Open Source Innovation

The Phenomenon, Participant's Behaviour, Business Implications

Cornelius Herstatt, Daniel Ehls

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9781138624047
• eBook ISBN: 9781317624240
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Open Source Innovation (OSI) has gained considerable momentum within the last years. Academic and management practice interest grows as more and more end-users consider and even participate in Open Source product development like Linux, Android, or Wikipedia.

Open Source Innovation: Phenomenon, Participant Behaviour, Impact brings together rigorous academic research and business importance in scrutinizing OCI from three perspectives: The Phenomenon, Participants' Behavior, and Business Implications. The first section introduces OCI artefacts, including who is participating and why, and provides a systematic overview of the literature. The second section stresses the behaviour of participants, highlighting participation progression, community selection, user entrepreneurship and fair behaviour, and answering key questions like how to manage governance rules, openness and community design aspects. The third explores the impact and implications of OSI for firms and economies by evaluating business models, uncovering opportunities for firms to interact with communities, and presenting value capture mechanisms.

Open Source Innovation provides a full picture of the movement to help readers understand and engage with OSI from the micro perspective of individuals, to the community, to the macro perspective of firms and economies.

Section 1
The Phenomenon

1
What Is Open Source Innovation?

An Economic, Social, Artifact, and Innovation-Incentive Perspective with Implications for Firms

Daniel Ehls and Cornelius Herstatt

The open source phenomenon has gained tremendous traction within praxis and theory. Thereby various concept now dilute the phenomenon and mix different perspectives. This contribution aims to provide an introduction and overview to the concept open source innovation. An open source taxonomy is offered viewing the phenomenon from an economic perspective, concentrating on openness and free revealing, a social perspective, highlighting collaboration and movements, artifacts, differentiating terminology and classifications, and finally a theoretical view delivering an innovation-incentive perspective. Based on this understanding, participation drawbacks and benefits for firms and individual contributors are shown and strategies for managing open source innovation provided.

Keywords: open source, review, taxonomy

1 What is Open Source Innovation?

1.1 Introduction: The Momentum of Open Source Innovation

Recent examples of collaborative product creation have evidenced a new phenomenon: open source innovation. Innovative goods are produced by volunteers, who “program to solve their own as well as shared technical problems, and freely reveal their innovations without appropriating private returns from selling the software” (Hippel and Krogh 2003, p. 209). Open Source is a product which allows the developers to access all information to create, modify and distribute it under the same license as the original product (Open Source Initiative). Examples of this phenomenon include software development (e.g. Linux, Apache, Debian or Mozilla) and content creation projects (e.g. Wikipedia, LibriVox, Open Directory Project or Open Street Map) that involve numerous people, question the boundaries of the firm, and impact market share.

The large number of open source projects and people involved is illustrated by the open source directory SourceForge. SourceForge lists more than 324,000 projects with a total of over 3.4 million developers on the supply side, and on the demand side more than 4 million downloads a day connecting 46 million consumers as of September 2013.¹ Further projects not listed on SourceForge like the Open Directory Project or Wikipedia consist of more than 10,000 contributors (Cedergren 2003; Glott et al. 2010). The Linux Kernel project and Debian have more than 1,000 contributors each.

Regarding the locus of innovation, distributed volunteers work together in self-governing communities rather than under contract for firms. The locus of knowledge creation shifts outside the boundaries of the firm and there is no contractual member commitment.

Additionally, market analysis provides astonishing figures for openly developed products. As of August 2013, Apache has a market share for web server software of 52.19%, followed by Microsoft with 19.65%.² Microsoft Internet Explorer (proprietary but available for free), Google Chrome (based mainly on open source project Chromium, but proprietary and for free), and the open source browser Firefox represent the top three browsers worldwide with market shares of 22.35%, 37.54%, and 18.66% respectively as of June 2013.³ Total factory revenues in the worldwide server market of $11.9 billion breaks down to 16.9% for Linux, 21.8% for Unix, and 48.5% for Windows in the first quarter of 2011.⁴ However, initial software deployment on sold servers does not represent actual market share, but the high share of open source products in commercial distribution. An actual market share is obtained by measuring internet traffic. These analyses reveal a market share of 32.6% for Linux (special Unix distribution), 31.2% for other Unix distributions, and 36.1% for Windows.⁵

Following this discussion, open collaboratively developed products are accepted in the market. They have even driven incumbent firms out of the market, or at least significantly reduced their market share. To develop the products, a large number of volunteers provide their input outside the boundaries of the firm. It is for these reasons that the open source phenomenon attracts the interests of scholars, governments and businesses, and substantiates the relevance for management and science.

However, with the raise of open source innovation, the application of the term increased and was transferred to further areas, thereby sometimes misleading or vaguely applied. We pursue to address this inconsistency and elucidate open source innovation. We describe open source innovation in more detail and provide an overview of current understanding from different points of views. We do not aim to provide a comprehensive literature review about the open source innovation, research directions or present key findings,⁶ but to take stock of the understanding of the phenomenon. In order to focus our understanding and create coherence we provide a multi-perspective view of open source taxonomy and highlight key characteristics of open source innovation.

1.2 Open Source Taxonomy

The term ‘open source’ describes a phenomenon where volunteers⁷ create a product, make it publicly available and relinquish most of their intellectual property rights (IPR), but do not receive a direct compensation (Hars and Ou 2002). Open source implies that the instructions for creating the product are human readable and fully and freely revealed to the public. Central to both aspects is the understanding of openness. However, openness and the phenomenon of open source are “spectacularly stratified” (Healy and Schussman 2003) and attract attention from (social) science academics and practitioners. In order to reflect the highly stratified nature, we introduce four perspectives: economic, social, artifact and innovation-incentive. The economic perspective concentrates on free revealing and openness in terms of the boundaries of the firm and the product. The social perspective includes open source communal aspects, stresses the debate about the meaning of open and free as well as the collaborative mode of working. The artifact perspective provides definitions and classifies open source projects. Finally, the innovation incentive view provides a theoretical modeling explaining why people innovate and freely reveal their contributions.

1.2.1 An Economic Perspective: Openness and Free Revealing

The classic approach to product development represents a ‘producer’ model, where “most important designs for innovations would originate from producers and be supplied to consumers via goods and services that were for sale” (Baldwin and Hippel 2011, p. 1). The open source phenomenon challenges this model. Many open source users are at the same time consumers using the product as well as producers creating the product (Baldwin and Hippel 2011; Roberts et al. 2006). These users conduct tasks ranging from producing core elements and suggesting new features (Lakhani and Wolf 2005; Hertel et al. 2003; Jeppesen and Frederiksen 2006), to testing and giving feedback (Hars and Ou 2002; Bagozzi and Dholakia 2006) and to providing user assistance and mundane tasks (Lakhani and Wolf 2005). In contrast to the classic approach, the development process is changed both at the supply side, because users represent additional sources of innovation, and at the demand side, because users are enabled to integrate their requirements directly into the product, thus extending the traditional choice of building or buying (Fitzgerald 2006). Essential within the integration in the open development process are access to information and the use of IPR. The creator grants “access to his proprietary information to all interested agents without imposition of any direct payment”, defined as ‘free revealing’ (Harhoff et al. 2003, p. 1754). The product is considered open “when all information related to the innovation is a public good—non-rivalrous and non-excludable” (Baldwin and Hippel 2011, p. 1401). However, this does not mean that the full product needs to be open, but maybe only certain product modules. Besides, openness is described more specifically. Openness is broken down into the two factors ‘access control’ and ‘usage regulations’. This subdivided concept of openness repudiates the one-dimensional view of revealing ‘all’ or no proprietary information (Harhoff et al. 2003, p. 1753). The dichotomy of being fully open or fully closed is overcome. Openness is described more specifically and the dichotomous concept is transferred into a multidimensional concept⁸ (Henkel 2006; West and O’Mahony 2008; Balka et al. 2009; Dahlander and Gann 2010).

Viewed from a strict economic-legal perspective, the term ‘open source’ is defined by the type of license applied to the product (Hippel and Krogh 2003; Krogh et al. 2012). The license waives the principal rights assigned to the product creator by copyright law and grants users the right to access, modify and redistribute the creation instructions (Fosfuri et al. 2008). In this creator- or product-centered concept, open source products are a public good, created by private investments (Crowston et al. 2012; O’Mahony 2003).

Open source is furthermore discussed from an organizational studies description related to ‘Open Innovation’⁹ while concentrating on the revenue generating practices of firms (Vanhaverbeke et al. 2008). Open source represents an external source of innovation and opportunity for commercialization (Bogers and West 2012). Firms maximize innovation effectiveness by co-operating across firms’ boundaries. They source external innovations in order to inbound knowledge or outbound knowledge they cannot utilize. Openness “emphasizes the permeability of firms’ boundaries where ideas, resources and individuals flow in and out of organizations” (Dahlander and Gann 2010, p. 699). This organizational or process view differs from the above view concentrating on the creator and product. The organizational-process view focuses on organizational permeability and commercialization supported by IPR, whereas the creator-centered view focuses on the free revealing of information and developing practices (Baldwin and Hippel 2011). In other words, openness within the organizational view refers to openness of the firms’ boundaries as well as knowledge inflows and out-flows. In contrast, openness in the creator- or product-centered view refers to the openness of the product creation, including the development process. Additionally, organizational utilization of openness and open innovation research is directed (so far) at producer benefits, whereas user innovations focus on the motivations of why users innovate an...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Figures and Tables
• Acknowledgements
• Foreword
• Preface
• SECTION 1 The Phenomenon
• SECTION 2 Participant’s Behavior
• SECTION 3 Business Implications
• List of Contributors
• Index