Who Captures Value in a Global Innovation Network? The Case of Apple's iPod

A framework for analysis based on financial measures of value capture is developed and is used to study one iPod model to provide the answer as to which country captures value in a global innovation network. The Apple iPod is manufactured offshore and has a global list of suppliers, but the greatest benefits from this innovation goes to Apple, an American company. Apple has developed very specialized knowledge and ways of doing things that reside within the company and would be difficult to transfer to external locations. Firms are increasingly globalizing innovative activities, but at the same time, most firms keep a substantial base of operations in their home countries. The producers of high value, critical components capture a large share of the value of an innovative product. As long as the US market remains dynamic, with innovative firms and risk-taking entrepreneurs, global innovation should continue to create value for American investors and well-paid jobs for knowledge workers.