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In economics and business administration literature, K. Knight introduced the notion ‘bootlegging’ in 1967. Bootlegging is defined as research in which motivated individuals secretly organise the innovation process. It usually is a bottom-up, non-programmed activity, without the official authorisation of the responsible management, but for the benefit of the company. It is not in the department’s action plan nor are there any formal resources allocated towards it (Augsdorfer 1996).

Quite a few firms have their own specific term for it: English firms call it: Friday afternoon work, work behind the fume cupboard, free lance work, under the counter work, under the table work, pet project, discretionary research, free wheeling, illicit research, scrounging , renegades work, work in the shadow- or underworld. French firms call it: recherche camouflée, recherche cachée, recherche parallele, recherche libre, recherche en perruque, recherche sauvage, or recherche sous-marine. American firms call it moonlighting. German firms call it: U-Boot Forschung, or graue Projekte.

The main reason for the occurrence of bootlegging is the lack of ‘free space’ for creativity. In particular rigid planning ignores the nature of experimental trial and error research. Bootlegging, as a kind of self-regulating element, bridges the mechanistic world of organisation (hierarchy, project proposals, MBO, decisions can only be made after some initial findings) with the chaotic world of creativity and innovation. The theory of path dependency explains why bootleg innovations are (most often) in line with the strategic objectives of the firm: corporate competencies define the search paths for its future. In this respect are the learning processes, beside the tangible output of bootlegging beneficial for the firm.

Bootlegging should not be confused with skunk works: skunk work is defined as a sort of elite, working officially on a given project alongside the formal organization to solve problems more efficiently. In fact the Pacific Tech's Graphing Calculator project at Apple Computer was not a skunk works project but a bootleg project.

'Permitted bootlegging' is research time where technical staff are allowed to spend a certain amount of their time working on ‘pet-projects’ in the hope that some day there is some return for the company. Famous examples of companies, which follow such an initiative, are 3M and Hewlett-Packard. They allow 10 to 15 per cent of the working time for own product related interests. A well-known example of a permitted bootleg product is the yellow sticky Post-it note developed by Arthur Fry and Spencer Silver at 3M.

• Knight, K., 1967, A Descriptive Model of the Intra-Firm Innovation Process, in The Journal of Business, Vol.40, pp.478-496
• Augsdorfer, P., 1996, Forbidden Fruit: an analysis of bootlegging, uncertainty, and learning in corporate R&D, Aldershot