In his 1986 classic, “ Profiting from Technological Innovation ”, Teece argued that the appropriability regime and access to complementary assets are two key determinants of how the value created through innovation is distributed. Appropriability regime • The strength of the AR describes how difficult it is for others to imitate an innovation • The appropriability regime may be strong due to effective patent protection (e.g., in pharmaceuticals) or due to effective secrecy (e.g., ceramics, beverages) Complementary assets • Assets needed in order to commercialize the innovation • Examples: production capacity, distribution channels, brand • Not a problem for profiting from innovation: CAs that can be sourced on a competitive market • Problematic: CAs in monopolistic supply (typically assets to which the innovation is specialized)