jan 1, 2005 - From Innovation to Firm Formation in the Windsurfing, Skateboarding and Snowboarding Industries

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By Sonali Shah

Academics and practitioners have long been interested in understanding the sources and causes of innovative activity and the relationship between innovation and industrial change. Existing theory assumes innovative activity to be the domain of firms and research institutions, and commercial activity to be the domain of firms and entrepreneurially-minded individuals. This paper suggests and provides evidence for the idea that social activity may precede and heavily influence both firm and market formation via the innovative activities that take place within "innovation communities." Based on an inductive study of the innovation and commercialization histories of 57 key skateboarding, snowboarding, and windsurfing equipment innovations, this paper finds that (1) the majority of innovative activity in these fields took place in the hands of hobbyists and enthusiasts. (2) These innovators often receive rich feedback from others with related interests and expertise. This feedback not only helps improve the innovation, but is also used to make commercialization decisions regarding the innovation. That is, innovation communities serve as an effective innovation development and selection mechanism. (3) Many of these innovators start firms in order to appropriate financial benefit from their innovation. This view is unique in that it shows that a significant portion of innovation development and selection activity may be organized outside the boundaries of firms, markets, and research institutions. Firms (and markets) may thus be the consequence, not the cause, of innovation.

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