In economics and business administration literature, Kenneth E. Knight introduced the notion bootlegging in 1967. Bootlegging is defined as research in which motivated individuals secretly organize the innovation process. It usually is a bottom-up, non-programmed activity, without the official authorization 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).
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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 organization (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 the learning processes, beside the tangible output of bootlegging, are 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, NuCalc, 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 that follow such an initiative are 3M and Hewlett-Packard. They allow 10 to 15 percent 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. Another famous example is Google, where employees are allowed to spend up to 20% of their work time in personal projects related to the company's business. Several services provided by Google such as Gmail, Google News, Orkut and AdSense were originally created by employees in their work time[1].
Quite a few firms have their own specific terms for it. English firms call it: Friday afternoon work, work behind the fume cupboard, freelance work, under the counter work, under the table work, pet project, discretionary research, free wheeling, illicit research, scrounging, renegade work, work in the shadow world 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 or government projects. German firms call it: U-Boot Forschung, or graue Projekte.