paper extends the studies on internal networks. By differentiating the mechanisms of internal knowledge network and collaboration network dynamics on generative appropriability, our study also provides empirical evidence that internal networks work effectively not only as a way for value creation but also for value appropriation. 

Key words: profit from innovation, value appropriability, generative appropriability, knowledge network, collaboration network