University of Southern Denmark The Dynamics of Openness and the Role of User Communities A Case Study in the Ecosystem of Open Source Gaming Handhelds Zaggl, Michael ; Schweisfurth, Tim; Herstatt, Cornelius Published in: I E E E Transactions on Engineering Management DOI: 10.1109/TEM.2019.2897900 Publication date: 2020 Document version: Accepted manuscript Citation for pulished version (APA): Zaggl, M., Schweisfurth, T., & Herstatt, C. (2020). The Dynamics of Openness and the Role of User Communities: A Case Study in the Ecosystem of Open Source Gaming Handhelds . I E E E Transactions on Engineering Management, 67(3), 712-723. [8656558]. https://doi.org/10.1109/TEM.2019.2897900 Go to publication entry in University of Southern Denmark's Research Portal Terms of use This work is brought to you by the University of Southern Denmark. Unless otherwise specified it has been shared according to the terms for self-archiving. If no other license is stated, these terms apply: • You may download this work for personal use only. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying this open access version If you believe that this document breaches copyright please contact us providing details and we will investigate your claim. Please direct all enquiries to [email protected] Download date: 03. Oct. 2021 This article has been accepted for inclusion in a future issue of this journal. Content is final as presented, with the exception of pagination. IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT 1 The Dynamics of Openness and the Role of User Communities: A Case Study in the Ecosystem of Open Source Gaming Handhelds Michael A. Zaggl , Tim G. Schweisfurth, and Cornelius Herstatt Abstract—To remain competitive, it is critical for firms to in- firms need to carefully balance their degree of openness in order tegrate external sources of knowledge. However, finding the right to benefit from extra-organizational actors’ contributions while degree of openness is challenging, especially in complex open in- limiting the potential for negative effects [5]. novation ecosystems. The interdependencies and dynamics related to the choice of openness are not well-understood. This paper in- To better determine the optimal degree of openness, the vestigates the role of openness as a competitive mechanism. Specif- managerial literature has suggested a dynamic perspective [7], ically, we research how openness affects firms’ interactions with [12]–[15], which has shown that openness can follow a self- user communities and how it changes the preference structure of reinforcing process [7] and escalate if firms are unable to re- customers. We build a longitudinal case study in the open source strict demands for openness from extra-organizational actors gaming handheld industry and trace the evolution and the dynam- ics of firms, user communities, and their interactions. We find that [13]. However, the literature does not capture what happens a suboptimal level of openness can pose a threat to a firm’s very ex- when the degree of openness provided by firms and the de- istence. Further, we identify repeated patterns characterizing the gree of openness demanded by users are misaligned, i.e., when dynamics in the ecosystem. Based on these patterns, we propose a there is a discrepancy in openness. This paper addresses such framework of the dynamics of openness. Our paper contributes to a discrepancy of openness in an open innovation ecosystem. the literature on open innovation. We illuminate the relevance and the dynamics of openness as a dimension for competition. This pa- Therefore, we ask the following research questions. First: how per also contributes to the literature on user innovation by showing does discrepancy between the openness provided by firms and a shift from manufacturer-based to user-based innovation over the the openness demanded by a user community emerge? Second: course of the product lifecycle. what are the consequences for the ecosystem (especially the Index Terms—Collaboration, crowdsourcing, dynamics, en- firms) when firms fail to address such a discrepancy? trepreneurship, innovation management, open source software, To define openness, we build on the notion of design space, organizational aspects, organizations, research and development which is comprised of all the possibilities in which search and management, technology management, user-generated content, product improvement can take place [16]. We distinguish be- virtual groups. tween open and closed areas in a design space. The open areas are accessible to extra-organizational actors (e.g., users) who I. INTRODUCTION can modify, improve, and change the product. The closed areas, PENING the innovation process to extra-organizational in contrast, are not accessible. The ratio of open areas to closed O actors, such as users, can be beneficial for firms. Users areas represents a product’s degree of openness [8]. Although can contribute new product ideas [1]–[3], improve existing prod- openness is a product-level concept, we argue in this paper for 1 ucts [4], [5], and develop complementary products [6]. Thus, reasons of simplicity that firms are as open as their products. openness can lead to a competitive advantage for firms, they We use a longitudinal case study approach [17]–[19] based can gain knowledge, attract users, and differentiate themselves on data from a netnography, qualitative interviews, and archival from competitors [7], [8]. However, being too open involves data to approach the research questions. As research context, the risk of imitation [9] and value slippage [10]. Further, users we chose the ecosystem of open source (OS) gaming handheld. can gain too much influence on corporate decisions [11]. Thus, OS gaming handhelds are similar to the better known Nintendo DS and Gameboy and Sony’s PlayStation Portable, but the OS gaming handhelds became more open over time. The ecosystem Manuscript received June 13, 2018; revised September 24, 2018 and Decem- consists of the firms that produce the handhelds and users who ber 26, 2018; accepted February 3, 2019. The work of M. A. Zaggl was supported by Deutsche Forschungsgemeinschaft SFB 768. Review of this manuscript was organize themselves in an online community. arranged by Department Editor C. M. Eckert. (Corresponding author: Michael Analyzing the emergence and consequences of discrepancies A. Zaggl.) in openness at multiple occurrences over time in the OS gam- M. A. Zaggl is with the Technische Universitat¨ Munchen,¨ 80333 Munich Germany (e-mail:,[email protected]). ing handheld ecosystem, we find a recurring pattern that we T. G. Schweisfurth is with the University of Southern Denmark, DK-6400 summarize in a framework: we find that the ecosystem is stable Sonderburg Denmark (e-mail:,[email protected]). C. Herstatt is with the Technische Universitat Hamburg-Harburg, 21073 Ham- burg Germany (e-mail:,[email protected]). 1This assumption appears uncritical since the firms in our empirical context Digital Object Identifier 10.1109/TEM.2019.2897900 offer only one product at a time. 0018-9391 © 2019 IEEE. Personal use is permitted, but republication/redistribution requires IEEE permission. See http://www.ieee.org/publications standards/publications/rights/index.html for more information. This article has been accepted for inclusion in a future issue of this journal. Content is final as presented, with the exception of pagination. 2 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT as long as the openness provided by a firm is larger than the because it allows them to influence the designs and product users’ demand for openness (i.e., there is an openness surplus). configurations according to their preferences and thus obtain Yet, owing to further product development, the open areas of products better suited to their needs [16], [27]. Over time, users the design space shrink, and the ecosystem enters a state in become accustomed to the possibilities enabled by firms’ open- which the openness demanded by users is larger than the open- ness and develop specific skills that are only useful as long as ness provided by a firm (i.e., an openness deficit emerges). This openness is provided [7]. Hautz et al. [13] conceptualize this openness deficit causes tensions and conflicts between the firm dynamic as escalation of openness:“once organizations open and the community of users. If a firm ignores this openness up in some areas they might not have the possibility anymore deficit, conflicts can escalate and create a business opportunity to restrict openness if they wanted to” (p. 303). Thus, if a firm for a new entrant. By being more open, this entrant can attract tries to reduce the degree of openness, a discrepancy arises be- users and their contributions, thereby improving the entrant’s tween the openness demanded by the users and the openness product. In turn, this creates positive feedback, attracting fur- granted by the firm. This discrepancy could result in tensions ther users. These dynamics can ultimately drive the incumbent2 and conflicts between the users and firms. out of business. Whether a discrepancy between the openness demanded by Our paper provides two major contributions to the existing the users and the openness granted by the firm leads to a con- literature. First, we extend research on the emergence and flict or other undesired consequences likely depends on the dynamics of openness [7], [12]–[14] by shedding light on how power balance between the two players. To better understand an openness discrepancy between firms and users emerges and this power balance, we briefly discuss the key factors deter- what its consequences are for the firms. Specifically, we show mining the degree of openness [12]. These key factors are a how users—empowered through the possibility of organizing firm’s technology prowess (whether it is possible for a firm to themselves in an online community—can influence a firm’s maintain technology without inputs from users) and the role of degree of openness.