The content of the license to innovate

Sustainable value creation of firms under rapidly changing conditions depends on ongoing innovation. The license to innovate emphasizes the firm’s role as an innovator based on its interactions with stakeholders. Furthermore, the license to innovate implies that stakeholders also have a key role as innovator in a knowledge-based, networked society.

Innovation is salient for the traditional RbV that we analyzed in detail in Chapter 2. The traditional RbV relies on the basic assumptions of self-interest, and focuses on the exploitation of bundles of unique resources in order to create superior financial value for one specific resource owner, the shareholder. Recently, this thinking is being questioned increasingly by scholars of the stakeholder theory of the firm, discussed in Chapter 4, on the basis of what they consider to be enlightened self-interest. They consider stakeholders making firm-specific investments, and their entitlement to participate in value distribution based on their contributions.