Elon Musk Opens Tesla’s Patents: Bad Management or Innovation Strategy?

Earlier this month Tesla announced that it would open the source for all its cutting edge electric car patents, leaving the business world wondering whether this was a strategic move or a management misstep.

Dr. Rajshree Agarwal, University of Maryland Ruldolph P. Lamone Chair and Professor in Entrepreneurship, recently sat down with Jeff Salkin on MPT.org’s “Your Money and Business” to discuss this bold move.Screenshot 2014-09-23 12.12.53

Tesla has very important patent that could potentially set the standard for the electric car industry, said Dr. Agarwal. She discussed that Tesla’s move to open source of its patents is a proven innovation strategy that could positively influence the electric car industry.

Dr. Agarwal explained that at this infant stage of the electric car industry, it is more important for Tesla that the industry grow, than for it to compete with other electronic car companies and gas-powered automobiles. By leveraging its existing technology via open-sourced patents, Tesla encourages other companies to enter the electric car market. With more electric car manufacturers, customers would ideally have more option and could be influenced to shift purchases away from gas-guzzler dominated automobile market.

Click here to watch Dr. Agarwal’s “Your Money and Business” interview and learn more about Tesla’s innovation strategy (start at 17:55).

Rajshree Agarwal is the Ruldolph P. Lamone Chair and Professor in Entrepreneurship at the University of Maryland.  Rajshree’s research interests focus on the implications of entrepreneurship and innovation for industry and firm evolution.

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