how firms make friends: communities in private-collective innovation

How Firms Make Friends:Communities in Private-Collective Innovation

Defense Doctoral Thesis by Matthias Stuermer

ETH Zürich, September 30th 2009

2September 30th 2009 How Firms Make Friends: Communities in Private-Collective Innovation

Overview

1. How firms make and don't make friends

2. Thesis papers and their findings

3. Additional research papers

4. Conclusions


How Firms May Adopt the Open Source Model

Integrating externally available

open source software open innovation→Level 1





Revealing proprietary source code under an

open source license full control by the firm→Level 2







Level 3Building a firm-sponsored community by

renouncing some of the project's control


Why and How to Gain Control

A)Community-driven OSS projects Meritocracy: exercise of control on the basis of knowledge *

Technical contributions and organizational-building

behavior lead to authority and control **

B)Firm-driven OSS projects Business model: value creation and value appropriation

Firms need control to appropriate returns of investment

Balancing act between openness and control* Weber (1978)

** O'Mahony and Ferraro (2007)


How May Firms Influence on OSS Communities?

Influence of corporations increases when... firms reveal previously proprietary code firms employ core developers who previously

contributed as unpaid volunteers firms contract intermediary OSS firms and individuals

New challenges in firm-driven OSS projects Possible crowding-out effects of intrinsic motivation

Create incentives to attract external contributions


Balancing Act Between Openness and Control

Control decreases contributions * Transparency increases contributions strongly Accessibility increases contributions slightly **

Balancing is difficult Too much control: communities may not contribute with

all of their energy, interest, and creativity Too little control: results may not serve the firm's goals

* Shah (2006), Dahlander and Magnusson (2005)** von Krogh et al. (2009)


Apple iPhone

low Degree of openness high


Apple iPhone Nokia N810



Apple iPhone Nokia N810


Openmoko


Overview




4. Conclusions


Structure of my Doctoral Thesis

Paper 1 Paper 2 Paper 3

App

endi

x




Introduction

App

endi

x




IntroductionMy paper thesis:

“How Firms Make Friends...”

App

endi

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IntroductionMy paper thesis:

“How Firms Make Friends...”

Paper 4 Paper 5 Paper 6Co-Author on additional research papers

App

endi

x


Thesis Papers and their Theory and Data

Paper Theory Method Dataset My contribution

1 open innovation

2

3

longitudinal analysis, new measures

quantitative archival data: newsgroups and source code commits

research design, data analysis, method creation, theory development

private-collective model of innovation

grounded theory building

expert interviews:with Nokia members, contractors and voluntary contributors

conducting interviews, coding of transcripts, grounded theory building, theory writing

motivation, identification, marketing

structured equation modeling (SEM)

online survey:questionnaire to Maemo and Openmoko community

research design, survey development and testing, data gathering, hypothesis development, link to theory

1

2

3


Enabling Knowledge Creation through Outsiders: Towards a Push Model of Open Innovation

Published: 2010 in special issue on open innovation in the International Journal of Technology Management

Finding: characteristics of the context that enables external contributions push-model of open innovation→

Data: Eclipse newsgroup messages (372k messages)and source code history (63 Mio LOC)

Method: longitudinal analysis, distinctionbetween IBM and non-IBM contributors

1



1

Licensinginnovationsto other firms

Current concept of open innovation

Exploitation of existing ideas



1

Licensinginnovationsto other firms

Current concept of open innovation

Exploitation of existing ideas

Free revealing ofknowledge

Push model of open innovation

Inducing new external innovations useful for the firm

Innovations pushed back

→ level 2 of the open source model



1

Example of adoptinglevel 3 of theopen source model:founding anindependentgovernance body

→ Developer activitybefore and afterEclipse Foundation



1

Example of adoptinglevel 3 of theopen source model:founding anindependentgovernance body

→ Developer activitybefore and afterEclipse Foundation

announcement of Eclipse Foundation


Extending Private-Collective Innovation: A Case Study

Published: 2009 in R&D Management, vol. 39 (2)

Finding: benefits, costs and mitigation strategies of Nokia using and contributing open source software in a commercial product private-collective innovation→

Data: 23 interviews in the Maemo community (300 pages) Nokia managers, developers, contractors,→

voluntary contributors

Method: grounded theory buildingthrough coding the transcripts

2



2

Example ofmitigation strategy for“difficulty to differentiate:”

Selective source code revealing

→ Hybrid software stack of Maemo


The Credible Sponsor: Participant's Motivation and

Organization Attributes in Collaborative Digital Innovation

Under review: special issue on digital innovation in Organization Science

Finding: impact of perceived firm characteristics on the intrinsic and extrinsic motivation of contributors

Data: survey on the Maemo and Openmokocommunities 1233 responses, 27.9% response rate →

Method: structured equation modelingtesting 10 hypotheses on openness, credibility, identification, motivation and contribution

3




3




3

Perceived firm attributes Individual Identification, Motivation, and Contribution




3

Perceived firm attributes Individual Identification, Motivation, and Contribution

⊘


Overview




4. Conclusions


Proceedings of HICSS 2007:Sampling in Open Source Software Development:The case for using the Debian GNU/Linux Distribution

Working paper:A Lightweight Model of Component Reuse: A Study of Software Packages in Debian GNU/Linux

Revise and resubmit Organization Science:How Component Dependencies Predict Change in Complex Technologies

4

5

6

Additional Research Papers


Overview




4. Conclusions


Conclusions

Firms benefit investing in open source software private-collective model of innovation→

Balancing act managing an open source community – especially as a firm

Ways on how to incentivize contributions

Proposition: Network with the community becomes a new source of sustainable competitive advantage


Conclusions

Firms benefit investing in open source software private-collective model of innovation→

Balancing act managing an open source community – especially as a firm

Ways on how to incentivize contributions

Proposition: Network with the community becomes a new source of sustainablecompetitive advantage


Sources of Competitive Advantage

Traditional views Industry structure view * Resource-based view **

* Porter (1980)** Wernerfelt (1984), Barney (1991)


Sources of Competitive Advantage

Traditional views Industry structure view * Resource-based view **

Dyer and Singh (1998): Relational view Network of relationships with other organizations Embedded interfirm resources are difficult to imitate Results in interorganizational competitive advantage

* Porter (1980)** Wernerfelt (1984), Barney (1991)


Firm-Driven Open Source Communities as an Example

of Interorganizational Competitive Advantage

Determinants of relational rents Subprocesses facilitating relational rents

Relation-specific assets Duration of safeguards→

Volume of interfirm transactions→

Knowledge-sharing routines Partner-specific absorptive capacity→

Incentives to encourage transparency and discourage free riding→

Ability to identify and evaluate potential complementarities→

Effective governance

Complementary resources and capabilities → Role of organizational complementarities to access benefits of

strategic resource complementarity

→ Ability to employ self-enforcement rather than third-party governance enforcement

→ Ability to employ informal versus formal self-enforcement governance mechanisms

Dyer and Singh (1998)


Ari Jaaksi, Head of OSS Operations at Nokia

“But we believe the world is changing and the competitive advantage comes from how many others can you get from participating in this network. This network becomesmore important than trade secrets.”




→ this was November 2006

→ June 2009: partnership Nokia and Intel based on Maemo

→ August 2009: Maemo shall supersede Symbian as a platform




→ this was November 2006

→ June 2009: partnership Nokia and Intel based on Maemo

→ August 2009: Maemo shall supersede Symbian as a platform

→ October 2009: N900, new smartphone based on Maemo