OPEN SOURCE INNOVATION IN PHYSICAL PRODUCTS: ADVANTAGES AND DISADVANTAGES, A CORPORATE PERSPECTIVE
Mickael Francois Henri Blanc Bsc, MBus, MBA
Supervisors: Associate Professor Roxanne Zolin and Dr Henri Burgers
Submitted in fulfilment of the requirements for the degree of Master of Business (Research)
School of Management, Faculty of Business
Queensland University of Technology
Australia 2011
i
Keywords
Innovation, Innovation Management, Open Source, Open Source Hardware, Open Source Innovation, Open Source Software, Product Development, User Innovation.
Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective i ii
Abstract
A better understanding of Open Source Innovation in Physical Product (OSIP) might allow project managers to mitigate risks associated with this innovation model and process, while developing the right strategies to maximise OSIP outputs. In the software industry, firms have been highly successful using Open Source Innovation (OSI) strategies. However, OSI in the physical world has not been studied leading to the research question: What advantages and disadvantages do organisations incur from using OSI in physical products?
An exploratory research methodology supported by thirteen semi-structured interviews helped us build a seven-theme framework to categorise advantages and disadvantages elements linked with the use of OSIP. In addition, factors impacting advantage and disadvantage elements for firms using OSIP were identified as:
Degree of openness in OSIP projects; Time of release of OSIP in the public domain; Use of Open Source Innovation in Software (OSIS) in conjunction with OSIP; Project management elements (Project oversight, scope and modularity); Firms‟ Corporate Social Responsibility (CSR) values; Value of the OSIP project to the community.
This thesis makes a contribution to the body of innovation theory by identifying advantages and disadvantages elements of OSIP. Then, from a contingency perspective it identifies factors which enhance or decrease advantages, or mitigate/ or increase disadvantages of OSIP. In the end, the research clarifies the understanding of OSI by clearly setting OSIP apart from OSIS.
The main practical contribution of this paper is to provide manager with a framework to better understand OSIP as well as providing a model, which identifies contingency factors increasing advantage and decreasing disadvantage. Overall, the research allows managers to make informed decisions about when they can use OSIP and how they can develop strategies to make OSIP a viable proposition. In addition, this paper demonstrates that advantages identified in OSIS cannot all be transferred to OSIP, thus OSIP decisions should not be based upon OSIS knowledge.
ii Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective iii
Table of Contents
Keywords ...... i Abstract ...... ii Table of Contents ...... iii List of Figures ...... v List of Tables ...... vi Statement of Original Authorship ...... ix Acknowledgments ...... x CHAPTER 1: INTRODUCTION ...... 1 1.1 Background ...... 1 1.2 Statement of the problem ...... 3 1.3 Theoretical Contribution and practical importance of the study ...... 4 1.4 Methodology ...... 7 1.5 Definitions and scope of research ...... 8 1.6 Thesis outline ...... 9 1.7 Summary ...... 10 CHAPTER 2: LITERATURE REVIEW ...... 11 2.1 Review of the OS literature in the software industry ...... 13 2.2 Definition of Open Source Innovation ...... 23 2.3 Advantages and Disadvantages of OSIP for the firm...... 36 2.4 Summary and implication for the firm ...... 44 2.5 Research questions and framework ...... 45 2.6 Conclusion ...... 45 CHAPTER 3: RESEARCH METHODOLOGY ...... 47 3.1 Introduction ...... 48 3.2 Methodological approach ...... 50 3.3 Data collection method ...... 57 3.4 Validity and reliability ...... 63 3.5 Conclusion ...... 65 CHAPTER 4: RESULTS: ELEMENTS OF ADVANTAGE AND DISADVANTAGE IN OSIP67 4.1 Background to the repondents projects ...... 68 4.2 Key findings ...... 70 4.3 Comparison of the results with the literature on OSIS ...... 110 4.4 Conclusion on this results section ...... 119 CHAPTER 5: RESULTS: FACTORS IMPACTING ELEMENTS OF ADVANTAGE AND DISADVANTAGE IN OSIP ...... 120 5.1 Introduction ...... 121 5.2 Impact of the firm‟s life cycle ...... 123
Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective iii iv
5.3 Industry impacts ...... 124 5.4 Influence of the firm‟s strategy on advantage and disadvantage elements of osip ...... 126 5.5 How do organisations enhance OSIP? ...... 131 5.6 A contingency model could explain advantages and disadvantages of OSIP ...... 144 5.7 Future research questions regarding OSIP ...... 147 5.8 Conclusion ...... 164 CHAPTER 6: IMPLICATIONS AND CONCLUSIONS ...... 165 6.1 Summary of key findings and Contribution to the theory ...... 166 6.2 Implication for management ...... 170 6.3 Limitations and suggestions for future research ...... 173 6.4 Conclusion and recommendations ...... 175 GLOSSARY...... 177 BIBLIOGRAPHY ...... 179 APPENDICES ...... 191 Appendix 1: Interview protocol ...... 191 Appendix 2: Interview questions ...... 193
iv Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective v
List of Figures
Figure 2-1: OSI in comparison to other models of innovation (adapted from von Hippel & von Krogh, 2003) ...... 20 Figure 2-2: Comparison and contrast of value creation and value capture in OSI (adapted from Casadeus-Massanell & Ghemawat, 2009) ...... 28 Figure 2-3: Factors impacting advantages and disadvantages of OSIS ...... 30 Figure 2-4: Elements of open source innovation and their outputs ...... 35 Figure 2-5: Supply chain differences between OSIS and OSIP (Based on von Hippel, 2001) ...... 40 Figure 5-1: Scope and Modularity scenario in OSIP and their impact on advantages and disadvantages elements...... 158
Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective v vi
List of Tables
Table 2-1: Outline of Chapter 2 ...... 12 Table 2-2: Elements of business model (Adapted from Osterwalder, 2004) ...... 21 Table 2-3: Elements used to define OS in the literature ...... 23 Table 2-4: Motivation factors in OSIS (based on Hars and Ou, 2001) ...... 26 Table 2-5: Example of benefits from OSIS at the firm level...... 26 Table 2-6 : Advantage and Disadvantages of OSIS discussed in the literature at the firm level ...... 27 Table 2-7: Advantages of OSIP, the IBM PC case ...... 38 Table 2-8: Differences between OSIS & OSIP and their impact on perceived OSIP disadvantages (Adapted from Raash et al., 2009) ...... 39 Table 3-1: Outline of Chapter 3 ...... 47 Table 3-2: Summary of the study ...... 49 Table 3-3: Selection criteria for the sample ...... 53 Table 3-4: Sampling approach ...... 54 Table 3-5: Final projects selection ...... 56 Table 3-6: Interviews‟ details...... 57 Table 3-7: Sample of interview questions ...... 59 Table 3-8: Themes and their definition in the research coding ...... 63 Table 3-9: Attributes of qualitative study sampling (adapted from Miles & Huberman, 1994) ...... 64 Table 4-1: Outline of Chapter 4 ...... 67 Table 4-2: Details of OSIP projects ...... 68 Table 4-3: Summary of findings and thematic coding ...... 71 Table 4-4: Advantages and disadvantages elements common to OSIP and OSIS ...... 111 Table 4-5: Advantage and disadvantage elements, differences between OSIS and this research on OSIP ...... 114 Table 5-1: Outline of Chapter 5 ...... 120 Table 5-2: Factors impacting advantage and disadvantage elements of OSIP from the literature and the research ...... 121 Table 5-3: Factors linked with organisations‟ life cycle found in interviewees comments...... 123 Table 5-4: Managers‟ comments on manufacturing elements impacting OSIP ...... 125 Table 5-5: A contingency model of OSIP: Impact of an increase in contingency factors on advantages and disadvantages for firms engaged in OSIP...... 145 Table 5-6: Levels of openness in OSIP projects and their influence on advantage and disadvantage elements ...... 149 Table 5-7: Time of release in OSIP and its impact on advantage and disadvantage elements ...... 151 Table 5-8: Effects of openness of the project and time of release on the OSIP project ...... 153 Table 5-9: Project Management contingency factors and their relative impact on advantage and disadvantage elements ...... 157 Table 5-10: Risks and risk management actions in OSIP (Adapted from Lichtenthaler, 2010)...... 160
vi Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective vii
Table 6-1: Outline of Chapter 6 ...... 165
Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective vii viii
List of Abbreviations
CSR: Corporate Social Responsibility
IP: Intellectual Property
IT: Information Technology
OS: Open Source
OSH: Open Source Hardware
OSI: Open Source Innovation
OSIP: Open Source Innovation in Physical Products
OSIS: Open Source Innovation in Software
OSS: Open Source Software
R&D: Research & Development
UGC: User Generated Content
viii Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective ix
Statement of Original Authorship
The work contained in this thesis has not been previously submitted to meet requirements for an award at this or any other higher education institution. To the best of my knowledge and belief, the thesis contains no material previously published or written by another person except where due reference is made.
Signature: ______
Date: ______
Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective ix x
Acknowledgments
I owe many thanks to my supervisors without whom this journey would not have been possible. I am grateful for their support, availability and flexibility to accommodate my schedules. I address a very special thanks to you for helping me build this academic understanding and successfully achieve a switch from an operational to an academic style.
I would also like to thank the Open Source community without which this research would not have eventuated. Thanks for their time, involvement and endless generosity and support. I have been amazed by people‟s generosity and willingness to help. You guys already make the world a better place.
In addition, I wish to thank all my friends and colleagues for their support, comfort, friendship and availability during this journey. Most of all, I would like to thank my wife for her unconditional love and support.
July, 2011.
Mickael Blanc
x Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective 1
Chapter 1: Introduction
1.1 BACKGROUND
Innovation has become an important driver for competitiveness in many industries. The importance of innovation is partially due to an increase in global competition and rise of knowledge-based advantages for companies (Schilling, 2008). This situation has put tremendous pressure on organisations to continuously innovate and produce new and different products and services (Banbury & Mitchell, 1995). Indeed, constantly introducing new products and focussing on processes development allows firms to reduce costs of production, protect margins and stay ahead of competitors (Porter, 1980). Innovation is traditionally defined as an unconstrained process of accepting and implementing ideas into new products or processes (Hurley & Hult, 1998). However, academics have discussed at length that successful innovators have to develop clear strategies and processes to foster their organisation‟s innovation (Nohria & Gulati, 1996; Brown & Eisenhardt, 1997). Amongst the important debates in innovation management and strategies, are cost and speed of innovation (Brown & Eisenhardt, 1995), with the view that companies can build competitive advantages either by shortening their innovation cycle and/or reducing associated expenses (Brown & Karagozoglu, 1993).
Recently, academics like Chesbrough (2003, 2006) are reporting a change in innovation paradigms whereby firm-centric traditional innovation models are slowly replaced by more open ones. This situation is supported by improvement in Information Technology (IT) as well as new emerging technologies which allow for easier and faster access to more flexible manufacturing, shorter production runs and reduction of importance of economy of scale (Womack, Jones & Roos, 1990). Thus, innovation which was solely seen as an internal activity is slowly transforming into a more flexible structure where differences between internal and external sources of innovation are blurred. Indeed, through the licensing of Intellectual Property (IP), joint venturing, pooling of Research & Development (R&D) and other arrangements, organisations are able to innovate outside of the traditional boundaries of the firm.
Chapter 1: Introduction 1 2
A good example of this transformation and blurring of the firm‟s boundaries is the integration of full communities in organisation‟s innovative environment. Open Source Innovation (OSI) is the involvement of the community with volunteers participating in the design, development and delivery of new products (Raymond, 1999; von Hippel, 2001). OSI is an innovation process rooted in the development of Information Technologies (IT) and computing sciences. In the software industry, firms have been highly successful using this strategy, as Open Source Innovation in Software (OSIS) allows for software development with lean management and low costs due to community involvement (Bonnaccorsi & Rossi, 2006; Cassadesus & Ghemawat, 2006).
However, OSI is not a new concept and has also been used in marketing hardware. IBM, at the end of the 70‟s, with its well known IBM PC, used OSI in physical product (OSIP). By leveraging a whole community from resellers to technology enthusiasts, IBM achieved faster and cheaper development and set new standards in the personal computer industry (Battey, 2001). As this research aims at being non-industry specific, the term “physical product “ is used instead of hardware to define tangible goods developed using Open Source Innovation.
Still, research and knowledge on OSIP are non-existent and at best come from empirical knowledge gathered mainly from the IBM case study or very specific applications in the biotech industry. Understanding OSIP is therefore important as it could offer new innovation strategies. Knowing that Open Source Innovation in Software (OSIS) has proved to be a successful strategy (von Hippel, 2008) gives us a reason to investigate OSI advantages in physical products. In addition, increasing permeability of firms‟ boundaries to external partners (Chesbrough, 2006) are changing the OSI landscape. In fact, an increasing number of organisations claim they are using OSI not only in the software industry but also in physical products (von Krogh & von Hippel, 2006; Müller-Seitz & Reger, 2009). Thus, OSI‟s applications have attracted academic attention on the transfer and impact of this innovation strategy beyond the IT industry and software.
2 Chapter 1: Introduction 3
1.2 STATEMENT OF THE PROBLEM
There is a gap in the understanding of OSI, particularly when looking at physical products. Indeed, research on the subject of OSI beyond software is scarce and refers at best to a description of the translation of OSIS phenomenon into contemporaneous projects such as the OScar (Müller-Seitz & Reger, 2010), Biotechnology project and the extended family of Wikis (Peddibohotla and Subramani, 2007; Müller-Seitz and Reger, 2009). Thus, there is a gap in the literature to understand OSI in physical goods. Moreover, applicability and transferability of OSI processes to physical products has recently been raised. Many scholars are investigating the limitation of OSI processes in non software related arenas (Müller- Seitz & Reger, 2009; Raash et al., 2009; Allarakhia, 2009). However well understood in the software arena, advantages and disadvantages of OSI for the firm in the physical world have not been studied.
This paper examines the application of OSI for hardware or OSIP and asks the following research question:
What advantages and disadvantages do organisations incur from using OSI in physical products?
Looking at advantages and disadvantages of OSIP, other important questions also arise: what are the factors that impact elements of advantages and disadvantages and how can firm enhance OSIP?
Chapter 1: Introduction 3 4
1.3 THEORETICAL CONTRIBUTION AND PRACTICAL IMPORTANCE OF THE STUDY
This research aims to make a contribution to the body of knowledge management and innovation literature. First, I intend to build a framework summarising advantages and disadvantages of OSIP from a corporate perspective. This will help to understand the impact of OSIP and its repercussion on firms. Second, this research answers to the increasing demand for a better understanding of OSI‟s principles applied to physical products development, by offering a contingency model of advantages and disadvantages linked with this strategy. In addition, translation of OSI advantages from software to physical products are under scrutiny, especially when looking at economical and product development impacts at the firm level. The research also looks at helping managers in understanding when and if advantages outweigh disadvantages of OSIP. Thus, the study develops an understanding of situation and elements which mitigate disadvantages and nurture advantages. In that regard, some of the strategies organisations can use to capitalise on the advantage of OSIP are discussed. Ultimately, this paper provides managers with recommendations about the alternative offered by OSIP if seriously considered as an innovation process with particular focus on the fact that OSIP is a strategy, which does not fit all.
Von Hippel & von Krogh (2003) describe three models of innovation prevalent in organisation sciences: the “private investment model”, the “collective action model” and “the private collective model”. OSI falls into the third category, being characterised by both private investment and collaborative contribution toward design, development and/or delivery of new product. In addition to being part private and part public, the Intellectual Property (IP) developed during the process is freely revealed and available for the community (von Hippel & von Krogh, 2003, 2006). Hence, this innovation model has attracted researchers as it conserves private elements even after disclosure to the public, thus revealing a middle ground in the continuum between private and public goods. The OSI model has been extensively studied in the software industry from Stallman (1999) setting up the principles defining the concept to von Hippel, (2010) re-discussing openness in OSI. However,
4 Chapter 1: Introduction 5 scholars tend to agree that Open Source Innovation in Software (OSIS) is defined as: the design, development and distribution of products characterised by community involvement, individual and community incentives as well as collaborative innovation (von Krogh & von Hippel, 2003, 2006).
Outside of the software industry, physical products have tangible characteristics which slightly impact the OSI process and model (Abdelkafi, Blecker & Raash, 2009). As identified by von Hippel (2001), physical products must be produced and physically distributed. Thus, innovation can still be expected from end- users but diffusion and production is in the hand of manufacturers. Consequently, OSIP has specific impacts on organisations using this strategy which might be different from OSIS. In addition, when compared to more traditional models of innovation, the fact that IP is developed collectively and shared between participants in OSIP opens a new rich dimension, which is of high interest.
The literature identifies important advantages for organisations using OSI, with the view that those advantages are not confined to the software industry. OSIS has been extensively studied with particular attention toward advantages and disadvantages for individuals, the community and firms. The OSIS development model is widely seen as both a collaborative process in producing (von Hippel & von Krogh, 2003) and sharing implementation of a technology (Chesbrough, Vanhaverbeke & West, 2006). Since the community contributes to the process, it is expected that OSIS products would be made easily available. OSIS can also be described as the answer to a proprietary and closed model (Lakani & von Hippel, 2003; Chesbrough et al., 2006) with incentives and motivations identified as intrinsic and extrinsic for both individuals and firms (Lakani & von Hippel, 2003). On another hand, benefits (Raymon, 1999; Dahlander, 2004; Lerner & Tirol, 2001, 2002) and strategic impacts (Bonnaccorsi & Rossi, 2006; Cassadesus & Ghemawat, 2006) of OSIS at the firm level have been identified and discussed with particular interest to the low cost of diffusion and coordination associated with OSIS projects. Moreover, the literature also covers diverse subjects such as the impact of free pricing (Mustonen, 2002), the degree of Openness in OSIS strategies (Cassadesus-Massanell
Chapter 1: Introduction 5 6
& Llane, 2009), licensing models (Stallman, 1999; Mustonen, 2003; Shapiro, 2001) and resource allocation in OSIS projects (von Krogh & von Hippel, 2003, 2006).
The advantages of OSIS encompass: fostering the firm‟s innovation processes by integrating end-users in the innovation process (von Hippel, 2005, 2007), providing financial advantages (Mustonen, 2004), accessing community resources (Lakhani & von Hippel, 2009, De Jong & von Hippel, 2009) but also offering different competitive strategies (Bonnacorsi et al., 2006; Müller-Seitz, 2009). At the firm level, financial advantages principally flow from lower cost of development due to community involvement as well as community support. This in turn allows firms to compete on price but also distribute their product for free, locking consumers in service agreements and/or providing hardware. IBM is well-known to have employed this strategy with its Apache web-servers (Henkel, 2003; Koenig, 2004).
However, the literature also identifies disadvantages of OSIS linked to value capture. In fact, in traditional innovation models, firms invest in R&D building up new knowledge and processes which are then protected and used or sold to produce income partly reinvested toward producing further IP. Thus, firms‟ business models rely heavily on their IP to acquire competitive advantages (Barney, 1991). However, this model does not stack up in OSIS as IP is released for free to the community (Mustone, 2003; Casadeus-Massanell & Ghemawat, 2009).
As the origin of OSI lies within software development (Raymond, 1999), this phenomenon has been extensively studied in the software industry. However, scholars point out that if software offers a rich and specific environment for OSI, it is by no means exclusive (von Hippel & von Krogh, 2003; Chesbrough & Appleyard, 2007). In fact, many scholars indicate that OSI might have broader applicability than the IT industry (Lerner & Tirole, 2002; Müller-Seitz & Reger, 2009). According to Chesbrough (2007), OSI seems to offer new business model alternatives adaptable to any given industry, thus providing new market entry strategies (Allarakhia, 2009) and new ways of competing against incumbents (Raymond, 1999). But the major advantage of OSI appears as the community and end-users in particular are
6 Chapter 1: Introduction 7 integrated in the innovation processes, tapping into resources under-exploited until now. This allows firms engaged in OSIS to increase speed of development, reduce costs and access new markets (von Krogh & von Hippel, 2006). In addition, an increasing number of ventures indicate that they have been successful in using OSI in new physical products (Raash et al., 2009). Such examples cover a broad and diverse range of industries such as biopharmaceuticals, with the Genome Project (Allarakhira, 2009; Müller-Seitz, 2009), or communication, entertainment and transportation (Abdelkafi et al., 2009). The Neuro OSD project for example provides an entertainment unit which sits in the lounge room and can stream media to a home theatre. The OScar project is a transportation project entirely developed by the community.
Understanding both the advantages and disadvantages of OSIP, and their impacts on the firm allows organisations to decide if and when they might use OSIP.
1.4 METHODOLOGY
This paper is a qualitative exploratory research based on fifteen semi-structured interviews of twelve participants.
The research objective is to discover the potential advantages and disadvantages for firms using OS in the design, development and delivery of physical products. Because very little previous study on OSIP exists, this research adopts a qualitative approach with an exploratory setting using semi-structured interviews. This strategy is recommended by Miles & Huberman (1994) in the context of scarcity of knowledge, and when the aim is creating new knowledge and gaining further insights. Furthermore, this strategy is particularly appropriate in an exploratory context. Eisenhardt (1989) and Yin (2003) suggest this setting when new areas of knowledge are studied while the theoretical background is still in development. According to Yin (2003), interviews are suitable when the researcher looks at uncontrollable events. Moreover, Eisenhardt (1989) and Gillham (2000)
Chapter 1: Introduction 7 8 argue this methodology is well suited when the research purpose is to advance theory in new topics.
In this research, the units of analysis are projects using OS in the design, development and distribution of new physical products. Multiple respondents have been selected as it is considered more robust than a single case (Yin, 2003). In addition, this set-up allows for a lot of information to be collected from different sources (Yin, 2003).
The research proceeded in two steps. First, the design of a sampling framework in order to select projects and respondents which matched the particular definition of OSIP adopted. Building on previous knowledge from OSI in the software industry, the study particularly focused on firms which were either mature with a mature project or at the business start-up phase with a well-advanced project. Those organisations and projects were selected as they offer some stability to study OSIP and the firms would have some experience upon which to base their thoughts about the advantages and disadvantages of OSIP. Then, the conduction of fifteen exploratory interviews from a purposive sample of managers involved in those projects. During interviews, important information was collected on the advantages and disadvantages of OSI in the physical world.
1.5 DEFINITIONS AND SCOPE OF RESEARCH
This section provides definitions of the research boundaries and key terms used along the study. Chapter 2, Literature Review, elaborates on their importance and links to the subject discussed.
This research takes place at three levels: firstly, I look at projects using OSIP, which represent the main unit of analysis. Secondly and by extension, I focus on firms that run OSIP projects. Lastly, I discuss those organisations‟ external
8 Chapter 1: Introduction 9 environment. In addition, it is important to replace OS in its context, where it refers to availability of source code in the early days of computing technology (Raymond, 1999). In the research, the term OSI is used to define both an innovation model and process including: new product design, delivery, and distribution (Schumpeter, 1938). Thus the concept of OSI is not industry-specific and can be applied to either software (OSIS) or tangible goods (OSIP). This research focuses on the latter with the view that this innovation model and process is aimed at creating novel products in a collaborative way by integrating the community in the innovation process. This is made possible by opening IP developed collectively to the public. The legal environment associated with OSI is not discussed in this document as different licensing models and their impact have already been discussed in the literature1. In addition, the existing patenting environment protecting tangible goods makes OSIP more complex when discussed from a legal environment perspective.
1.6 THESIS OUTLINE
This thesis consists of six chapters. Chapter 1 introduces the research aims and objectives while Chapter 2, Literature Reviews, examines the existing literature on OS, offers a summary of academic knowledge on OSI and discusses the different definitions used in this research. Chapter 3, Methodology, presents the researcher‟s methodology and justifications used along the research. Results and discussion about advantage and disadvantage elements in OSIP are displayed in Chapter 4. Additionally, Chapter 5 presents further results and analysis on factors impacting elements of advantage and disadvantage in OSIP. Finally, Chapter 6 summarises the research conclusions and identifies further areas of potential interests that flow from the review of the limitation of the study.
1 Also see the Open Source Initiativehttp://www.opensource.org/licenses
Chapter 1: Introduction 9 10
1.7 SUMMARY
This introduction presents the research and principal drivers. Understanding advantages and disadvantages for firms involved in projects using OSIP is important as overall only minimal knowledge and an embryo of answer is available. Moreover, knowledge on OSIP so far is industry-specific and does not seem to fare well when translated from software to product. Chapter 2 provides further elements in that regard.
10 Chapter 1: Introduction 11
Chapter 2: Literature Review
Since the 80‟s and public development of the Internet, the literature on OSI has focused on understanding and defining this concept in the software industry, where it originated (Raymond, 1999). Recently, academics have been increasingly interested in the broader application of the model (Müller-Seitz & Reger, 2009). Von Hippel & von Krogh (2003) and Chesbrough & Appleyard, (2007) point out that if software offers a rich and specific environment for the development of OSI, it is by no means exclusive. Moreover, there is a strong expectation that other industries may benefit from OSI (Lerner & Tirole, 2005; Müller-Seitz & Reger, 209). Still, research on the subject of OSI beyond software is scarce except in the biotech industry or in non- tangible products such as the extended family of Wikis (Peddibohotla & Subramani, 2007; Müller-Seitz & Reger, 2010; Hope, 2004 and Allarakhia, 2009).
However, researchers tend to agree that OSI as an innovation process and model has potentially a broad range of applications (Kogut & Metiu, 2001; Bonaccorsi & Rossi, 2003a; von Krogh & von Hippel, 2003; Müller-Seiz & Reger, 2009). Maurer & Scotchmer (2006) hint that OSI has particular applications in intangible goods production as they share a lot in common with software. Chesbrough & Garman (2009, p. 68) suggest that OSI “can reduce costs of R&D without sacrificing tomorrow‟s growth”. Thus, there is a gap in the literature to understand OSI in physical products or OSIP and more importantly, discover what advantages and disadvantages organisations achieve from using such strategy.
This chapter, Chapter 2 Literature Review, is organised in four sections, which address the main research question. The first section provides a review of the literature on OSI in the software context. The second section gives a generic definition of OSI. The third section identifies a gap in knowledge on OSI in physical products and introduces the research question, while section four concludes the literature review and discusses the framework of the study.
Chapter 5: Literature Review 11 12
Table 2-1: Outline of Chapter 2
No. Content 2.1 Review of the Open Source (OS) literature in the software industry 2.2 Definition of OS as Open Source Innovation in this research 2.3 Advantages and Disadvantages of OSIP for the firm, what can be expected? 2.4 Summary and implications for the firm 2.5 Research questions and framework
12 Chapter 5: Literature Review 13
Schumpeter (1943) highlights that 3 elements sit at the core of organisation innovation: new product, new markets, and new forms of production and distribution. Historically, innovation has taken place within the organisation boundary, generated through usage of knowledge and human capital (Chesbrough, 2003). Open Innovation displaces this traditional and closed innovation approach by discovering, developing and utilising knowledge and human capital outside of the firm boundaries. By reaching outside of the organisation boundaries, firms can change their value chain, developing new values for customers, new designs and change the way they distribute and deliver their own product (Watson, Bourdreau, York, Greiner & Wynn, 2008). This results in opportunities for the firm to displace existing organisation and develop new competitive advantages. The software industry with its Open Source Innovation is one of the strongest examples of Open Innovation, whereby a collaborative process utilising both human capital and knowledge within and outside the firm, leads to developing new software (Chesbrough, 2003).
2.1 REVIEW OF THE OS LITERATURE IN THE SOFTWARE INDUSTRY
The literature abounds with examples of OS applications in the software industry. However the Open Source model is heterogeneous and hard to define. Indeed, the OS concept has evolved rapidly driven by the technological environment in which it is rooted. Consequently, from being confined to source code, OS is now seen as a heterogeneous concept, which has spread beyond software development and the boundaries of the IT industry.
2.1.1 OS HISTORY AND EVOLUTION
The genesis of what would become the IT industry is defined by communities of people or programmers sharing basic operating code for computer programs or source code. Thus, one of the constituent of OS is the collaborative production or development of IP (Dibonna, Okman & stone, 1999; Raymond, 1999). Embedded in
Chapter 2: Literature Review 13 14 this idea of collective development lies the associated concept of free availability and free distribution of the code produced by the community (Stallman, 1998; Abdelkafi et al., 2009). Therefore, the first definition of OS refers to “source code” which is developed by the community for the community and made freely available. The action of modifying, transforming and adapting this source code has been referred as hacking (Raymond, 1999).
Hacking is the ability to tweak and modify a product. Those modifications are identified as “hacks or hackings” and highlight the possibility for the end-customer to modify, adapt and customise for their own needs (Raymond, 1999). Hacking is by no means limited to OS; however, the openness in this case makes the access to “the inside of the product” easier. By extension, hacking is not limited to software and can also describe similar actions in hardware such as changing, modifying or replacing physical elements. More importantly hacking stands for personalisation and adaptation to one‟s needs and specific environment of use.
It is important early in this research to clarify a persistent confusion existing between “open source code” and “free source code”. Software is composed of lines of instruction or “code” which is then packaged together in a product or software. Open source code means free availability of the source code not free availability of the final product. This public confusion has led to one of the major misunderstanding about OS in the software industry and a traditional mix-up between Freeware (free) and OS software (availability of the code). Freeware such as the well known Adobe PDF reader, are available without charge for the end-user but the code source may or may not be available for modification (Stallman 1998; Dibona, Ockman & Stone, 1999; Raymond, 1999). On the other hand, in Open Source Software (OSS), the code is available for free but the final product (the software) may not necessarily be free.
Open Source has been used since the invention of the first computer. Following those pioneer applications in different areas of IT, the concept of OS is publicly recognised and formalised in 1983 with the development of the first organisation supporting OS the Free Software Foundation (FSF). The efforts of the foundation are
14 Chapter 5: Literature Review 15 focused on setting the rules behind the cooperative software development processes and the sharing of source code (Lerner & Tirole, 2002). The development of a formal licensing procedure at that point in time was necessary to solve the issues regarding IP ownership and increasing issues concerning cooperatively developed software.
There is often a second mix-up between OS and licence distribution. Lerner & Tirole (2002) offer a simple classification of OS licenses according to the restrictions they impose on the users namely: highly restrictive, restrictive and unrestrictive. As an example, the GNU (GNU is Not Unix) project of Unix-like Operating system falls in the second category (Tuomi, 2005). Launched in 1984, it answers to a set of specific rules or GNU Lesser General Public License (LGPL) where developers agree to make the code source freely available2. Underpinning this definition is a special distribution system known as the GPL (General Public License) agreement also known as “Copy left”, as opposed to “Copyright”, (Stallman, 1998, 1999) where users agree not to impose licensing restrictions on others and any modification or addition to the code source has to obey the same licensing terms.
The rise of the Internet allowed for an exponential use of OS in the software industry and an explosion of the OS arena resulting from an increase in end-users and developers. Nowadays, even if the GPL dominates the landscape in terms of OS licensing agreements (Pearson, 2000; Bonaccorsi & Rossi, 2003b, Lerner & Tirole, 2005), alternative approaches have been developed to answer the need of the community to allow for more flexibility. The definition of OS blurred even more when in 1997 a community of developers adopted what will be known as the “Open Source Definition” (Open Source Initiative, 2010). The new Open Source Definition concept allows more flexibility in regard to the source code. In particular, it allows bundling of the OS code with proprietary code and removes the obligation for subsequent developed products to be distributed as OS software. Therefore, under Open Source Definition, the licensing or distribution agreement is separated from the software development (Open Source initiative, 2010).
2 For further details, see http://www.gnu.org/
Chapter 2: Literature Review 15 16
The OS notion was shaped during the last forty years in a fast moving environment; hence it is of no surprise if there are a broad range of definitions for the concept. Detailed work and analysis of the Open Source Definition can be found in Lee‟s (1999) and Perens‟s (1999) work. However, even if OS is a complex concept, the literature tends to agree on some of the basic founding elements, which are discussed in the next section.
2.1.2 OS ELEMENTS DISCUSSED IN THE LITERATURE
Reviewing the literature shows that OS involves four different but complementary processes:
The OS development model (OSD)
The OS licensing model (OSL)
The OS innovation model (OSI)
The OS business model (OSB)
In the software industry, those four elements are all applied to a collaborative model of software development. The OS model is widely seen as both a joint process in producing (von Hippel & von Krogh, 2003) and sharing an implementation of a technology (Chesbrough et al., 2006). This model is described in contrast to a proprietary and closed model of development (Lakani & von Hippel, 2003; Chesbrough et al., 2006).
2.1.2.1 Open Source Development OSD is the most common description and qualification of Open Source projects in the software industry. Both Raymond (1999) and Lakani & von Hippel (2003) describe this particular approach to development as a novel method for developing software based on sharing the technology developed while contributing in a collaborative way to the overall development (Chesbrough et al., 2006).
16 Chapter 5: Literature Review 17
Allarakia‟s work (2009) reinforces the fact that OSD is a collaborative process of production.
Another very important element in OSD lies in the voluntary contribution of the participants as well as the lean coordination and central project team built around the task at hand (Asklund & Bendix, 2002). Numerous academics emphasize the fact that OSD projects have somewhat of a chaotic organisation as they are based on a voluntary contribution relying on virtual team and organised over the internet (Kogut & Metiu, 2001). In addition, by comparison to Copyrights, Stalman (1998) characterises OSD as “copy left” system. Indeed, in this development system, the community involved gets ownership of the IP developed which is released for free and available for further developments. This leads to the third element of OSD, which is the importance of community contribution and support. Underpinning the concept of OSD is the impact of the community as OSD are community-based projects. Raymond, in 1999, speaks about contribution to projects by the community of developers. Müller-Seitz (2009, p. 212) summarises the previous concepts under one definition: OSD is the “joint and voluntary virtual development of freely available lines”. While Learner and Tirole (2005, p. 21) refer to “a method of software development in which contributors freely submit code to a project leader, who in turn makes the improved code widely available”
Since the early stages of research on OS, it has been seen as a collective development model for software (Dibonna, et al., 1999; Raymond, 1999), which includes design of the software and coding. According to Stallman‟s (1999), in the software industry, OS development processes are characterised by four principles:
1. The community is free to use the work;
2. The community is free to study the work;
3. The community is free to copy and share the work with others;
4. The community is free to modify the work, and distribute modified and therefore derivative work.
Chapter 2: Literature Review 17 18
Keeping the same emphasis on community, von Krogh & von Hippel (2006) identify six specific features of projects using OS in the software industry:
1. The community plays an important role in the development of a public good;
2. Standards are developed in the community to share contribution;
3. New products are instantaneously available and tested by the community;
4. New products‟ source code are freely available to the community;
5. The community is shaped by sharing and collaborative improvement;
6. Users are the major actors in innovation.
Although OS is broadly seen as a development model for software, it was quickly associated with a legal framework to protect the IP of the coder thus changing the definition of OS into both a development and licensing model (Lerner & Tirole, 2002), which is discussed in the next section.
2.1.2.2 Open Source Licence The OSL describes the legal environment protecting the coders‟ IP as well as a potential framework for distribution of this IP. Lerner & Tirole (2005) reference more than 36 licensing types in OS, each of them providing different characteristics relating to two items:
1. The scope of possible modification of the program and
2. Availability of the code source if modified versions of the software are published.
Other perspectives of OSL have been studied such as the economic impact on the firm of the licensing model (Katz & Shapiro, 1986a; Gallini & Wright, 1990), licensing and market entry (Gallini 1984, Rockett 1990). Research has also extended to OSL and competitive dynamics in the software industry (Shepard, 1987;
18 Chapter 5: Literature Review 19
Hedgebeth, 2007). It is also important to understand that Open Source licences are complex legal documents, which have not yet been tested in court (Doodle & Martin, 2000; McGowan, 2001; Lerner & Tirole, 2005). However, the term OSL is rarely used as people usually refer to the product using the licence or OSS.
2.1.2.3 Open Source Innovation More recently, the literature has been discussing the limitation of seeing Open Source solely as a development process. Some academics were already discussing the fact that OSD is only one part of an innovation process. In fact, OS is not limited to being a development process but can rather be seen as an innovation process and model. This includes: design, development and delivery with ultimate production of public IP (von Hippel & von Krogh, 2003). As such, OSI describes a collective innovation model offering alternatives to the proprietary or public models of innovation (von Hippel & von Krogh, 2003). This has been increasingly coined in innovation management research (von Krogh & von Hippel, 2006; Chesbrough, 2003, 2006; Chesbrough & Schwartz, 2007).
Early in the literature on OS, von Hippel (1988) refers to OS as the development of software using user-innovation. Flowing from von Hippel‟s work, Tuomi in 2003 and then Ulhoi (2004) identify OS as an alternative to firm-based innovation. Later, studying OS from a different perspective, Bonaccorsi & Rossi (2003a, p. 1243) are the first to really define OS as an innovation process or OSI. “From an economic point of view OSS can be analysed as a process innovation, a new and revolutionary process of producing”. In addition, “OS can be considered as a radical innovation in the way software is produced and distributed” (Bonaccorsi et al. 2006, 1086). Therefore, OS is really recognised as a full innovation process covering Schumpeter‟s (1934) three stages of innovation i.e.: invention, innovation and diffusion.
However, OSI is also seen as an innovation model. Indeed, von Hippel & van Krogh (2003) describe two models of innovation prevalent in organisation sciences. The “private investment model” is based on private development and private investment toward innovation. Private return is then harvested by innovators through
Chapter 2: Literature Review 19 20 commercialisation of private goods (Demsetz, 1967). This model is supported by mechanisms protecting private investment through the grants of IP rights to innovators. By opposition, the “collective action model” defines a common effort from volunteer innovators to produce public goods. Von Hippel & von Krogh (2003) then identify a third innovation model: Open Source. In this new innovation model (Chesbrough, 2006; von Hippel & von Krogh, 2003), elements of both private and collective models of innovation can be found. They define OSI in the software industry as “the private collective” model (von Hippel & von Krogh, 2003, 2006) characterised by a private investment toward innovation with relinquishment of private return by free revelation of IP. However, it is important to notice that according to von Hippel & von Krogh (2003), OSI does not lead to the development of entirely public goods. In fact, the OSI model conserves private elements even after disclosure to the public thus revealing a middle ground in the continuum between private and public goods as shown in Figure 2-1. In addition, OS also has the particular characteristic of displaying at the same time elements of both public and private return.
Public Return Return
Public Good Open Source
Private Public
Investment Investment Government Private good/ sponsorship
IP
Private Return
Figure 2-1: OSI in comparison to other models of innovation (adapted from von Hippel & von Krogh, 2003)
20 Chapter 5: Literature Review 21
In conclusion to this section, OSI in the software industry can be defined as: the design, development and distribution of products characterised by community involvement and collaboration in the innovation process (von Krogh & von Hippel, 2003, 2006).
2.1.2.4 Open Source Business Model More recently OS appears in a fourth area where it is characterised as business model (Bonaccorsi et al., 2006). A business model is defined as the firm‟s architecture spelling out product, service, information flow, actors of the business, benefits for stakeholders and cash flow (Timmers, 1998). According to Osterwalder (2004, p. 173), a business model describes “the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams”. Thus, value can be seen from four different perspectives: the customer and, in the case of OSI, the community, the firm‟s operations and environment, the product, and the balance sheet. Osterwalder (2004) takes into account those perspectives when he defines business model elements as customers‟ interfaces and product on one side and company finance and infrastructure management on the other. Table 2-2 summarises those different elements.
Table 2-2: Elements of business model (Adapted from Osterwalder, 2004)
Chapter 2: Literature Review 21 22
OSI as defined in this thesis is only a strategy, offering at the same time a model for innovation management and a process of innovation in which the community plays an important role. Indeed, when looking at the table above, OSI does not describe the way organisations make money or the cost structure or the network. This strategy obviously impacts those elements but does not describe them.
In summary, Chesbrough & Rosenbloom (2002) describe the business model as the framework under which the firm harnesses and creates value. However, recent studies tend to contradict this vision. According to the 451 group (2008), Open Source is certainly not a business model but is in fact a strategy. Indeed, OS can be both a development/design and a distribution strategy enabled by a licensing agreement. In fact, firms that chose between proprietary and open source for their development and/or licensing really chose a business strategy. In that sense, Open Source appears to be a model for development/licensing which has only one purpose: maximising value for company and customers.
In conclusion to section 1, it is important to understand that knowledge of OS is highly fragmented and depends on the overall definition and area of study. The dimensions above represent the scope in which the “OS phenomenon” (Raymond, 1999) has been studied but the research on Open Source is still “work in progress”. As a matter of fact, recently, Raasch, Herstatt & Balka (2009) point out that in addition to the above, OS might also be considered as a platform to distribute knowledge in the community.
22 Chapter 5: Literature Review 23
2.2 DEFINITION OF OPEN SOURCE INNOVATION
From the precedent section, it appears that OS is a complex phenomenon. Table 2-3 below summarises the different elements discussed as OS and their limitations.
Table 2-3: Elements used to define OS in the literature
OS Characteristics Limitations definition OSD OS as a collective development Development is only one step in the model innovation process. Design and Delivery are also concern with OS. Thus OSD is part of OSI an should not stand on its own as a research stream OSL Legal environment and licensing This represents only the legal of OS work environment of OS without any reference to how it is done OSB OS as a business model or a set OS has more characteristics of a of defined elements to generate strategy rather than a business model value for both the firm and customers OSI OSI as both a collective It is argued that OS can be more than innovation process and model that but no further researches have been done yet.
For the purpose of this paper, I define OS as collective innovation or OSI, where OSI is both a collaborative innovation process and an innovation model (Von Hippel & von Krogh, 2003; Osterloh & Rota, 2007). Simply put, this study looks at OSI in each of the innovation stages: design, development and delivery (Schumpeter, 1934) of a physical product. I argue that OS as a development model is embedded in the firm‟s overall innovation process (Chesbrough, 2006). In addition, the OSL extensively described and discussed by Lerner & Tirol (2005) is only a legal aspect of OSI which moreover lacks validity when translated in physical products. also, licensing as a distribution strategy is not exclusive to OS. Ultimately, OS is only a business strategy not a business model in itself as it does not cover specific areas of business modelling such as business actors, their benefit from the product and cash
Chapter 2: Literature Review 23 24 flows (Chesbrough & Rosenbloom, 2002; Timers, 1998). Thus my definition of OS as OSI is close to von Hippel‟s vision (2010, p. 554), which refers to “information commons that are free from intellectual property constraints and so open to all”.
Furthermore, OSI has already been described in the literature (Raasch, Herstatt, Blecker & Abdelkafi, 2008) as: shared ideas between members with the aim of joint development and non-market, non-contractual transfer of knowledge. Disclosure of the knowledge built in collaboration is at the core of the OSI. However, there is a need to be more specific, by first saying that what is disclosed and how it is disclosed depends on the licence under which the project is rendered open source3. Then, firms and individuals are not always obliged to disclose knowledge built independently from the project. In the end, exploitation is also restricted by the licence in use.
In this research, I chose to define OSI as both a community-driven innovation model and process, and aimed at exploiting intellectual property which is created and made public. This definition keeps an important element from the definition described above: creation of IP with the aim of exploitation introduced by von Krogh & von Hippel (2003, 2006). In fact, according to Osterloh & Rota, (2007, p. 157) this is what separate OSI from “just another case of collective invention”. In addition, this is also what separates OSI from collective creation as actors are also involved in exploitation which can be either private or commercial (Raasch et al., 2009).
In the above definition, I challenge the fact that OSI has been described in the literature as “non market and non contractual transfer of knowledge among the actors involved” (Raasch et al., 2009, p. 383). First, because of the licensing agreement built around the majority of the outputs of OSI, there is automatically a binding legal relationship created between users and members involved in the innovation process. Then, there is nothing which limits remuneration of contribution from the firm‟s perspective. Empirically, in the software industry, organisations like Canonical, (well known for its operating system Ubuntu derived from Linux) both has a team of paid
3 See Lerner & Tirole‟s work for further information on licensing.
24 Chapter 5: Literature Review 25 developers and works hand in hand with the community. In fact, the only element highlighted in the literature is that contribution to OSI is not motivated by monetary reward (Hars & Ou, 2001).
It might also be important at this stage to redefine the term “open” as, according to von Hippel (2010), academics follow different schools of thought. In this thesis, “open” refers to information commons, free from traditional IP constraints such as discussed by Raymond (1999) and Dasgupta & David (1994). To clarify, as IP is made freely available, there is no impact linked to either copyright or patenting. Within this definition, OS projects are not restricted to Stallman‟s (1999) principles and are not limited to the characteristics often found in the literature on open source such as: opened to the community at large, aimed at the creation of a novel product, delivering benefits to the community, shared ownership, specific organisation characterised by shared norms, a common platform for development and agreement between participants.
This section set up the some very important definitions and it is imperative to understand the particular definition of OSI used along this research. In summary, OSI is both an innovation model and a process which involves the community and aims at creating IP which can then be exploited. The next section provides a summary of the knowledge on OSI in the software industry.
2.2.1 WHAT IS KNOWN ABOUT OSI IN SOFTWARE (OSIS)
OSI has been largely studied from a software development perspective or OSIS (Grand, von Krogh & Swap, 2004) at 3 different levels: individual, projects and the firm. When looking at projects Kogut & Metiu (2001) and Asklund & Bendix (2002), discovered that OSIS leads to development of projects that are voluntarily contributed to with light coordination and active central project team. In addition, incentives and motivations were particularly researched and in-depth knowledge has been gathered. Indeed, Hars & Ou (2001) and Lakani & von Hippel (2003) identified intrinsic and extrinsic motivation factors for both individuals and organisations in
Chapter 2: Literature Review 25 26 participating in OSIS (Lakhani & Wolf, 2005). Table 2-4 identifies some of those factors.
Table 2-4: Motivation factors in OSIS (based on Hars and Ou, 2001)
Intrinsic Extrinsic Own needs Peer recognition Altruism Self marketing Community identification Human capital Self determination Additional sales
On another hand, benefits (Raymond, 1999; Dahlander & Magnusson, 2005; Lerner & Tirol, 2001, 2002) and strategic impacts of OSIS at the firm level have been identified and measured (Bonnaccorsi & Rossi, 2004, 2006; Cassadeus- Massanell & Ghemawat, 2006). Some of the main benefits from a corporate perspective are summarised in Table 2-5 and further discussed in the next paragraph.
Table 2-5: Example of benefits from OSIS at the firm level
Benefits from OSIS at the firm level Low costs Solving technical issues Product development User support User Innovation
Moreover, the literature also covers diverse subjects such as the impact of free pricing (Mustonen, 2002), the degree of openness in OS strategies (Cassadesus- Massanell & Llanes, 2009), licensing models (Stallman, 1999; Mustonen, 2003; Shapiro, 2001) and resource allocation (von Krogh & von Hippel, 2003, 2006).
26 Chapter 5: Literature Review 27
2.2.1.1 Advantages and disadvantages of OSIS
The majority of research on OSIS focuses on processes at the project and individual levels. (Grant et al., 2004, p. 593) “Research on OS software development has focused on individual... There are only a few studies that deal with economic activities and incentives at the level of the firm”. Table 2-6 offers a summary of those advantages discussed in the literature.
Table 2-6 : Advantage and Disadvantages of OSIS discussed in the literature at the firm level
Advantages Description Community/Networ Creates a platform for exchanges k Shared norm Marketing New market entry wedge Sales of complementary goods Product Quality: instantaneous testing, feedback as well as better customer knowledge Development: virtuality/modularity End user support Legal Licensing Costs Free innovation from the community Free support from the community Voluntary participation without monetary reward Low-cost innovation No suppliers or free/almost free supply Corporate Strengthening the innovation process Disadvantages Description Network/ Conflicts Conflict can arise between community voluntary with the community contribution and the firm profit oriented strategy Costs/ Value capture Free release of IP means that the firm cannot cash out IP. Thus strategies have to be implemented to ensure cash flows
Advantages of OSIS encompass: fostering the firm‟s innovation processes (von Hippel, 2005; von Krogh, 2007), providing financial advantages (Mustonen, 2002), accessing community resources (Lakhani & von Hippel, 2009, von Hippel, 2007) but
Chapter 2: Literature Review 27 28 also offering different competitive strategies (Bonnacorsi et al., 2006; Müller-Seitz, 2009).
Von Hippel & von Krogh (2005, 2007) point out that the major advantage of OSIS is to foster the firm‟s innovation process by integrating end-users. It increases efficiency of the process by providing constant feedback and instantaneous testing. In addition, end-users provide the firm with an identification of their needs and potential solution to satisfy them.
Mustone (2003) and then Casadeus-Massanell & Ghemawat (2009) find that OSIS provide financial advantages to the firm. Indeed, it improves firms‟ value creation by integrating community in the innovation process thus providing “free” innovation. However, they also identify value capture as a potential disadvantage of this strategy as it is difficult for organisations to transform innovation into revenue. They recommend the use of OSIS in association with more traditional innovation models to capture higher value for the firm. This duality is summarised and compared to public and private goods outcomes in Figure 2-2.
Open Source Hybrid models
Value Capture
Public Good Private good/ IP
Value Creation
Figure 2-2: Comparison and contrast of value creation and value capture in OSI (adapted from Casadeus- Massanell & Ghemawat, 2009)
28 Chapter 5: Literature Review 29
Garud et al. (2002) and Cusamano & Gawer (2002) discovered that firms integrating OSIS in their innovation process benefit from the support of the community which in turn sets up the firm‟s products as its standards. However, disadvantages arise as the collective efforts of the community do not follow a profit motivation (Bonaccorsi & Rossi, 2003a) while the firm is profit-oriented. Hence, firms that are able to resolve those conflicts of interest can gain advantages from OSIS. However, Garud et al., (2002) point out that social and political skill sets have to be demonstrated in the management of those projects if the firm wants to harvest the benefits linked with this innovation strategy.
Bonnaccorsi et al. (2003, 2006) look at OSIS projects compared to proprietary product developments. They discuss advantages of providing new ways of entering markets by satisfying consumer niches. However, they also highlight that if switching-costs are high and network externality low, there is little chance OSIS will provide any advantages for the company. More specifically, von Hippel & von Krogh (2003, 2006) identified important monetary reward as advantages for firms using OSIS. Those financial gains are principally due to “network effects” described above providing sales increase for complementary goods but also to low investments and therefore low risk innovation.
In summary, in the software industry, there is no doubt that OSI can provide advantages to organisations. However, specific conditions have been identified without which OSIS cannot be leveraged or becomes a disadvantage.
2.2.1.2 Context dependency for OSIS advantages and strategic use Advantages and disadvantages described previously can be influenced by external factors both at the firm and project levels. Academics identify that the firm‟s experience in driving OSIS as well as size and resources allocated have a positive impact on the success of OSIS projects (Garud et al., 2002; Henkel, 2003; Mustonen, 2003; Allarakia, 2009). At the project level, size of the team and type of project are of utmost importance. In fact, as OSIS revolves around community involvement, all elements which can impair or enhance community‟s impact on an OSIS project have
Chapter 2: Literature Review 29 30 to be taken into account. Project motivation has been extensively studied by von Hipel, (2005) and already discussed to have a positive impact. Furthermore, Management, Leadership and Organisation have been found to improve OSIS‟ output (Bonnacorsi and Rossi, 2003; Raash et al. 2008; Muller Seitz and Reger ,2009), while a degree of openness (Raash et al., 2008; Casadesus-Masanell and Lanes 2009) seems to have a positive impact on the outcome of OSIS. A summary of the different factors impacting advantages and disadvantages of OSIS is presented in Figure 2-3.
Industry (Allarakia, 2009) Resources (Garud et al. 2002; Grand et al. 2004) Experience (Garud et al., (2002)
Relation between firm and OSI projects (Henkel, 2003; Mustonen, 2003)
Type of project and motivation (von Hipel, 2005) Advantages & The community, Team & Disadvantages Individuals, (Lakani and von Hippel, 2002)
Management, Leadership and
Organisation (Bonnacorsi and
Rossi, 2003; Raash et al. 2008;
Muller Seitz and Reger ,2009) Degree of openness (Raash et al., 2008; Casadesus-Masanell and Lanes 2009)
Figure 2-3: Factors impacting advantages and disadvantages of OSIS
In addition, as described previously, to ensure sustainability of the OSIS model, organisations need at least to be compensated for freely revealing their innovations as free revelation does not cover the investment. Thus, firms using OSIS have to choose the right strategies to make their project viable. Moreover, advantages
30 Chapter 5: Literature Review 31 described above are highly context-dependant which means that, while organisations have to find a difficult balance to provide adequate reward to all participants (Lerner & Tirole 2000; von Krogh, 2002), they also need to build the right environment.
OSIS is used in different environments and for different strategic reasons. First firms can use OSIS as a “hybrid” or a “dual licensing” strategy (Dahlander, 2004; Casadesus-Massanell & Ghenawat, 2006) with part of their products closed and other open. Cassadessus-Massanell & Llanes (2009) identify two different situations related to such approach. In the first one, the base is open with extensions closed. In the second, extensions are open while the base is proprietary. In any case, it allows the organisations to maximise value from OSIS process by either selling further extensions or maintaining the software. Then, firmss use OSIS to: gain market share in complementary market segments, to jumpstart competitors in nascent markets or as entry wedges into existing markets (Raymond, 1999; Bonaccorsi & Rossi, 2003). Still in the software industry, another strategic reason for the use of OSIS identified by Raymond (1999) and later by Dahlander (2004) is to establish standards or dominant designs or to disable rivals implementing similar strategies. The adoption of the Apach web server by IBM to pre-empt Microsoft hegemony on the server market is a good example of the above (Henkel, 2003; Koenig, 2004).
Other strategies identified in the literature include: commoditisation of complementary goods (Koenig, 2004), or downstream suppliers of services or goods (Raymond, 1999; Lerner & Tirole, 2001). Ubuntu, one of Linux‟s distributions, highlights the above phenomena. Canonical Ltd, the company which develops it, offers a free operating system and adds value to the customers while making money by providing support, maintenance and integration services4.
Last and none the least, the OS community provides a pool of R&D available for free to organisations embracing the OS philosophy. By donating to the open source project, firms can take advantage of skills and contribution of all the
4 http://www.ubuntu.com/
Chapter 2: Literature Review 31 32 community members (West & Gallagher, 2004). Sun Microsystems reflects this strategy well through its mySQL and Java5 products (Raash et al., 2008). Developments are controlled by the company, which shape the commercial product with inputs from the community.
2.2.2 OSI USAGE OUTSIDE OF THE SOFTWARE INDUSTRY
A primary interest in studying OSIS is the expectation that OS phenomena have broader applications and can be transferred across industries (von Hippel & Von Krogh, 2006; Chesbrough & Appleyard, 2007; Nuvolari & Rulliani, 2007). Scholars point out that if software offers a rich and specific environment for the development of OS, it is by no means exclusive (von Hippel & von Krogh, 2003; Chesbrough & Appleyard, 2007). There is a strong anticipation that other industries may benefit from OSI (Lerner & Tirole, 2004; Müller -Seitz & Reger, 2008). Still, research on the subject of OSI beyond the software industry is scarce and refers at best to the translation of OSIS phenomena into contemporaneous projects. These include the OScar (Müller-Seitz & Reger, 2010), OS biotechnology projects and the extended family of OS Wikis, such as Wikipedia (Peddibohotla and Subramani, 2007; Müller-Seitz and Reger, 2009). In fact, except the application of OSI in the biotech industry (Hope, 2004; Allarakhia, 2009), close to nothing is known about the phenomenon in the physical world. Maurer & Scotchmer (2006), when looking at trust and exchanges in OSIS, only suggest that OSI has particular application in intangible goods production. More recently, Raasch et al. (2009) looked at the transferability of the OSI in a non-software environment and identified that tangibility of OS products might be a hurdle to OSI. Thus, there is a real gap in the literature to understand OSI in the physical world. In addition, OSIP is not a new concept as it has already been employed empirically in products. The IBM PC is the most well-known case further discussed in the next section.
5 See also http://www.sun.com/software/opensource/
32 Chapter 5: Literature Review 33
2.2.3 OSI IN PHYSICAL PRODUCTS (OSIP)
From the IBM PC to more recent projects, OSIP has been observed across a broad range of industries. However, even if empirical knowledge exists, academic knowledge is still limited to a general understanding of OSI with particular insight on OSIS only.
2.2.3.1 The IBM PC and other OSIP projects, an empirical perspective OSIP is not a new concept: it has been extensively used and the IBM PC is the most well-known and frequently studied case. Charles Jones Principal at McKinsey (1985) commented on the IBM PC strategy, highlighting that in the late 70‟s IBM was not participating in the rapid-growing market of the personal computer, losing around one billion dollars in opportunity cost. Using OSIP, the IBM PC team developed in fifteen months a project which should have taken four years.
Battey (2001) offers further insight on IBM strategies which were aimed at providing a PC made of the company‟s components. Their strategy was driven by two important elements: an economic factor as well as speed of development. Distribution was clearly an important factor and it was determined that to reach the mass-market, retailing was considered the best. IBM‟s own sales force, deemed too expensive, were by-passed to achieve this strategy. In addition, “Distributors would have to service the product themselves” (Battey 2001, p. 29); indeed to limit costs, products were not supported by IBM but by the distributors. Furthermore, IBM‟s development team understood that by keeping an open system, they were inviting the participation of the rest of the industry. This entire strategy was at first made possible by leveraging IBM‟s network, such as the Intel chipset used in previous projects, and having third parties able to develop applications such as the Lotus spreadsheet. By setting the first open standards for the PC industry, IBM allowed thousands of organisations to participate in the PC area. Thus, IBM provided a glimpse of what OSIP could do.
Chapter 2: Literature Review 33 34
Clark & McNeilly (2004, p. 45), when drilling down the IBM case study, report that IBM in the 1990‟s was still using the same strategy to look for “ways to provide innovation beyond-the-box”. This strategy was based on providing customers with benefits beyond the traditional productivity provided by PC. In fact, their product was highly commoditised, and IBM needed new ways to lead the market. Again, they pursued an OS strategy based on integrating customers‟ insights in their process and came back with solutions to solve their problem. At the time, PC maintenance costs were four time the cost of acquisition. By releasing the specifics of their servers, IBM allowed for other organisations to decrease those costs.
More recently, Learner & Tirole (2005) account that in 2001 IBM had spent more than one billion dollars driving OS projects. However, IBM‟s PC is not the only case of OSIP. In the IT industry, Sun Microsystems released its OpenSPARC processor under an open licence which spawned numerous OSIP projects (OpenSPARC, 2010). In other industries, projects such as the “open source car” or Oscar, which works towards developing an alternative source of transportation with and for the community, has been running for more than ten years (Müller-Seitz & Reger, 2001). Biotechnology projects such as the Human Genome Project put together hundreds of laboratories toward mapping the human genome and results were open to the public to facilitate and ensure an open field of research (Müller- Seitz & Reger, 2009).
2.2.3.2 Summary of the OSI model as applied in this thesis
The literature identifies three applications of OSI which are summarised in Figure 2-4: Open Source Innovation in Software (OSIS), Open Source Innovation in Knowledge (OSIK) and Open Source in Physical Product (OSIP). OSIP is the only aspect which is discussed further in the research. Indeed, as OSIK is intangible, it possesses too many similarities with OSIS and would be expected to follow comparable patterns.
34 Chapter 5: Literature Review 35
Previous researches have divided OSIP into two categories (Muler-Seitz & Reger, 2009). The first category covers intangible goods, which can be of two different natures. The first of these is OS knowledge, such as the pool of knowledge described by Allarakhia (2009) in the biotech or open content. This category also encompasses Users Generated Content (UGC) and more recently consumer generated media CGM or also user-created content (UCC). UCC refers to the wikis, videos and other online media in general (Müller-Seitz & Reger 2009; Peddibotla & Subramani, 2007). The second category is OSI applied to tangible or physical products.
There is a view that intangible products might be more accessible for OSI due to them sharing multiple features with software (Maurer & Scotchmer, 2006; Raasch et al., 2009). It can also be argued that wikis and any online media regarding OSI are similar to software. In fact, OS Content and OS Knowledge both share intangible and digital characteristics and can be electronically distributed. This does not create an environment which is sufficiently different from OSI in software to integrate them in the physical good category. However, this is not the objective of the present research and in order to simplify, OS intangible goods will be treated as a separate element.
Open Source Innovation
OSIS OSIK OSIP
Open Source Open Content Open Source Software Hardware
Figure 2-4: Elements of open source innovation and their outputs
Chapter 2: Literature Review 35 36
This research only looks at OSIP and its output OSH as they offer a far different contrast when compared to software. Outside the software industry, physical products acquire tangible characteristics which slightly change the approach to OSI (Abdelkafi et al., 2009). The next section provides further comments on those differences when looking at what is already known about OSIP.
2.3 ADVANTAGES AND DISADVANTAGES OF OSIP FOR THE FIRM
OSIS offers specific advantages to firms using this innovation strategy. It is expected that similar advantages could be developed in OSIP projects.
2.3.1 WHY IS IT INTERESTING TO UNDERSTAND OSIP?
The major interest in OSI appears in the field of innovation management. Indeed, OS projects fully integrate the end-user in the development and innovation processes, tapping into resources that were under-exploited until now (von Krogh & von Hippel, 2006). It is well known and understood that a firm's innovativeness or innovation capabilities have a major effect on its business performance (Schumpeter, 1934; Porter, 1990). Innovation allows firms to develop new products or processes (Kleinschmidt & Cooper, 1991; Hurley & Hult, 1998) and to generate new solutions. In this context, it appears valuable to fully understand OSI. In addition, an increasing number of ventures indicate that they have already been successful in using OSI in developing new physical products (Raash et al., 2009). Such examples cover a broad and diverse range of industries such as biopharmaceuticals (Allarakhira, 2009; Müller-Seitz, 2009) and communication & entertainment (Abdelkafi et al., 2009). Still, research on the subject of OS beyond software is scarce and refers, at best, to a description of the translation of OS phenomena into contemporaneous projects, such as the OScar (Müller-Seitz & Reger, 2001), biotechnology projects, and the extended family of Wikis (Peddibohotla & Subramani, 2007; Müller-Seitz & Reger, 2009). Thus, there is a gap in the literature in understanding OS in physical goods.
36 Chapter 5: Literature Review 37
Moreover, the applicability and transferability of OSI processes to physical products has recently been raised. Many scholars are investigating the limitations of OSI processes in non-software related areas (Müller-Seitz & Reger, 2009; Raash et al., 2009; Allarakhia, 2009). However well understood in the software arena, the advantages and disadvantages of OSIP for the firm have not been studied.
In the end, there is a direct benefit for organisations to understand the advantages and disadvantages of OSIP. Firstly, OSIP offers an alternative to traditional innovation processes and might offer a cheaper, faster and more robust innovation process, due to community integration (von Krogh & von Hippel, 2006). Secondly, firms must decide if expected advantages described previously in OSIS can be translated in physical products. Finally, with in-depth knowledge of the impact of OSIP on firms, organisations will be able to decide if they can use this strategy, when they can use it, and how they can enhance OSIP.
2.3.2 WHAT ADVANTAGES AND DISADVANTAGES CAN BE EXPECTED FROM OSIP?
Knowledge on OSIP relies heavily on empirical observations and comparison with academic research on OSIS.
2.3.2.1 From a corporate perspective Knowledge of OSIP is at best empirical and was gathered from the well-know case study of the IBM PC. Indeed, IBM was the first company (Battey, 2001) to leverage OSIP in a very particular environment but matching the definition of OSIP adopted, which is the release in the public domain of their products IP, while integrating the community in the innovation process at the design, development and delivery stages. As described inthe introduction, IBM adopted an OSIP strategy with two main goals: economy; and speed to market (Battey, 2001). These goals were supported by what IBM was seeing as the principal advantages of an OSIP strategy. Table 2-7 identifies both goals and advantages IBM was gaining from its OSIP strategy.
Chapter 2: Literature Review 37 38
Table 2-7: Advantages of OSIP, the IBM PC case
Category Elements of Advantages of OSIP Marketing Offering a high value proposition Decreasing cost of marketing the product Broadening the target market Entering a new market Product Shortening the innovation cycle with specific impacts at the design, development and delivery level. Cost Decreasing overall cost to market Removing cost of maintaining the product Outsourcing the distribution channel Simplifying its product delivery Corporate Being more innovative Achieving industry standards
One of the first goals for IBM was to be able to outsource the different stages of its innovation process. In fact, the design and development of components were done by other organisations, such as Intel for the chips, while delivery was carried by IBM‟s distributors. By using “off-the-shelf” products, and getting away from the delivery of its own products, IBM was able to shorten its innovation cycle (Battey, 2001). Further economic advantages flew from this organisation, such as low overheads and low resources commitment. In addition, it offered IBM entry to new markets and niches by allowing third parties to develop specific compatible products (Vujovic & Ulhøi, 2008).
As discussed previously, even empirical knowledge on OSIP is scarce and relies only on a few cases. Consequently, the current depth of academic knowledge is also limited.
2.3.2.2 Tangibility versus intangibility, a comparison between OSIS and OSIP The only academic knowledge of OSIP comes from a comparison between OSIS and OSIP and focuses on the differences and similarities between the two OSI
38 Chapter 5: Literature Review 39 models and processes (Abdelkafi et al., 2009). Raash et al. (2009) identifies nine points of difference between product-type physical goods and software, which highlight that OSI in software and OSI in product are two different innovation processes. Table 2-8 identifies the differences between physical and intangible products and their impact on OSI.
Table 2-8: Differences between OSIS & OSIP and their impact on perceived OSIP disadvantages (Adapted from Raash et al., 2009)
Feature Software Product type Perceived Physical good Disadvantages of OSIP Lifetime Unlimited Limited Limits the scope of the hacking process Modularity High Low Difficulty for the community to be integrated Material No Yes Limited availability and Supply chain increase in costs Production Computer Manufacturing Limits the feasibility of hacking and adds technical difficulties Distribution Instantaneous and Physical Limits the community unlimited distribution access to geographic channel availability Inventory Digital Material and Need for stocking and component supply chain which limits the hacking process as well as availability Replication Digital copy Production Limits the hacking process. Copy process and availability of needs reversed the product engineering Cost Low cost, light Overheads Barrier to incremental structure structure represents an innovation, as prototyping important portion needs to be done first of the total costs Patenting Ambiguity and One product one Patenting infringement is limits innovation patent a big hurdle. Open licence to modify the product
OSI is based on community collaboration and user innovation where Hacking or modification of existing products plays a very important part. Generally, software has an unlimited lifetime, thus can be modified and adapted without restriction in the
Chapter 2: Literature Review 39 40 hacking process (Raymond, 1999). This can also simply be defined as user innovation (von Hippel, 2001). By opposition, physical products not only have a limited life-span but also tangibility, which limits the feasibility of the hacking process.
Even if Müller-Seiz (2009) identifies “Digital commons” between physical goods and software, which give them very similar attributes during the development and design phase, differences arise in the delivery phase. Von Hippel (2001) identifies that physical products must be produced and physically distributed, therefore innovation can still be expected from users, but diffusion and production is in the hands of the manufacturers. This impacts OSIP in two ways: limiting reproducibility; as well as increasing the cost structure. Figure 2-5 illustrates the additional step in the value chain which differentiates OSIS from OSIP.
Innovating Users End User communit Innovating users Physicaly Manufacturing End users Wholesale and retail
Figure 2-5: Supply chain differences between OSIS and OSIP (Based on von Hippel, 2001)
However, tangibility impacts traditional innovation strategy in the same way. Consequently the above phenomena are not specific to OSIP, but they might change the advantages and disadvantages of using OS in the innovation process. The only trait which differentiates OSI from traditional innovation is linked to the legal environment. Thus it is difficult so far to have a specific idea of advantages and disadvantages specifically linked with OSIP. The next section offers further insights in that regard, focussing on identified core elements.
40 Chapter 5: Literature Review 41
2.3.3 OSIP, LEVERAGING USER INNOVATION TO ITS MAXIMUM
OSIP represents a specific and unique case of user innovation pushed to the extreme. In this unique environment, organisations rely on the community at large to boost the firm‟s innovation capabilities. Users appear at the same time as participants in the OSIP process and end-users of the final solution developed (von Hippel, 1988; Kogut & Metiu, 2001; Lakhani & von Hippel, 2003). Recently, user innovation strategy has gained a lot of attention among academic as it provides additional and easily available resources for the firm (Nambisan & Sawhney, 2007; Agerfalk & Fitzgerald, 2008). In OSIP the user‟s perspective plays a particularly important role in finding and developing viable solutions (Henkel & Jung, 2010), making them a potentially valuable innovation resource for firms from the idea stage through to development. Keinz and Prüg (2010) summarise the input of the end-user in three ways:
Firstly, the end-user provides creative thinking. In fact, users do not seem to be bound by previous experiences and are able to come up with new applications and technologies (von Hippel, 1994). Secondly, they can identify commercial value in a product or technology through their “hands on experiences”. This is particularly linked to the user‟s knowledge both of the product and its usage and environment. However, Keinz & Prüg (2010, p. 270) point out the need for specific conditions and information to be present to get users‟ input. To start, there must be enough motivation, “there must be a problem that is important enough to prompt the user to look for and adopt a solution”. Then, the costs related to adopting the solution must be lower than the benefits an individual derives from solving the problem. In addition, substitute solutions (if there are any) must have a lower benefit/cost ratio than the solution based on the technology in question (Katz & Shapiro, 1986b). Finally, successfully leveraging users‟ technological competencies demands a particularly high involvement at the firm level: tracking and identifying individuals and skills, matching them to commercially viable development, and then incorporating them in the product. The above raises potential issues with OSIP linked with project management. Still, this particular aspect has not yet been studied.
Chapter 2: Literature Review 41 42
Thirdly, by experiencing the technology or products firsthand, users know and understand the product, and therefore possess a specific knowledge regarding its benefits and flaws (von Hippel, 2005; DeMonaco, Ayfer & von Hippel, 2006). Thus, users appear to be an important resource to understand the benefits of a technology and to answer specific and identified problems. Keinz & Prüg (2010) also identified a potential limitation with user innovation which might apply to OSIP. This issue is related to the ability of the users to identify key benefits of a solution or process without being able to compare and contrast with an analogical equivalent.
Section 0 highlights similar user innovation benefits for OSIP and OSIS discussed by academics. They can be summarised as increasing creativity, offering a better identification of new products, markets and applications. Potential disadvantages or limitations have also been raised. The next section broadens this discussion to the community at large.
2.3.4 OSIP, CORE ROLE OF THE COMMUNITY
OSIP is based on harvesting communities‟ support and so is OSIS. In that regards, it is expected that OSIP and OSIS would be very similar. As described previously in OSIS, the challenge resides in finding the right individuals combining the right mix of willingness and abilities, as well as skills, to contribute to projects (Kogut & Metiu, 2001; Lakhani & von Hippel, 2003). Further challenges arise when looking at a novel, creative, and viable way of contributing to a solution. This is especially true when the latter is ill-defined or boundaries of the projects are at best poorly defined (von Hippel, Franke & Prügl, 2009).
Still in the case of OSIS, communities are shaped around a project and present certain characteristics, defined by von Hippel (1994, 2005) as informal social networks. Within those networks, participants can exchange technological, product and/or market-related information, knowledge and innovative thoughts, as well as artefacts related to the project. As mentioned earlier, members‟ purpose for participating has been extensively studied in the software community and varies from
42 Chapter 5: Literature Review 43 willingness to generate new knowledge, to pleasure to solve complex problems and simple creation (von Krogh, Spaeth & Lakhani, 2003; von Hippel, 2005; von Krogh & von Hippel, 2006; Lakhani et al., 2007).
Another important point raised by Kogut & Metiu (2001) and Lakhani & von Hippel (2003) on the role of the community is the identification of lead users or experts. Core-community members actively involved in the communication and contribution of the project know other community members and are able to identify skills and knowledge. They can look for the more active lead-users to leverage their contribution. This solves an important issue, which is finding access to, and building upon, members‟ knowledge, as it is widely and unequally spread within the community (Lakhani et al., 2007). Two different strategies are used by lead-users to access and leverage technical competencies (von Hippel, Franke & Prügl, 2009). The first one, “broadcasting”, consists of an analysis of the overall contribution of users and selection of the ones that show most expertise. The other one, “pyramiding”, is based on referral networks and allows users to identify the people they think are the best to solve a given problem.
However, this is not the only advantage of community. In fact, the most important element is crowd-sourcing, or the “power of the crowd”, which is the ability of members to work with each other on ideas and solutions to a given problem. Here, the community provides a pool of knowledge (Allarakhia, 2209), competencies, skills, but also elements of inspiration, support and, in the end, feedback. This creates the perfect environment to foster innovation and allows for quick testing of each other‟s ideas (Prügl & Schreier, 2006). Peer review seems also to provide solutions which are superior to those created by individuals, with an increase in novelty (Lakhani, Jeppesen, Lohse &Panetta, 2007). This is principally due to the broad range of backgrounds the community is coming from, which offers different perspectives on problems and ideas. In addition, the community‟s approach to creative problem solving is not biased nor limited by a company‟s organisation or culture (Franke & Poetz, 2008).
Chapter 2: Literature Review 43 44
It is argued in the literature on OSIS that community involvement allows for a better identification of opportunities in the market in the case of iterative innovation, as the community already uses the technology and knows its whereabouts. In addition, engagement with the community allows for a better ideation process, generating vast amounts of ideas using a crowd sourcing approach and selecting the ideas with the highest value (von Hippel, 2005). This in turn allows for market research to be done rapidly, the potential success of an idea to be measured, and the quality of a solution evaluated (Lakhani et al., 2007).
Elements described above offer a strong base for this study. Indeed, they shape the research strategy and certainly influence the framework used in this study methodology.
2.4 SUMMARY AND IMPLICATION FOR THE FIRM
Research on OSI has described a lot of advantages and some disadvantages of the model and processes as they relate to the software industry. However, similar research has not yet been conducted in relation to physical products. As discussed previously, even if there is a certain expectation that some of those elements will be transferable to physical products, there is no certainty, and recent research already shows that some limitations already appear, due to the tangible characteristics of physical products.
Consequently, in-depth knowledge of the advantages and disadvantage of OSIP will help a company to better understand the impact of their strategy. In fact, this information will assist organisations to select the innovation strategy which best fits their objectives. In addition, it is important for firms to be able to assess if OSIP is the best strategy for them and then to determine how to use this strategy to enhance the advantages and mitigate disadvantages.
44 Chapter 5: Literature Review 45
2.5 RESEARCH QUESTIONS AND FRAMEWORK
The broad literature review on OSIS highlights the theoretical development of an OSI model and process integrating the community in the collective design, development and delivery of publicly available IP in intangible products. The literature also suggests that OSIP might follow similar patterns and provide firms with some similar advantages. However, understanding of OSIP is at best only a transposition of the knowledge acquired by academic researchers in a different setting: the software industry.
An exploratory approach has been adopted to investigate OSIP at the firm level. Therefore, the scope of the study is limited to organisations involved in projects using OSI in the design, development, and delivery of physical products. The main focus of the research is to investigate advantages and disadvantages of this innovation process and model, while exploring other facets of the concept such as:
When is it likely that advantages will exceed disadvantages of OSIP?
What factors affect advantages and disadvantages of OSIP?
What are the strategies for successful OSIP projects?
2.6 CONCLUSION
This chapter presents the literature review on OS and OSI, focussing particularly on OSIS and early stage research on OSIP. It introduces the research environment and the reason for this study. Indeed, this study aims at extending the knowledge on innovation management by looking at advantages and disadvantages gained by firms using OSIP. This study adopts an exploratory, qualitative methodology using, multiple in depth semi-structured interview. The next chapter discusses the research strategy while describing the analytical process undertaken to answer the research question.
Chapter 2: Literature Review 45
47
Chapter 3: Research Methodology
Chapter one introduced the exploratory qualitative analysis approach and semi- structured interview design used in this thesis. Chapter two presented the research questions and synthesised the existing literature on OSI while developing the conceptual framework along which this study is conducted.
Chapter three builds on section 1.4 of the introduction, further describing and justifying the methodology, which is the way data is collected and analysed. This chapter also ensures that appropriate processes are in place to maintain validity and reliability of the research (Lincoln and Guba , 1985). Chapter three, Research Methodology, is organised around five sections: Section 1 introduces the methodology in use while section 2 describes the research design, method, data collection and analysis. Section 3 discusses the quality of the research, section 4 introduces the different respondents and section 5 concludes this chapter.
Table 3-1: Outline of Chapter 3
No. Content 3.1 Introduction 3.2 Methodological approach 3.3 Research methods, collection and analysis 3.4 Quality of the research 3.5 Conclusion
Chapter 3: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP Methodology 47 48
3.1 INTRODUCTION
Projects using OS principles for the design, development and distribution of new products in the physical world have been identified in the literature. Chapter 2, Literature Review, acknowledges the research of some scholars and identifies the gap in understanding OSI. As described in Chapter 1, a broad range of projects have been studied in detail, from OS Beer (Free beer), passing through an open source entertainment system (Neuro OSD), to an open source car (Oscar) (Müller-Seitz & Reger 2009, 2010; Abdelkafi et al., 2009). Moreover, the number of projects claiming they use similar principles is booming, with more than two thousand three hundred OSIP projects identified online (Sourceforge, 2010). However, OSI applied in the physical world has not been extensively investigated, thus little is known so far in this area and understanding of the phenomenon is still in its early stages. Scarcity of knowledge justifies the exploratory and qualitative approach (Miles & Huberman, 1994) adopted in this research.
The research question guides the research framework which looks in detail at company-based projects using OSIP. Semi structured interview of selected respondents allows us to understand organisational phenomenon (Eisenhardt, 1989; Yin, 2003). This approach has another advantage, as it enables multiple sources of evidence to be included, improving the quality and rigor of our research (Eisenhardt, 1989; Stake, 1995).
In choosing respondents, there is a need to capture the individuals‟ point of view by getting closer to them (Denzin & Lincoln, 1994). For that purpose, structured interviews with managers of those projects using OSIP are conducted to gather data. According to Kahn & Cannell, (1957), interviews or “conversation with purpose” (Burges, 1984, p. 102) are particularly suitable for this study in an exploratory context, with the aim of creating new knowledge, and gaining further insights on OSI. Furthermore, interviews allow for a particularly rich and in-depth data gathering process (Mason, 2002). To ensure this richness, additional information is gathered from document analysis, including Internet websites and corporate material. This is supported by Yin (1994), who indicates that multiple sources of data
48 Chapter 5: Research Methodology 49 increases the quality and reliability of the data collected, as well as allowing for triangulation (Yin, 1994).
In this research, the project using OSIP, as defined earlier in chapter 2, is the unit of analysis chosen. Mason (2002) points out that comparisons and contrasts are two pivots in qualitative analysis. Thus, particular repondents are chosen as a consequence (Miles & Huberman, 1994) and multiple interviews of project managers are used to allow researchers to identify common patterns and discrepancies across answers, whilst generating descriptive data (Cavana, Delahaye & Sekaran, 2001). Since this paper explores a new phenomenon, OSI in the physical world, this cross- sectional study is regarded as being sufficient (Miles & Huberman, 1984). Table 3-2 below provides a summary of the study.
Table 3-2: Summary of the study
Strategies and tactics Details Methodology: Qualitative study Strategy: Respondents interviews Data gathering/Method: Principal research method: in-depth semi structured interviews supported by document analysis Unit of analysis: OSIP project Population: Projects using OSI in physical products Sampling strategy: Purposive sampling
Chapter 3: Research Methodology 49 50
3.2 METHODOLOGICAL APPROACH
As discussed previously in chapter 2, Research Methodology, OSI applied to products in the physical world has not been extensively investigated and understanding of the phenomenon is in its early stages. This research aims at exploring new applications of OSI and providing us with a better understanding of the advantages and disadvantages offered to firms using OSIP. Denzin & Lincoln (1994) say that a qualitative study offers a more holistic and broader approach than qualitative methods to understand organisations. Moreover, Miles & Huberman (1984) argue that scarcity of knowledge justifies an exploratory and qualitative approach in research. This is supported by Strauss & Corbin (1990) who claim that qualitative methods are appropriate when attempting to better understand any phenomenon about which little is known. In addition, Lincoln & Guba (1985) highlight the ability of qualitative data to better and more fully describe a phenomenon. This is important from both the perspective of the researcher and the reader, as it allows them to access a rich content they can then put into perspective with their personal experience (Stake, 1978).
A critical realistic stance is adopted to examine the phenomenon and describe the conceptual foundation for this research (Guba, 1990). For Denzin & Lincoln (1994) this implies that a transactional and subjective interaction between the researcher and the subject takes place to apprehend reality. More precisely, a dialogue is necessary for the researcher to understand the different cultural, ethnical, economical, and political layers shaping what is real for the subject (Denzin & Lincoln, 1994). Several academics have identified characteristics of qualitative research that strategically align within this context. For Eisner (1991, p. 36), qualitative research allows for a descriptive report integrating expressive language or “voice in the text”. Lincoln & Guba (1985) and Patton (1990) highlight the interpretive character of qualitative research where the researcher interprets the meaning events have for those who experience them. In-depth interviews of participants are used as the principal method to gather data supports this perspective. In fact, this particular setting allows the researcher to put the OSIP phenomenon in perspective within the different organisations studied, through access to factual
50 Chapter 5: Research Methodology 51 information (Miles & Huberman, 1994). Moreover, it also provides the researcher with individual understanding and a broad range of data that can be triangulated to ensure accuracy in a multiple perspective set up. This is particularly important as Norman & Lincoln (2005) stress the necessity for the researcher to maintain accuracy in situation observation and reporting to maintain validity of the research.
The next three sections provide additional justifications for the research‟s strategy and describe the theoretical approach, protocol and sampling framework.
3.2.1 INTEVIEW APPROACH
The principal strategy of this study is the interview of respondents involved in OSIP. This setting is particularly appropriate for an exploratory study, as new areas of knowledge are studied where the theoretical background is still in development (Eisenhardt, 1989; Yin, 2003). Multiple respondents were selected as it is considered more robust than using a single case (Yin, 2003). Moreover, recent qualitative studies in non-software OSIS related initiatives by Müller-Seitz & Reger (2009, p. 372) have argued for the use of similar designs. Mason (2002) points out that comparisons and contrasts are two pivots in qualitative analysis. Thus, interviews of thirteen respondents allow the researcher to identify common patterns and discrepancies across projects while generating descriptive data (Cavana et al., 2001).
Yin (2003) argues that sources of evidence gathered through interviews plays an important role in qualitative study. According to Kahn & Cannell (1957), interviews are particularly suitable for studies in an exploratory context with the aim of creating new knowledge and gain further insights. The study fits this context as it aims at better understanding an un-studied phenomenon: OSI in physical products6. Moreover, the research focuses on advantages and disadvantages for the firms, hence interviewing is the perfect tool to use, as it allows the researcher to gain insights into
6 see chapter 2
Chapter 3: Research Methodology 51 52 the participants‟ own goals, actions, thoughts and feelings (Green et al., 2004). Besides, interviews allow for particularly rich and in-depth data gathering (Mason, 2002). Hawkins et al. (1994) suggest that individual in-depth interviews are particularly appropriate as they allow probing of an individual's behaviour, attitudes or needs. Furthermore, interviews allow for a detailed understanding of complex decision-making or behaviour patterns. Finally, Hawkins et al. (1994, p. 554) highlight another fit for this design when “The interviews are with professional people or with people on the subject of their jobs”. In this case, the focus is on learning from employees of firms involved in OSIP. Therefore, this research is about capturing the individual‟s point of view by getting closer to the individual through detailed interviews (Denzin & Lincoln 1994).
By using in-depth structured interviews as primary source of information, a particular direction and framework was chosen for the research (Patton, 1990). This particular set-up has been selected for its alignment with the research paradigm and overall goal. As described by Lincoln & Guba (1985) it is important that the design of the research flows from the researcher‟s own understanding of its environment. As described previously, contact with managers and CEOs/owners of different organisations was first made through Email, and then interviewees were selected based on their willingness to provide answers and their availability.
3.2.2 SAMPLING STRATEGY AND REPONDENT SELECTION
The study focuses on getting a better understanding of OSIP. Thus, a special framework was developed to select the best projects for this analysis.
3.2.2.1 Sampling framework Choosing the right respondents is a very important process when trying to build theory (Eisenhardt, 1989; Yin, 2003). As suggested by Stake (1995), it is not only about choosing a typical setting, as unusual situations can provide us with a different perspective and therefore foster overall understanding. Moreover, Curtis et al. (2000, p. 1002) reinforce the need for rigor in “sampling in qualitative research” or selecting
52 Chapter 5: Research Methodology 53 the respondents for the study, arguing the necessity of developing specific strategies. Thus, the researcher has developed a specific sampling strategy, keeping in mind that selecting respondents was not about representation of the overall OSIP phenomenon but gaining particular insights on the phenomenon (Miles & Huberman, 1994). Raasch et al. (2003, p. 384) argue that considering the nascent stage of research on OSIP, “an encompassing view seemed advantageous”. Therefore, respondents are selected to “fill theoretical categories and provide examples of polar types (Eisenhardt, 1989, p. 537).
Previously, the literature review pointed out that a number of criteria might impact advantages and disadvantages of OSI in the software industry. As there are strong expectations the same elements could play an important role in OSIP, Company life cycle, Project life cycle, Type of product, Size of the community involved and Degree of openness in development design and delivery were taken into account when looking at how best selecting our sample. Those elements described in Figure 2-3 were integrated in the research framework and Table 3-3 summarises the framework used to systematise selection of the projects taken into account in this study.
Table 3-3: Selection criteria for the sample
Selection Degree of Size of the Criteria openness Company Project life Type of community Development Integrated life cycle cycle product involved Design and in the study delivery Intangibles 1 person products, Or no sign No Start-up Nascent 1 of those Food, of online Media community Electronic Small Yes Start-up Mature At least 2 components 2-50 In Do it Mature development yourself More than All three Yes company or (DIY), 50
completed ready to use
Chapter 3: Research Methodology 53 54
Nascent organisations with nascent concepts were removed from the sample, as they carry too much uncertainty which could have had a potentially negative impact on the accuracy of the research, thus compromising its validity (Norman & Lincoln, 2005).In the research, nascent firms are defined as start-ups and nascent project as projects still in the concept phase. By comparison, mature firms are beyond the start- up phase and mature projects have passed the concept phase. As developed in chapter 2, the research looks at OSI in physical products, thus projects focusing on intangible goods and software were removed from the sample. In addition, following the definition of OSIP, three other categories of projects were removed from the sample. Firstly, the research focuses on an “open” process of innovation, thus projects which were not showing at least two of the innovation process stages as open were removed. Secondly, the chosen definition of OSIP focuses on new and physical products as outputs of the innovation process. Hence, food and media related projects were removed from the sample. Finally, as community plays an important role in OSI, projects without community support were also removed.
This section focuses on developing a sampling framework in order to select the respondents which are the most relevant for the study. The next section, 3.2.2.2, provides further details on adopted sampling strategy.
3.2.2.2 Sampling strategy The sampling approach is simple and summarised in Table 3-4.
Table 3-4: Sampling approach
Process Explanation Unit of study Projects using OSI in physical products Population Projects identified as using OSI in physical products Sampling pool Online referenced project and snowball sampling Sampling strategy Purposive sampling strategy
Patton (1990) argues that qualitative research is characterised by an emerging design as the researcher observes and interprets meaning in specific context.
54 Chapter 5: Research Methodology 55
Consequently, it is difficult to set a defined strategy, as the strategy evolves while the data is collected. However, Eisner (1991) points out that, at a minimum, a specific research design adapted to the purpose of the enquiry is required. Therefore, it was important to define beforehand what information is important for the research. In the research‟s context, the interest lies in the firm‟s innovation processes, hence projects using OSIP are chosen as the unit of analysis. Moreover, the particular aim of the study is to get a better description of the advantages and disadvantages perceived by those firms. Thus, it makes sense to identify projects where organisations are involved in a specific project using OSI. Furthermore, gathering specific information from people involved in those projects is essential. For this reason, in-depth and structured interviews are used as the primary methods to gather the data for this research. This design is further discussed in the following paragraph.
The sampling framework discussed in the introduction was applied to a population of open source projects in order to create a sampling pool. The project population was identified from two online websites which maintain a list of OS initiatives. Open Innovation Project (Open Innovation Project, 2010) references around one hundred and fifty Open Source Hardware projects while the P2P foundation (P2P foundation, 2010) maintains a directory of more than two hundred projects. Further along the study, projects were added to the sampling pool as they were referred by interviewees. It is important to recognise the value of the snowball sampling in this study (Goodman, 1961) as it yielded a higher rate of return and participation in further interviews.
Initially, organisations or owners of those projects were approached by the researcher via email informing them of the research undertaken as well as the unit of analysis and strategy for data gathering. This first email had as its objectives to select firms willing to participate, as well as to identify project managers or owners in charge of the OS projects. Then, a second email, specially addressed to those projects‟ managers and owners, was sent, including the participant information sheet reviewed by the University‟s Ethics Committee. In addition, a series of pre-questions was included to ensure the selected projects matched the sampling framework.
Chapter 3: Research Methodology 55 56
In the end, this study presents thirteen projects using OSIP presented in Table 3-5. As described above, an incremental and iterative process is used in selecting those projects and I stopped adding new projects when data saturation was reached. According to Morse (1995), saturation occurs when no new information is collected from the repondents, which means that the data gathered is adequate and sufficient for analysis. The saturation phenomenon occurred between the Gaming and Network interviews (projects 10 and 11). Telephony and Transportation were added subsequently to the study. The rationale behind this addition follows Hartley‟s (1994) advice on strengthening the study by addition of projects or development of contrast. The value of additional projects resides in the fact that they both represent categories which the sampling framework does not cover. Telephony presents an interesting project which used OSIP but was not successful due to fast changes in the technological environment. Transportation is a portfolio of projects driven by a not- for-profit organisation having been in the community for a long time but which is yet to produce any results. Further projects description can be found in Table 4-2.
Table 3-5: Final projects selection
Mature Projects
Telephony, Optical, Entertainment, Knowledge Access, Global Communication, PHD Project, Nascent Automation, Telecom, Transportation, Network, Organisations Gaming
Mature Manufacturing, Prototyping
It is interesting to notice that almost all projects take place in nascent organisations. While this might be linked to the willingness of those firms to share with the public, it also represents a limitation toward generalisation of the research findings. Those limitations are further discussed in chapter 6. In fact, it was almost impossible to connect with mature firms: firstly, because few firms use OSIP; but also because they are quite protective with those projects, preferring to use their own PR and communication channels.
56 Chapter 5: Research Methodology 57
3.3 DATA COLLECTION METHOD
Denzin & Lincoln (2002) describe qualitative research as working best with a multi-method, as it focuses on understanding the phenomenon researched. To fully utilise the study setting, collection of data is mainly provided through interviews and supported by document analysis. Table 3-6 below provides a summary of the data collection, which ran from June to September 2010. Analysis of the data is provided in Chapter 4, while protocol and processes used to deal with the data are further described in the following section.
3.3.1 INTERVIEWS
The research proceeded with fifteen focused, semi-structured, interviews of managers of OSIP projects. These interviews were designed to obtain open descriptions of the OSIP phenomenon. Thus, important information were collected on the use of OSI in the physical world. Although Patton (1990) and Eisner (1991), argue there is no critical sample size in qualitative data and that only the results count, the total of fifteen interviews is considered suitable for the nature of the exploratory research conducted according to Preece (1994).
Table 3-6: Interviews’ details
Projects 7 Date Type of Length in Interviews interview minutes Telephony & 27/07/10 Skype 47min in 1 Knowledge total8 Access Entertainment 07/08/10 Skype 50min 2 Global 10/08/10 Skype 44min 3 Communication PHD Project 13/08/10 Skype 60min 4 Manufacturing 15/08/10 Skype 50min 5 Automation 16/08/10 Skype 90min 6 Optical 20/08/10 Skype 60min 7
7 Projects are further described in Table 4-2 8 Interview 1 was run across two projects. The indicated time represent the total duration of the interview focussing on both projects. See Table 4.2 for further explanations
Chapter 3: Research Methodology 57 58
Telecom 23/08/10 Skype 55min 8 Transportation 29/08/10 Phone 52min 9 Network 10/09/10 Skype 80min 10 Gaming 10/09/10 Phone 53min 11 Prototyping 11/09/10 Skype 77min 12 Entertainment Follow up Skype 10min 13 interview Optical Follow up Skype 15min 14 interview Telecom Follow up Skype 12min 15 interview Projects 1 & 2 3 4 5 6 7 8 9 10 11 12 13 Interviews 1 2 1 1 1 1 2 1 1 1 2 1 TOTAL Respondents 13 TOTAL INTERVIEWS 15
Interviews were conducted principally using Voice Over the Internet (VOIP) with a particular software application, Skype. This method of contacting interviewees was selected for its low cost and availability around the world. Interviews nine and eleven were done using more traditional methods of communication- i.e. phone,- as it was more suitable for the interviewees.
As displayed above in Table 3-6, semi-focused interviews were conducted over a period of forty three days with an average duration of sixty four minutes. Three follow-up interviews were added later with an average of twelve minutes.
3.3.1.1 Interview questions The research questions were developed using the theoretical framework described previously. Those questions flow directly from the literature review conducted in Chapter 2, which identifies advantages and disadvantages of OSI in the software industry. Main interview questions are focused on two terms from the research question: advantages; and disadvantages of OSIP. Then, secondary questions clarify and support this main enquiry while putting the research into context. Overall, the questions have two different and complementary goals: understanding the “why” OSIP is used while assessing advantages and disadvantages of this innovation management strategy. Table 3-7 reports some of the questions used
58 Chapter 5: Research Methodology 59 as interview protocol, while Appendix 2: Interview questions, presents the main queries used during interviews.
Table 3-7: Sample of interview questions
Can you briefly describe the OS project you are involved with? How do you use OS in the design stage? How do you use OS in the development stage? How do you use OS in the distribution stage? Why did you choose OSI for this project? What is it about the OS strategy that makes it important for your project? What advantages and disadvantages does your company/project gain from the use of OSI during: o The design of this product? o The development phase of this product? o The distribution of this product? What do you perceive as a direct or indirect advantage or disadvantage from OSI in general? What is the overall impact of OSIP on the company? Do you use OS in any other projects?
It is important to notice that the previous questionnaire was used only for the first twelve interviews. As data saturation was reached, the last three interviews were used to provide further understanding on the way projects managers using OSIP were dealing with the disadvantages of this innovation model and what mitigation strategies were used (if any). This research strategy is supported by Denzin & Lincoln (1994), who claim that clarification of the research question through the interview process increases internal validity. Thus, keeping with the flexibility of qualitative design, interviews were modified over time to focus on important areas and keep-in line with the research goal. Lee (1999) advocates for this flexible approach based on the interviewer‟s judgment, when and where appropriate. Moreover, following an iterative process provides the researcher with different types
Chapter 3: Research Methodology 59 60 of information. This in turn increases the study ability to triangulate between different sources, ultimately improving the richness of the data gathered (Singleton & Straits, 2005). Follow-up interviews were much shorter as they consisted of a single question flowing from the analysis: How do you mitigate disadvantages of OSIP?
3.3.1.2 Interview protocol As discussed by Lofland & Lofland (1984), an interview guide was developed to ensure consistency of information gathered. This protocol is used before, during and after the different interviews to achieve consistency and clarity (King, Keohane & Verba, 1994). The interview protocol is part of the overall research protocol. It includes and outlines recording methods and debriefing as well as the interview processes. A summary sheet was used for each interview to keep track of specific information, time and other comments. This protocol and questions were also used to seek approval from QUT Ethics Committee.
For each interview, the purpose of the study, duration and confidentiality were explained and participants were asked verbally to state their willingness to participate. Even if Lincoln & Guba (1985) do not recommend data recording, interviews using VOIP were saved for convenience following Patton‟s (1990) advice. Thus, all interviewees were asked if the interview could be recorded at the beginning of the process. This set-up made access to data for further interpretation easier and facilitated the transcription. The VOIP compatible software MP3 Recorder was used as it allows for safe recording of the conversation separating both data set from the interviewee and interviewer for a better sound quality. Moreover, this software is an open source freeware available without cost.
During the early stage of each interview, confidentiality, duration and purpose of the research were discussed again. In addition, characteristics of the projects were validated with the interviewees while in-depth interviews were conducted one-on- one. Interviews were then transcribed to allow for analysis. Services from an external person to transcribe that information were used in order to accelerate availability of
60 Chapter 5: Research Methodology 61 the data. Transcripts were then sent back to the interviewees for approval before being analysed. Data is discussed in the next chapter, while the following paragraph summarises the data coding, collection and analysis.
3.3.1.3 Collection analysis and coding of the data To ensure both anonymity of the interviews and comments, as well as de- identification of the data gathered, projects and interviews were numbered9 following Miles & Huberman‟s (1994) recommendation on data analysis. Moreover, transcriptions were de-identified and audio data were erased after transcription. Only electronic copies of the transcripts were kept and saved on a protected server. In the end, transcripts were only made available to the researcher, the researcher‟s supervisor and each of the participants for review. Analysis of the data was done using NVivo version 8.
This study adopts a dual approach in analysing the data collected from interviews. Miles & Huberman (1994) argue that analysis is more efficient and realistic if a coding system is developed first from the theory and then free code built from the data. This approach allows for theory guidance as well as flexibility of an empirical analysis. The data analysis used key principles (Miles & Huberman, 1994; Boyatzis 1998) summarised in a five-stage framework which develops themes and coding and includes: (1) reducing the raw information to a more manageable form; (2) Identifying themes, setting up codes and encoding the data; (3) Testing the emergent knowledge while searching for alternative explanations. The fourth and fifth stages consist of revising code and coding to increase its reliability and the writing. It is important to notice that the data retrieved from the interviews was already quite reduced as focused structured interviews were used for better clarity. In addition, Nvivo provides specific tools to create a thematic analysis of the data. Further discussions on reliability take place in the next section.
9 See table 3-6
Chapter 3: Research Methodology 61 62
The first step of the analysis was to upload interview transcripts. Transcripts were already easy to read, as they were formatted according to a particular structure. In addition, a reflective journal was developed to gather comments and important feedback arising during the data analysis. Transcripts were then analysed individually.
The second step consisted of two different processes, setting up codes and applying these codes to the data. The researcher started by analysing the first two transcripts. “Tags” were used to identify important information in the different transcripts and displayed as colour coded categories named “Free nodes”. Information analysed was either recorded to an existing free node or coded in a new node. This open-coding phase (Lee, 1999) allows the researcher to identify categories, patterns and specificities from the data in an unrestricted way. The researcher, in this iterative process, generated more than sixty codes. Then, these codes where categorised under “tree nodes” to reflect themes and patterns (Lee, 1999). Within the samples, I compared and determined similarities amongst the different pieces of information.
It was identified that information gathered was divided into three different items: advantages flowing from OSIP, disadvantages flowing from OSIP; and a third category filled with items that were neither advantages nor disadvantages, named Comments. This last category contained a lot of important information used in the discussion. Advantages and disadvantages were then grouped under seven main themes, which is, according to Miller (1956), the optimal number of variables a coder can use at a time. Those themes presented and described in Table 3-8 emerged principally from the literature on OSI but were left open to integrate emergent elements from the interviews (Patton, 2002). In the end, thirty six codes appear under those main themes by comparing, collapsing and contrasting emerging themes and sub-themes (Chamaz, 1983).
62 Chapter 5: Research Methodology 63
Table 3-8: Themes and their definition in the research coding
Theme Definition and explanation Network This particular theme illustrate the integration of the community in the new product innovation focussing particularly on the collective elements of development Product This theme looks particularly at the output of the Open Innovation process Marketing Marketing is treated separately from the product theme to increase clarity. It focuses on three particular elements: pricing, place and promotion. Learning This theme looks at intangible outputs for the firm especially in the Experience domain of knowledge and know-how. Costs This theme looks at the financial impacts of OSIP inputs and outputs Legal The legal theme looks at the legal environment of OSIP focusing on the mechanisms linked with transfer of IP and protection. Corporate This theme regroups all the different elements which happen at the firm level with particular regard to operational elements.
In the third and fourth steps, this codebook was applied to analyse the rest of the eleven transcripts. It is important to notice that the researcher kept revising the coding during the analysis (Boyattzis, 1998). All transcripts were reviewed at this stage to ensure that the same code was applied everywhere consistently.
In the fifth step, key findings were organised and interpreted. The next chapter, Chapter 4 data analysis, provides a complete analysis and write-up of the data. In addition, following Eisenhardt (1989), annotations and personal comments from the researcher were recorded and linked to the transcripts, thanks to Nvivo software, and incorporated in the discussion part in Chapter 5.
3.4 VALIDITY AND RELIABILITY
Lincoln & Guba (1985) point out that the major issue in qualitative study is validity or credibility. To deal with this issue, I first ensured that data was gathered until saturation (Miles & Huberman 1984), thus allowing the researcher to compare
Chapter 3: Research Methodology 63 64 and corroborate information. Then, I developed a sampling strategy which possessed the six attributes suggested by Miles & Huberman (1994) as being necessary for good qualitative study. Table 3-9 details the qualitative study sampling in light of those attributes.
Table 3-9: Attributes of qualitative study sampling (adapted from Miles & Huberman, 1994)
Attributes Research status 1. The sample generates rich Yes: as it accesses different data and information on the phenomena allows for a personal engagement with studied subjects involved in the project
2. The sample should help the Yes: a broad range of respondents are researcher to generalise the selected which does not restrict the findings researcher.
3. The sample provides believable Yes: Broad range of different projects, description people and documents.
4. The sample is ethical Not a major criteria in this research but has been considered thoroughly 5. The sampling strategy flows Yes: Flows from previous research from the research question
6. The sampling plan is feasible Yes: limited network is necessary
Conformability of the data was also ensured by having multiple interviews for the same project. Moreover, validity and reliability of the results have been ensured by data triangulation and diverse collection methods (Yin, 2003). Thus, data is gathered from multiple sources: interviews; websites; commercial documents; and publications, as using various sources reinforce the generalisation and validity of the conceptual framework (Marshall & Rossman, 1995). Moreover, an iterative process allows for triangulation of received information and increases the richness of the data-set while providing checks and balances for a qualitative study (Miles & Huberman, 1994).
64 Chapter 5: Research Methodology 65
Overall, data gathered during interviews is validated by that gathered indirectly and even provides additional information in the Entertainment and Global Communication projects, where the OS strategy of those organisations was discussed extensively. When inconsistencies were found between secondary data and interviews, clarifications were made during the interview process as well as in the following interviews or via email. This was the case in the Gaming project, which shows strong discrepancies between how the community describes the project and the way it is run by the project management. Similarly, discrepancies appeared in the PHD Project. Online information in this case was somewhat conflicting with what was discussed with the interviewee as it was covering a long period of time over which changes in strategy were made.
In the end, Eisenhardt (1991) and Yin (2003) argue generalisation of qualitative research is based on logic rather than on statistics. But replication and ability to study trends or patterns cannot be found using single cases. The study method follows a rigorous process to maintain high standards of validity and reliability. When looking at the thirteen proejcts, trends and similarities can be observed. When discrepancies were observed they were all found to have logical contextual explanations discussed in the next chapter.
3.5 CONCLUSION
This chapter develops the methodology used for this study and explains the design of the research, sample, data generation and analysis, which are summarised in Table 3-2. A qualitative approach with semi-structured interviews as the principal data gathering method was adopted. The subsequent Chapter reports and analyses the data gathered and discusses in detail the results of those interviews. Analysis of the data and writing followed an iterative process to bring together a broad range of data from diverse sources. Chapter 5 offers a discussion on these results.
Chapter 3: Research Methodology 65
67
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP
Chapter four introduces elements that answer the research question presented in section 1.3 of the introduction and detailed further in the methodology chapter.
This chapter presents both results and analysis, building on Chapter 3, Methodology. The previous chapter provides information describing the way the data was collected and analysed using Nvivo8. Based on the preceding discussion, Chapter 4 summarises the analysis of the data-set. This chapter is composed of four sections: section one gives some more background on the projects studied, while section two introduces the study results focussing on advantages and disadvantages of OSIP for organisations. Section three, offers a comparison between the findings and the literature on OSIS described in Chapter 3, Literature Review, while focusing on the differences between OSIS and OSIP. Section four concludes with the results. The next chapter, Chapter 5, builds a deeper understanding of the mechanism behind OSIP by looking at factors impacting advantage and disadvantage elements.
Table 4-1: Outline of Chapter 4
No. Content 4.1 Background to the projects studied 4.2 Key findings 4.3 Comparison of the results with the literature on OSIS 4.4 Conclusion on this results section
Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 67 68
4.1 BACKGROUND TO THE REPONDENTS PROJECTS
The Thirteen respondents are taken from a broad range of industries and firms, in different contexts and at different stages in their life cycle. Table 4-2 provides further information on these projects. Fictional names are given to each project studied to facilitate understanding of the data. The majority of the projects are set-up in start-up firms, as they are easier to reach and more flexible with the research process. However, start-up does not mean “boot-strapped” organisations, as some of the projects take place in firms which have raised high levels of capital or are already turning substantial profits. It is also important to notice that the study involved a not- for-profit organisation as well as some sole traders.
Table 4-2: Details of OSIP projects
Project Project name Explanation and back ground number 1 Telephony Uncompleted project in the telephony industry. This project was stopped as a result of new entrants in the market, which made further developments obsolete. This project was particularly interesting as it provided the community with a platform of development without any limitations 2 Knowledge This project has produced a portable device which Access provides users with data access. The OSH is distributed internationally, following traditional retail distribution channels. This project builds on the experience of the company in running OSIP projects, particularly with the Telephony project described above. It is interesting to highlight the fact that the strategies used for both projects are totally different 3 Entertainment This project delivers an entertainment unit capable of streaming digital content. It strongly leverages consumer feedback and beta testing with a well- thought testing program, encouraging testers to adopt new standards 4 Global This global project is a portfolio of different projects Communication which work on communication solutions. This is one of the most altruistic projects involving an international team and skill-set. This is a highly technical project, involving highly skilled engineers
68 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 69
5 PHD Project This rapid prototyping project initially developed as a case study for academic research focuses on providing alternative solutions for manufacturing. First developed as a DIY approach, it has sparked interest in the community and start-ups are now reselling products and components 6 Manufacturing This project provides manufacturing facilities for other OS projects as well as develops its own range of communication products, all OSIP. The company has developed more than four products with an international collaboration 7 Automation Wireless house automation system. This project works on the convergence of different OSIP projects with an online distribution. It highlights the importance of collaboration between OSIP projects 8 Optical This early stage venture provides alternative optical solutions. The project has a portfolio of different products, which provide alternative solutions to optical elements, using substitute building material. This project has two focuses: the first one, developing products which are environment friendly, but also decreasing costs of development. 9 Telecom This telecommunication device represents a highly technical product, which is developed in collaboration with technicians and engineers from around the globe 10 Transportation This project works on an alternative and modular source of transport, involving the use of different “parts” produced and designed by the community. It has a portfolio approach and focuses on empowering the community and employment creation 11 Network This particular project has been discontinued as a result of changes in the technological environment. It was started as a hobby and further developed to share outputs with the community. In its time, it also provided a technical solution which was far cheaper than commercial products 12 Gaming This project evolved from a previous OSIP, which has been in the community for a long time and develops an entertainment unit. 13 Prototyping From a university environment, this project provides modular prototyping and has attracted venture capitalists
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 69 70
4.2 KEY FINDINGS
The study identifies seven areas impacted by OSIP. Each of these categories presents advantages and disadvantages elements for the firms. Advantages of OSIP seem to follow what was to be expected from the literature on OSIS, especially in regard to: Network advantages, Access to resources, Skills, Opportunities and Products. Similarities also extend to part of the Marketing elements and Learning experience. However, some elements appear to be specific to OSIP and emerge in regard to Legal, Economic and some of the Marketing themes. These similarities and differences are discussed in paragraphs 4.3.1 and 4.3.2 in the next sections. Table 4-3 summarises the main themes and different elements gathered from the interviews mentioned in the precedent chapter.
70 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 71
Table 4-3: Summary of findings and thematic coding
Sub category Explanations Offers a differentiation point compared to competitors. Existing communities can be leveraged, particularly OSS community and Advantage Community other OS communities developed around other products (i.e.: other projects and software)
Financial resources, Human resources, Moral support, but also other public Advantage Network of Resources IP available Advantage Network of Skill Brain power and skill transfer available to OSIP projects Advantage Network of All side track opportunities leveraged from the OSIP; i.e. career, business…
Network Opportunities The output of OSIP process as part of broader community and able to Advantage Network of Products leverage other physical and non physical products by being part of an ecosystem Disadvantage Community Getting people onboard with the project and reaching a critical mass
Advantage PR: Traditional elements of Public Relations leading to Brand awareness, which Brand Recognition, Reputation, can be leveraged by OSIP projects Word of Mouth and Good Will Early adopters are part of the OSIP process which speeds up first sales. Advantage Sales The network ensures cross selling and an extended market available early on.
Marketing Disadvantage Costs There are extra costs identified for OSIP projects
Compatibility embedded in the product design as well as openness to the user Advantage Compatibility to build their own compatibility Advantage Alternative to Closed Offers flexibility and freedom of choice Solution Advantage Customer Hacking Adaptability of the product under user innovation Advantage Customer Product The openness allows for customers to know the product inside out.
Knowledge Advantage Adaptability/ Integration of the end-user in the OSI processes allows for enhanced needs Modularity/Versatility and wants awareness Advantage Product Resources Community developed extra resources for the product Debugged by the community but also built for their specific needs allowing Product Advantage Quality Specs for more robust output Advantage speed of development Input of the community shortened the innovation process Advantage Value to Customers All the advantages above combine create a higher value for the end consumer Risk of multiple standards created and difficulty of integration of customers„ Disadvantage Compatibility hackings in the mainstream production Numerous contributors can increase development lead- time, complexity of Disadvantage Development the project and implementation of the design Ensure your standard to become leader in the industry Advantage Easy to Copy OSIP projects become development hubs
Protection of the IP from closed approaches. Savings on IP costs Advantage Licence Also provides a framework to use or exploit this IP Risk of product commoditisation and loss of revenue. Organisations involved Disadvantage Copy
Legal in OSIP are unable to directly recover IP development costs Being open does not protect against other patent infringements. Disadvantage IP OS has never been defended in court and there is currently no framework available to protect and/or enforce the licensing.
Advantage Costs Savings on costs as the community supports OS products. Limited overheads
Disadvantage Costs Extra costs resulting from openness Cost
Advantage Employees Happiness A special culture is created which influence employees and their output Advantage Industry Recognition Peer recognition
Advantage platform of Creates an environment which allows and helps people to innovate, cooperate Development and work together in a flexible way Advantage Strategy Allows the company to focus on its core business or diversify its activities Disadvantage Management A higher degree of project complexity means an extra need for management Disadvantage Business Model Value capture and product commoditisation are two main issues Integration of the end-user in the supply chain is a common strategy in OSIP Corporate Disadvantage DIY products Risk of competition by organisations which pillage the OSI without Disadvantage Free Riders contribution
Learning processes are enhanced as the OSI process allows for employees to Advantage Build up Expertise work on a lot of different new knowledge areas Advantage Company‟ Product The company develops a better understanding of its own product as it has to Knowledge make it available to the community.
Learning Advantage Skill Transfer Two-way exchange of knowledge between participants during OSIP experience
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 71 72
Building on this table, paragraphs 4.2.1 to 4.2.13 provide further explanations on the seven themes explored with managers of OSIP projects, namely: Network, Product, Marketing, Monetary, Legal, Learning Experience and Corporate. Each theme is discussed first from an advantage perspective and then from a disadvantage perspective, with highlights on discrepancies between respondents information. The first theme described relates to Networks.
4.2.1 NETWORK ADVANTAGES
Firstly, there was consensus among the project managers, who all see networks as one of the biggest advantages flowing from OSIP. For them, network advantages appear under five different types of networks: community networks, resources network, network of skills, network of opportunities and products networks. These elements are discussed below.
4.2.1.1 Advantages of community networks Every manager mentioned community as the first advantage of OSIP, as it offers a differentiation point compared to competitors. The Entertainment project claims this setting as significant in its success. In OSIP, the community is built around the project from inception to completion. Therefore it offers support when the project is launched, whereas in a more traditional innovation process, community has to be built when the project is completed.
"Last and none the least, you have the community behind you and you have developed the community around your project and product, not the competitors."(Entertainment)
In the same way, other communities based on other OSI projects can be leveraged as they all share the same ethos. Gaming not only leverages its own community, but also communities built around similar OSIP as well as OSIS projects. It is important to highlight the linkages between OSIS and OSIP, as it seems
72 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 73 that both communities form a unique and heterogeneous entity in projects where electronics are involved, which represents the majority of the projects studied.
“(Speaking about gaming) Yeah exactly there’s a lot of good games and there’s also a lot of open source, there’s a lot of [name of the community] fans out there still.”(Gaming)
“We use [product name] in our products... It is an Open Source Hardware chipset. Those components have already big communities behind them used to work on OS projects.”(Protyping)
It also seems fair to suggest that even if the community offers direct advantages for OSIP projects, managers really mean that community can be leveraged in different ways, which are summarised below. Thus, if community plays an important role in building advantages for the firm, it might not be a direct one. This is illustrated through another consensus from managers describing a network of resources.
4.2.1.2 Advantages of the network of resources The network of resources flows from community support. The community can sustain the project in a financial way, provide human resources or moral support, but also contribute via other publicly available sources of IP. Global Communication illustrates this setting, where people are providing monetary support as well as human resources to build and install antennas.
“Very quickly you get people which are willing to help you in the design, giving something else, other people which appreciate what you are doing to your records and willing to help even financially, or just by even if you’re not giving donation, they are just decide to buy your work and this way support your idea.”(Automation)
As part of this network of resources, but cited in almost every case as a separate element, is the network of skills.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 73 74
4.2.1.3 Advantages of the network of skills Network of skills is characterised by: Brain power, “Doing”, Knowledge, or “Know how”, available to drive an OSIP project. The network of skills can be direct, with people involved in the projects, or indirect, by transfer of skills to people involved in the projects. In the Automation project, the core team developed the projects and relied on the experience and knowledge of an individual, external to the project, whom solved technical hurdles and, as a result, built up the team‟s technical knowledge.
“Get access to specialist in the industry for free. Which allow for development you could not have done any way.”(Global Communication)
“Because he had contacts with engineers working in that area and thought it would be an easy way to develop new products with engineers from around the world.”(Telecom)
The advantages of accessing networks of skills are cited by all managers, as it is rare that an OSIP team has all the needed skills at inception of the project, and they thus have to rely heavily on this type of network to fill the gaps. Network members provide support and knowledge, but also act as a hub, facilitating contacts with other networks, which can generate new opportunities.
4.2.1.4 Advantages of the network of opportunities The network of opportunities refers to any new deals, which can appear at the margin of the project. They can be monetary, entrepreneurial in nature, or career- driven, but are not particularly limited to those examples. Organisations like Manufacturing have built their expertise and business on providing technical support for OSIP projects.
“I have been in touch with many other businesses and it increased our network” (Manufacturing)
74 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 75
“We now have a point of sales in Australia just because [name] knew me and he liked the application and he wanted other people to get involved.” (Automation)
The three previous networks discussed above are all intangible. However, there is a fourth advantage network, which is tangible for the community: the network of products.
4.2.1.5 Advantages of the network of products A network of products is also described by the majority of interviewees. These can be either other products built from OSIP, proprietary ones, or a mix of both. By interacting with each other, they create an ecosystem around the project, hence providing a unique product offering. Not surprisingly, the example of the IBM PC is cited by a majority of managers to identify this perspective. Prototyping and PHD Project have built a full business model around the idea that their product is a platform, on which others can develop and build their own products, following an “Apps” business model, which is not limited to software.
“Then I started working with some other guys from around the world on another open hardware project called [name]. We then combined that with [product name] hardware to build [other products names] so that sort of evolved through several hardware projects that got merged together I guess.” (Automation)
“So what happened is a bunch of developers developed a [product], which synchronises with our [product] player. And there were four of them that came out, you got a huge amount of insight, they took totally different approaches, users were using them, we got feedback.”(Entertainment)
This last network illustrates the advantages found in the product category discussed further in paragraph 4.2.3. However, before going further in the results
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 75 76 describing advantages of OSIP, interviewees also reported infrequently that networks can be a disadvantage.
4.2.2 NETWORK DISADVANTAGES
A few managers identified specific circumstances in which the community can have a negative impact on the organisations involved in OSIP. First, issues arise when the community does not buy-into the project, or more generally, if the community does not participate or contribute. This was particularly the case in PHD Project, where lack of support from the community almost brought the project to an end.
“You have to get the community onboard. Community had to get value out of its involvement and also get excited about the project.”(PHD Project)
In this case, managers also identify “a critical mass” an OSIP project should reach, in order to create awareness and ensure continuation of the development. The project was stagnant because the community was not attracted when it was first launched. When changes were made to the project, a significant population was attracted and started pushing the project forward. In the Network and Telephony projects, the community deserted the projects, bringing them to an end, as the core team was not able to maintain the projects anymore without support from the community.
Another issue also noticed with community involvement in OSIP is the fact that it attracts only early adopters or people with technical knowledge of the product being built. This disadvantage translates into issues linked with usability for the end- customer. Telephony had a huge community of engineers and tech-savvy people, generating products and add-ons. However, those products were not adapted for end- users.
76 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 77
“The negative side was that nothing really worked and when I say worked I mean worked from, you could hand it to your mom and your mom would say oh okay yeah and know how to make a phone call.”(Telephony)
It is interesting to notice that certain projects, such as Prototyping and Entertainment, have done well in similar environments without any problem. Entertainment has even set-up a specific beta testing process, while Prototyping thrives on beta development. These discrepancies are further covered in the corporate section, paragraph 4.2.12, of this chapter. It focuses on the contingency factors leading to community disadvantages, as they have also been linked to management issues and poor project management in general.
The two sections above described advantages and disadvantages linked to networks and particularly highlight the importance of the community for OSIP projects. They also raise some interesting hurdles, principally due to managing stakeholders of the projects. The next category comes back to advantages of OSIP linked with the product itself.
4.2.3 PRODUCT ADVANTAGES
Advantages linked to the output of OSIP processes are the most cited and also the category where managers had the most information to contribute. Interviewees identified seven direct different product advantages: product compatibility; customer hacking; customer product knowledge; product resource; adaptability/modularity & versatility; speed of development; quality of technical specifications (specs); all of which provide an alternative to traditional proprietary solutions. These seven advantages combine in the end to create higher value for the customer. Higher value for customers was cited by all managers as the most important element of the product category, thus I treated it as an eighth class.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 77 78
4.2.3.1 Advantages of the alternative to closed solutions Firstly, and logically from the manager‟s perspective, products developed openly offer an alternative for consumers locked in to closed solutions. This element is not only cited as a product advantage, but also as a driver for the community to participate in OSIP. As an example, in its product portfolio, Global Communication looks at developing free telephony, offering alternatives for developing countries where infrastructure is not available.
“That means that I want to have a fully open source alternative to all the close sourced solutions that are currently entering the market and big organisations that are doing that.”(Global Communication)
This advantage is very often implicitly discussed by managers, but does not seem as important as Compatibility and Hacking, developed below.
4.2.3.2 Advantages of Compatibility and Hacking An important advantage that was identified is linked to compatibility of OSIP products. This advantage is pretty similar to the one identified in network of products. However, product compatibility focuses on the functions and usage of the product, while network of products were focussing on the product‟s environment. In OSIP, compatibility with other products is embedded at the product design level by managers and community pressure. In addition, when the product is released, it allows customers to develop their own linkages with other products. Compatibility is strongly linked from the managers‟ perspective with hackings made available later in the product development by the community. This particular form of user innovation (von Hippel, 2008) increases the value of the product, as they can be adapted outside of their usage context.
“I know these products are going to be open, and they’re going to be hackable and they’re going to be you know able to interface and there won’t be dirty tricks with compatibility with media and so on and so forth....They can design other products based on the OSH already
78 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 79
available. Our product is designed for specific usage but already two of our customers are using it for a different.” (Entertainment)
All managers mentioned either compatibility or hacking advantages during interviews. Underlying this theme is the assumption that users have the technical skill but also knowledge to perform different modifications. This leads to the fourth and fifth identified advantages of OSIP, User Knowledge and Product Resource.
4.2.3.3 Advantages of User Knowledge and Product Resources OSIP is characterised by the release of IP into the public domain. This facilitates hacking and leads to another advantage. Indeed, because users can tamper and hack OSIP products, they have a greater knowledge of said products. This knowledge allows them to: design further products; provide support to community members; and provide basic/ advanced maintenance. This is, in turn, linked to a fourth advantage: availability and creation by the community of product resources. Product resources can be either in the form of additional gismos, such as stickers described in the Telephony project, but can also take the shape of user manuals or forums compiling technical information, such as in the Manufacturing case, and all the other technical projects.
“For example one of the biggest advantages I see is when the customer knows the hardware, they can design other products based on the OSH already available.”(Global Communication)
“As the communities already exist, we do not have to maintain the documentation for those components. You have a lot of people around the world that are using similar products and maintain the software and the hardware for you." (Manufacturing)
As described above, the community takes it on itself to develop resources made available publicly. However, product advantages are not limited to community inputs toward OSH. Further advantages also appear during the development phase.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 79 80
4.2.3.4 Advantages of the speed of development Some managers observed an acceleration of the development process in OSIP. As the community participates in the design, debugs their products and tests them in different environments, it limits the testing required by the company. In a few cases, managers have even shortened the development phase, when their company uses already-made projects or uses parts previously developed in OSIP. In the end, it was a common feedback that OSIP allows for a faster release of versions within an iterative process to develop a better product.
“So you quickly get the view from the community and this way you can shorten the design stage and also you can reduce the amount of prototyping.”(Optical)
“I cannot have a thousand set ups here at home just to do testing. So having open source solutions means that a lot of people have already tested this in a lot of different ways, a lot of different set ups which mean that it’s a very thoroughly tested hardware. It’s not only about designing but you can also be very certain that it’s been tested.” (Network)
Nevertheless, speed of development is not the only advantage cited by interviewees. Speed is usually bundled with other advantages such as quality.
“Improving overall quality and increased speed but also increasing hardware performances and reducing costs.”
Overall quality of OSIP outputs and performances are described in the next section.
4.2.3.5 Advantages of Adaptability, Modularity, Versatility and Quality Project managers all assume that the output of the OSIP process leads to better quality products. Highest quality is defined in comparison to proprietary products,
80 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 81 since OSIP is supposed to deliver better technical specifications (specs), more flexible products, more modularity and globally, more versatile products, as they have been developed for and with the end-users. In addition, the community seems to play an important role, as partially described previously, in increasing the overall quality of the final product. It is important to notice the uncertainty shown by project managers, as they are the first ones to say that there is no way to measure those dimensions and be certain of those claims.
“The product is better because I've had peer review.”(Global Communication)
“So if you have more people involved, you get different views, you can discuss because you know even if you are the best in the world for something you still, if you discuss with other people, yourself you can find something which you wouldn’t find alone.”(Telecom)
“You’ll see first is the kind of openness in the supply chain similar to what happened with PC’s so I do think that the nature of hardware and we talked about this earlier in the conversation that it tended to be more modular by its very nature because its various costs to release it and distribution parts and all of that so it tends to be more modular.”(Knowledge Access)
However, measuring those claims might not be as important as it appears. In fact, these dimensions are highly intangible and exist only in the eye of the beholder: the customer. Nevertheless, they can be assessed by the feedback and the values customers associate to the product. To conclude, all the product advantages cited above are only described because they enhance customers‟ experience and increase the value of the product in their eyes.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 81 82
4.2.3.6 Advantages of value for customers The product advantages previously described combine to build an eighth benefit for firms using OSIP. This last advantage, cited by all, is referred to as “value for customers”. From an academic perspective, value for customers is seen as a result of two distinct but complementary concepts: value perceived when purchasing OSH; and customers‟ own satisfaction (Eggert & Ulaga, 2002).
“And so when we took that approach what we were left with was an extremely diverse product where we had all sorts of different things that could work on it, that was the positive side.”(Telephony)
“I am partially designing from my own experience but If I can think of a design that solve a lots of people issues, we will probably find a market, because if people have experienced the problem and I see the need, other people will come and use the product”.(Global Communication)
As described above, value for customers is a complex construct, difficult to measure. It is linked to the customers‟ own satisfaction in participation in OSIP10, as much as a result of allowing consumers to push the product further than what it was designed for and providing additional benefits. In the Prototyping project, customers gain satisfaction not only from helping the team to find new ways of using or combining products together, but also by creating their own user-interface and sharing it with the community.
Section 4.2.3 described advantages linked with the product output of OSIP. The next section, Product Disadvantages, describes the potential issues managers might face with OSH and provides some interesting examples shared by interviewees.
10 see paragraph 2.2.1 of our methodology chapter
82 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 83
4.2.4 PRODUCT DISADVANTAGES
Similarly to the disadvantages noticed previously in the network section, it seems that product disadvantages are highly context-dependent. Some managers describe two main disadvantages from a product perspective, which can be linked with either development or compatibility. The similarity between these two disadvantages lies in the complex environment generated by OSIP, especially during the design stage.
4.2.4.1 Disadvantages in compatibility Firstly, the openness of the OSIP process creates a complex design environment, leading to the risk of generating multiple standards, which could result in product incompatibility. While all managers are aware of this possible difficulty, only the PHD Project reported it to be a direct issue, linked to the particular lack of project management.
“People would design specific parts for specific needs that would not be compatible with the original design.” (PHD Project)
While references to the complexity of the design process are discussed further in paragraph 4.2.13.1, managers also identified that the development of new products might be made more complicated under OSIP.
4.2.4.2 Disadvantages in product development Secondly, the product development itself becomes a liability in OSIP, as only people with the right skills and early adopters get involved in the development, which might lead to market inadequacy. In fact, early adopters and beta testers represent only a fraction of the total market, and they might not represent the average consumer. Thus, solving the needs of the development group might not cater for mainstream consumers.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 83 84
“You cater only for Beta and early adopters not for the whole community which is where you want to go as a company. Thus locking potential market and missing on development.”(Entertainment)
In addition, the speed of development can be complicated by the open process and involvement of so many people. Again, few projects report direct issues at this level. Telecom was impacted by it but had a particularly loose structure of development. Entertainment, which had a small development team, reported the same issue.
“And then that company has a very tight relationship with their investors, with their shareholders with the community and you know having too many cooks in that kitchen might be a problem”(Telecom)
Development can be impaired by too many stakeholders working on the same project. Furthermore, driving a community also means getting consensus, which might delay or slow down product development as well as creating tensions between community members, creating further hurdles for the project.
“However, the downside of this is the time of development that is increase with Open Source compare to proprietary Apple is running a new Iphone every year, that would not be possible with an open Source Hardware where discussions last for ages as well as meeting.”(Telephony)
Design hurdle and technical issues can also appear as a result of difficulties in prototyping and testing. Furthermore, some of these OSIP projects evolved in a very technical and complex domain that requires specific skills the community does not possess. Managers point out that if there is no limitation to what the community can think about, there are limits to what the community can do.
84 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 85
“I would say it was a few people who really understand electronics. A lot of people send feedback but their feedback is like I would say, the competence level of the people is not enough. So most of the input I couldn’t accept but these people who it was obvious that they really understand electronics, they were sometimes they were sending good valuable input which I could use and incorporate.”(Entertainment)
“But what is a disadvantage sometimes is actually determining if the input is good or bad takes so much time and I don’t ...just say okay I’m not going to accept it because I’m not having a good gut feeling already. The people start thinking oh he’s too paranoid, he’s a perfectionist what’s wrong with him you know? They just have to basically ...analyse it and give them a reason why it’s not going to work and sometimes the people don’t understand the reason because it’s such a complicated reasoning around it. Sometimes we have complex interactions of physics, optics, mechanics.”(Optical)
Those difficulties generated by OSIP highlight an important point, which is the need for proper communication and the right platform to build the project upon. In addition, it appears that too much openness can also be a hurdle for creativity and may also create something which is not marketable or in-line with the customers‟ needs and wants.
“Because when you use open technologies you have no limitations, you are able to really change any possible thing in and that becomes something that ...that really can bite you in the ass if you don’t impose yourself limitations. So we tried to create or I have tried to create a culture here where we umm where we embrace and even put limitations you know on our products ourselves because I think that that creativity right? That (illumination?) all of that stuff comes out of someone facing limits, facing limitations and thinking through new and elegant and exciting solutions to those limits.”(Knowledge Access)
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 85 86
“ So we had all of these great things going on I mean so many different you know possible pathways to take it kind of made your head hurt but there wasn’t really a clear pathway forward where everyone would get it and everyone said this was the way we should move forward with this [product].”(Network)
Further comments are provided on those issues when speaking of project management, in the corporate section, paragraph 4.2.13. Indeed, very often, managers have identified these disadvantages as flowing from management issues.
Product disadvantages result from issues rooted in the development stage and linked with the complexity associated with OSIP. They seem particularly affected by both communication and management and can lead to an explosion in the number of OSH standards. Both previous sections focussed on product, which is often associated in the marketing literature with pricing, promotion and distribution (Kotler, 2001). For clarity, marketing is discussed as an independent theme in the two next sections. The marketing section presents two main advantages and two main disadvantages. One of the biggest advantages recognised by all managers is public relations. They also recognise a sales advantage in using OSIP. However, raising costs in certain projects are seen as a disadvantage.
4.2.5 MARKETING ADVANTAGES
Marketing advantages include better PR and sales increase for firms running OSIP projects.
4.2.5.1 Advantage of public relations In the study, Brand Recognition, Reputation, Word-of-Mouth and goodwill were all described as direct advantages from OSIP. Interviews focused particularly
86 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 87 on the importance of organisations‟ brands, which allows them to stand out in the market, acting as a rally-point for stakeholders.
“But the most important is the brand. Because you are the developer you are known in the industry.”(Knowledge Access)
While these concepts are intricately linked with the brand, they all represent different aspects of marketing. It is important to notice that all OSIP projects benefit directly from the ethos associated with OS. In fact, all these projects are part of a broader “Open Source community”. This extended community can be both leveraged by the company, but also acts as a trend-driver. In addition, the increasing use of social media enhances the strong online presence of OS communities.
The first element described by managers as a positive output of OSIP is brand recognition. Having an OSIP project seems to increase the knowledge people have of the brand. This can also be linked to brand awareness and brand equity, or a higher impact from the brand on the market because of the brand name (Keller, 1993). Gaming and Knowledge Access, both benefit from brands developed around previous products in the OSIP arena, which built goodwill even before the start of the new projects. However, new projects such as Entertainment or PHD Project have also experienced similar trends.
“We’re very small but we’re a relatively well known brand ... So my best guess is that there’s a million people in the world who know the [name] brand. And they know it means Open Source and innovation and community and so yes... the brand is certainly our most valuable asset.”(Entertainment)
The managers interviewed refer to OSIP as having a positive impact on brand reputation or increasing the positive way consumers associate the brand with different values, such as: quality; durability; usability; and freshness (Harris & De Chernatony, 2001).
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 87 88
“Our openness increases the company reputation.”(Telephony)
“Engineers, they know now that we have the ability to design good hardware.”(Manufacturing)
Word of mouth appears also as a direct output of the OSIP project. It seems that the openness of the project plays an important role in the way people hear from the brand in the first instance, but also impacts the way people speak of the brand, advocate for it, or refer it to friends (Richins, 1983). This is particularly exacerbated by the communistic and collaborative character of OSIP and the emergence of online social media and global communities.
“Yes, yes. And after that, those people, if the product is attractive, they do the first marketing because they talk with their friends.” (Gaming)
However, it is important to mitigate these statements as some managers do not see PR as a direct advantage but as an outcome of the differentiation strategy undertaken by firms using OSIP.
“Good PR but not a direct advantage that is a by-product of the openness of the project.”(Entertainment)
“Um what other… benefits. Oh its because it’s new and unique, it’s lead me to talking to people like you and getting interviewed by Wired and lots of publicity. And so it’s a marketing angle. So that’s been useful.” (Global Communication)
These differences might simply be linked with the company‟s life cycle stage as more mature firms, such as Global Communication or Entertainment, have been in the OS arena with tested communication strategies, while young firm such as Gaming are still discovering their space.
88 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 89
In addition to having a positive impact on the brand, some of the managers identified developing community goodwill an advantage in OSIP, which can then be leveraged by the company.
“Biggest change after we run OSI for the first time in our company is that we developed a network and have gather community good will. We also have many good friends from now.”(Manufacturing)
An obvious leverage of community goodwill appears to be for further product development but also, in a more tangible way, by increasing sales.
4.2.5.2 Advantage of increasing sales As described above, some of the managers see OSIP as having an important and positive sales impact, flowing from the presence of the community early in the project. This is seen as both early sales, increase in volume, and intention to buy in support of the project. The Automation project got an entire part of its distribution channel developed by overseas customers to satisfy their own demand.
“We can have our customers and especially big customers pre-finance the production costs of these devices .... From an organisational point of view that’s another discussion of course, but if you have already the finances then I mean of course, we’re only a couple of guys who are, there’s only so much we can do.”(Entertainment)
“So this Australian company is interested in extending the design for their own use. There is also another one which is interested. That was even before we had our first prototype. Now we are in the manufacturing stage but long before we were getting a lot of interest.”(Automation)
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 89 90
Furthermore, the international character of the community also provides additional markets early in the project life-cycle, which are not available to products built in a more traditional way without an important marketing support.
“For example, if we target only, we’re located in [country name] so we target only the [country] market, it will never grow because it’s a very limited market. And so… it helps in the distribution I think. (Automation)
Marketing advantages introduced above impact the brand and can be leveraged towards a better sales outcome. In addition, extended markets seem available to OSH. However, even if OSIP has a positive impact on PR and sales, a major disadvantage appears in the form of extra marketing costs.
4.2.6 MARKETING DISADVANTAGES
Regarding marketing, the main critic of OSIP from a manager‟s point of view comes from extra costs associated with running the project.
4.2.6.1 Disadvantage costs Extra costs are a recurrent negative argument discussed with interviewees. This is especially true as extra needs in regards to maintaining the platform of development and supporting community interaction have been identified. Consequently, organisations using OSIP have to support those additional costs, particularly in the early stages of the project when everything has to be developed.
“Your project must reach a critical mass to be driven without need of over investments. Then the next step is for your product to be used as the norm in the industry to get access to the total market i.e. Arduino”(PHD Project)
90 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 91
Further costs linked with other aspects of the business are discussed in the next paragraphs as it is important to integrate marketing costs in a broader picture and to look at monetary advantages and disadvantages, which have also been identified.
Strangely, the Costs theme is one of the least discussed in the literature. This is important to notice, as it represents variations from the research on OSIS, which highlights a positive and important monetary impact. Further discrepancies appear regarding: low costs of running the projects in general; no need for suppliers; and freedom of delivery over the internet as discussed previously. Unfortunately, these characteristics are lost when running an OSIP project, principally due to the fact that a product needs to be physically produced.
4.2.7 COSTS ADVANTAGES
Monetary advantages discussed in the interviews come in two flavours: support from manufacturers sponsoring OSIP and reduced costs of development, both of which impact the bottom line of OSIP projects.
The primary monetary advantage, “reduced costs of development”, can be linked to two factors. Firstly, availability for free of other OSI projects in the public domain allows organisations to save money and to produce quickly without R&D expenditures. Manufacturing has been supporting OSIP projects for more than three years as they feed their production line when ready to market.
“So you save money and you save money because you have the opportunity to use things that have already been developed. I can stand on the shoulders of giants like they say.” (Global communication)
Secondly, the reduced cost of development can also be linked with the possibility to run OSIP with minimal investments, due to support from the community. In that regard, PHD Project has been partially funded by the community.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 91 92
“Save on costs as you do not support plus you do not need to have your IT team and you can outsource the product design and part of the development.”(Manufacturing)
“Otherwise they’d have to do it internally and so it’s a big cost saving, not having to do the design themselves.”(Transportation)
In addition, costs of development are also driven down indirectly by advantages cited above, especially thanks to an increase in speed, which has a positive impact by either reducing or eliminating costs.
“Um… well it’s been good for us revenue-wise because we’ve developed a product much faster than we would have otherwise...”(Automation)
Lastly, as discussed in paragraph 4.2.1.1, the community provides direct network effects, which have a cost impact, providing skills for free which would have been inaccessible in any other situation.
“And they may simply not be able to buy those skills. A lot of the open hardware crowds, the best developers drift into the open area, the ones you actually pay for are sometimes not as good as the ones you get for free.”(Global Communication)
A secondary monetary advantage identified, is the sponsorship and help offered by big players in the industry, like IBM and Texas Instruments (TI) to increase the adoption of their own standards. This also highlights a high expectation from certain OSIP players to build hardware, which in turn will become the dominant standard in their particular industry. Prototyping has benefited from the help of TI, which uses Prototyping products as a PR exercise, but also as a testing ground for future technologies.
92 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 93
“So cost would be one of the primary, cost and the ease of getting into that is the biggest driver of us as Open Source users buying designs and parts for Open Source stuff from TI. The biggest advantage as far as releasing it is the hope of standards basically, that you hope your design will be the standard that gets designed into a whole host of projects, commercial, academic and otherwise. That’s the biggest advantage.”(Prototyping)
However, if OSIP allows for some cost savings and running projects with low overheads, there are also a couple of monetary disadvantages linked with this strategy. From the research, it appears that OSIP projects are much more expensive to run than the literature initially revealed.
4.2.8 COSTS DISADVANTAGES
As discussed previously in the marketing section 4.2.6, OSIP has additional costs attached to the structure, which are necessary to enable the innovation process. In addition, there is an obvious disadvantage discussed by all, linked with the potential loss of income generated by giving away the IP for free. This particular characteristic flows from the intrinsic nature of OS projects and is further discussed from a legal perspective in the next paragraph.
“So the disadvantages are that part of your know how, you’re giving for free. And this way you can lose some income.” (Optical)
“it’s possible to make more money if you keep it closed I guess. But that’s debatable I guess.”(Global Communication)
As quoted above, managers insist on the fact that monetary disadvantages are always balanced by the advantages they see in their projects. This is important to mention as this is one of the main differences between OSIP and closed innovation solutions.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 93 94
Furthermore, extra management costs have been seen as the main hurdle to sustainability of OSIP projects. This last issue is further discussed in paragraph 4.2.13.1, from a management perspective.
“Running an OS project needs a person full time to drive the project which has a cost.”(PHD Project)
Both sections above, 4.2.7 and 4.2.8, relate to monetary advantages and disadvantages. Advantages of OSIP follow what was discussed in the literature on OSIS, especially regarding low overheads and some cost savings on development. However, disadvantages linked with higher costs to run the overall OSIP process appear and are further discussed in the Discussion chapter.
The next two sections focus on the legal side of OSIP. It is essential to notice that while never referring to them as “legal” advantages or disadvantages, managers all refer to the licensing agreement under which their projects are published. This part of the study is one of the most interesting, as the legal environment is cited frequently, especially when talking about disadvantages. Under this category, the fact that OSH is easy to copy was identified as either an advantage or a disadvantage, while the licence in particular was deemed to be an advantage. In the end, the IP protection was pointed out as a second disadvantage.
4.2.9 LEGAL ADVANTAGES
Legal advantages come from the fact that OSIP products are both easy to copy and supported by a simple licensing environment.
4.2.9.1 Advantage of easiness to copy Firstly, free and unlimited access to the IP generated by OSIP means that it is easy to “clone” OS products. Easiness to copy is a bounty for projects wanting to develop new standards in the industry, such as Prototyping or Manufacturing. In fact, this strategy has also been used by IBM (Bartey, 2001; Vujovic &Ulhøi 2008) in the
94 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 95
70‟s with the success known now, in becoming the dominant player. More recently, organisations like Arduino have been successful in occupying niche-markets using a similar strategy (Arduino, 2010).
“The Arduino project for example has been copied but it is more a form or flatteries, like fashion on the cat walk. They get copied by Chinese organisations. But does it mean that those organisations are getting bankrupted... no. It does show that they are making attractive designs which are worth copying.”(PHD Project)
“Yes you can have somebody copying you but I am more in the ultimate conviction that this is the ultimate form of flattery. If somebody copies us that mean that we are doing one hell of a job. I will probably uncork a bottle of champagne when we see the first copy.”(Global Communication)
From another perspective, the fact that OSH is easy to copy makes it an ideal strategy for firms willing to enter or test new markets, as barriers to entry are not high. Recently a lot of “clone” organisations based on the IP generated by the PHD Project have been created.
“We also develop a [Product name], it’s obviously relatively easy for someone else to develop an android tablet, I wouldn’t call that copying or a clone but your barriers, your barriers are certainly low and the various OSH in that market are low too and the various competitors that are technically very low too. So you know…” (Entertainment)
As described above, OSIP provides an easy path to standard domination and a good market-entry strategy. However, there is also a downside for this approach, identified by managers and further discussed in paragraph 4.2.13.2, regarding business models. It is also important to notice that freedom of using any OS work
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 95 96 flows from the licence under which the work is published. This contract sets up the environment, rights and obligations of the OSH users (Lerner & Tirole, 2005).
4.2.9.2 Advantage of the licensing environment One of the major advantages identified with the licensing environment is the fact that OSIP offers a free protection system when compared to the patent system. Not only does this system provide cost savings, but it is also easy to implement, with instantaneous benefits.
“Well that decision came with the decision to publish the project because I wanted to publish for free.” (Global Communication)
In addition, OSIP has been successfully used in different industries, especially Biotech (Allarakhia, 2009), because it provides a good legal environment for sharing knowledge as a platform for complex developments. Prototyping follows this example and provides a platform where OSIS and OSIP projects can collaborate.
“OSH is good when you have organisations that want to collaborate on the same project and want to pull the knowledge without being annoyed by IP issues.”(Telecom)
“No DR [name] did as it was easy for his thesis project.OSH is good when you have organisations that want to collaborate on the same project and want to pull the knowledge without being annoyed by IP issues.”(PHD Project)
To summarise, this section is important as its highlights some of the core elements of OSIP strategy and provides some explanations related to the fact that OSIP is more than just an innovation process and model11. In addition, the possible positive synergies between OSIP and OSIS have been mentioned again. However,
11 see literature review page 28
96 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 97
OSIP also has lot of disadvantages, flowing from the particular legal environment in which it exists.
4.2.10 LEGAL DISADVANTAGES
Legal disadvantage are linked to the fact that OSIP products have no IP protection, which makes them easy to copy.
4.2.10.1 Disadvantage of no copy protection An obvious legal disadvantage cited in every case is linked to the fact that OSH is easy to copy because of the availability in the public domain of the data regarding OSIP projects.
“The major disadvantage is as your Hardware is Open, anybody can copy it” (Gaming)
“And the biggest disadvantage which you know, has not been seen but certainly is theoretical is it makes it easier for competitors to encroach on your space.”(Global Communication)
This disadvantage is mentioned by all interviewees, with the point of view that the impact on the firm is not as big as it seems. Indeed, managers gave examples of strategies they use to mitigate this issue, which are discussed further in paragraph 5.5 of this chapter. However, still linked to the legal environment, IP issues in OSIP are also identified as a potential disadvantage.
4.2.10.2 Disadvantage of no IP protection In fact, even if developed as open source, a project still exists in an environment dominated by an international IP protection system. Existing patents pose a big problem to managers, as they have to be careful not to infringe upon them. Screening all elements included in a product, to be certain that publishing them in the
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 97 98 public domain does not have legal repercussions, is a very delicate, lengthy and costly process. Unfortunately, this process is almost always forgotten and ignored. (i.e.: out of thirteen managers, only three discussed those issues). This particular environment highlights tremendous potential issues for firms, especially during the development phase and can mean the end of an OSIP project.
“The CPU. It’s driving us nuts because it’s still got some closed source components and they charge you a hundred thousand US dollars to give you access to the data chips that you need. So my next idea is to ditch them and even come up with some Open Source protocols for the WiFi that don’t require these chips. So breaking open the last remaining closed areas in our designs. Ultimately to have Open Source silicon, you know the cab designs for the chips you would make open. Probably some people doing that already or getting close.” (Telecom)
“Infringing on patents.... So that’s still one of the things that go unresolved into the whole open source movement.”
”And then from the broad perspective it’s not just a copy right license but also the patent that are involved...So that’s really a mind field.”(Entertainment)
Telecom and Entertainment had to acquire licensing rights for chipsets‟ technical specificities in order to include them in their design. Even managers with experience in the OS area seem to have a limited understanding or awareness of the patent legal environment, and the potential liabilities they might have to face.
The next disadvantage of OSIP is that it has never been defended in court and the validity of an open source licence still has to be judged and enforced (Lerner & Tirole, 2005). There is unanimity on this point that it would be difficult to enforce the licence agreement due to the freedom of usage embedded into the majority of the licences.
98 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 99
“The other issue is that there is no actual framework to protect the IP. It can be copied and it is not enforceable. Even if different licenses exist, OSH is not protected.”(Global Communication)
This last point is really hypothetical and managers agree on the fact that there are too many unknowns in that domain to make any conclusions. In that regard, some managers, such as in Gaming, have decided to protect their products by traditional means, thus keeping important elements closed.
Sections 4.2.9 and 4.2.10, offer some insight on the complex legal environment in which OSIP exists. Firstly, advantages flowing from an easy and inexpensive protection when compared to the traditional patent system are discussed. Secondly, disadvantages are also exposed as, while OS licence provides an alternative, it does not protect from patent infringement and still needs to be defended in court. The next section focuses on skills and knowledge acquired by and for firms during OSIP projects. Interestingly, this is the only section which, by definition, does not present disadvantages associated with OSIP. The learning experience section presents three different elements flowing from OSIP: building up expertise; company product knowledge; and skill transfer.
4.2.11 LEARNING EXPERIENCE ADVANTAGES
Learning experience allows for an increase in expertise in running OSIP projects, a better product knowledge at the company level and a transfer of skills between project stakeholders.
4.2.11.1 Advantage of building up expertise One of the first advantages identified from OSIP is linked with the journey on which organisations embark. It was discussed previously that OSIP requires extensive investment but also helps the company to develop skills, knowledge and
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 99 100 competencies, and building their profile as an expert in numerous areas, such as complex problem management, particular technologies and manufacturing processes.
“We have made strong investment and we are now experienced in running OSH projects.”(Manufacturing)
Building expertise is seen as a very important element of OSIP and further developed in paragraph 4.2.12, when speaking of peer recognition. But firms are not limited to learning new knowledge and know-how, as they also develop a complex and in-depth knowledge of their own products.
4.2.11.2 Advantages for a company’s product knowledge By having to provide an “open” product, the company and its employees have to know their creation inside and out in order to satisfy the community, hence growing their own technical knowledge. This element is a constant in the study, with an increasing importance for highly technical projects such as in Manufacturing, Global Communication or Entertainment.
“So lately we’ve started shipping another product called [name] and this is in a way a focus on experience of some of the ideas we had for our previous open source [product].”(Knowledge Access)
“Developers on OSH know much more about the Hardware because it is open thus they are not limited and can do anything they like.”(Transportation)
In addition, OSIP is not done in a vacuum or within the boundaries of the firm. The contact with the community also allows for skill transfer and benefits which reach beyond the company.
100 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 101
4.2.11.3 Advantage of skill transfer Skill transfer can take place either from a technical or knowledge perspective, and is a two-way process. It can happen inside/out from the company to the community but also outside/in from the community to the company.
“We gain experience from the contact with engineers all around the work. Moreover, we got many good advices to improve the hardware... It’s helped a lot of people, being brought in technically like that.”(Manufacturing)
“Over the past two or three years I built up a pretty decent domain knowledge about sensors and sensor networks and how you can match your sensors to the internet and develop an internet platform.”(Automation)
Managers consider skill transfer as a very important outcome, as it allows them to stay up to date with new technologies, while helping the community as discussed in paragraph 4.2.1. In almost every project, managers report company gains as well as personal ones at this level. In Telecom, OSIP allowed the managers and company to tackle new projects in areas they would not have had access to otherwise. There is consensus that the learning experience of running OSIP projects builds company‟s skills and knowledge as well as expertise. Importantly, this can only be seen as an advantage by managers.
The last section below, Corporate, is one of the largest and broadest sections of the research. The themes encompass all comments made from the firm perspective and represent a mixed section of reflections on organisations using OSIP. Advantages are described around four important areas: OSIP as a platform of development; OSIP as giving strategy advantages; employees‟ happiness; and industry recognition. Four other sections define some disadvantages of OSIP linked to management, business model inadequacy, issues with DIY and “free riders effect”.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 101 102
4.2.12 CORPORATE ADVANTAGES
Corporate advantages include: industry recognition; building a development platform; allowing for new development strategies; and employees‟ happiness.
4.2.12.1 Advantage of industry recognition One of the main points discussed in the interviews from the firm perspective is peer recognition. It seems to be a very important element for project managers as it has also been discussed both in the previous paragraph and at the beginning of the results section, when describing networks of opportunity.
“Because you are the developer you are known in the industry, our product standards are now recognised in the industry too.”(Manufacturing)
This section can be compared to a marketing advantage as it allows organisations to secure new contracts. The only difference with paragraph 4.2.5 is the fact that the company would act as a supplier or subcontractor and service another business rather than product-users. As discussed, Manufacturing is now recognised in the industry as “the” manufacturer of OSIP. Similarly, Prototyping provides consulting services to other firms regarding OSIP. The next corporate advantage does not come easily to organisations and has been identified as necessitating an extensive investment.
4.2.12.2 Advantage of building a long-term platform of development The most important benefit of OSIP, viewed by all as a long-term asset and competitive advantage, is the fact that organisations involved in OSIP build platforms of development, which can be then leveraged for further projects. This, in turn, allows for more flexibility in the innovation process and has been extensively discussed in the literature on open innovation (Chesbrough, 2003, 2004, 2006). Organisations own their platform of development and it is where the main value of
102 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 103
OSIP lies. In fact, this could well be a sustainable competitive advantage (Barney, 1991), as it is virtually impossible to copy for potential competitors.
“I see OSI in hardware as a huge advantage to develop new product. Good hardware, good software, good documentation, good support, allows you to produce where costs are low.”(Global Communication)
“ I mean we were developing the [name]motherboards and we were seeing okay, when I got up in the morning, [name] had finished a new version, he sent it to me, I opened it and I looked at it and I just gave my comments like [name]that component, I would put it somewhere else, I would do this, I would do that, I give him suggestions and then we have a discussion about it so it’s a very open way of developing for each of the individual participants, like I said before, has his or her own backgrounds and expertise.”(Telecom)
Managers interviewed recognised the value of the community associated with this platform of development, and very often cite the community as an asset for the company, developed as a result of OSIP. Knowledge Access, as an example, successfully used the platform developed in its unsuccessful Telephony project. Furthermore, certain organisations claim that OSIP creates particular strategic advantages flowing from this collaboration.
4.2.12.3 Advantage of strategy of development According to the interviewees, OSIP allows the company to focus on its core skills and business, while using the community as an external driver for its innovation. In the Manufacturing project, the company relies on external OSIP projects to build new products, while focussing on their core business and skills.
“We started collaborating building on the knowledge of the firm in manufacturing, access to cheap labour and quality components to develop our own products.”(Manufacturing)
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 103 104
Managers using chipsets such as Telephony, Knowledge Access, Entertainment, Gaming and Prototype also provided comments on a potential interaction with OSIS communities, noting the free availability of their expertise, which then can be leveraged in different products.
In addition, OSIP switches value from investments meant to protect IP into the product itself, and other intangibles, such as brand12 or the development platform. Consequently, OSIP creates new assets for the firm.
“They know the OS design very well even much better than the manufacturer. So you do not need to provide support. Flowing from that remark, your only task is to make the hardware as good as you can. You do not need to worry about the software.”(Entertainment)
“Open Source hardware gives you a step up in the development process and the value shifts to other parts of your product rather than focussing on what the hardware design intellectual property costs.”(Optical)
In the end, from a strategic perspective, OSIP also allows organisations to adopt either a diversification and/or differentiation strategies. Manufacturing, which evolves in a very competitive environment, has decided to use OSIP to differentiate itself from its competitors.
“This project went well and the first realised was done in 2007, since 2007 we have released 4 other products based on OS project and a 5 one is in production to be released soon with a completely different focus.”(Manufacturing)
12 see paragraph 4.2.5
104 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 105
In conclusion, there is quite a broad range of strategies enabled by OSIP, but this is not the only advantage for the company. Indeed, it seems that the environment created by OSIP also has a positive impact on employees‟ motivation.
4.2.12.4 Advantage of employees’ happiness Found in only two interviews, this comment appears as an important element from a management perspective. The openness of the OSIP projects seems to create a more positive environment for employees, when compared to traditional innovation processes. Managers from Global Communication and Telecom even linked career choices and involvement with OSIP projects to this specific reason.
“It’s made the employees happier.”(Telephony)
“Because I’m happier working with other Open Source guys than I am playing the closed source game, protecting intellectual property.”(Global Communication)
Section 4.2.12 highlights advantages of the OSIP as offering a particularly motivating environment for employees, but also peer recognition of a company‟s uniqueness and skills, while providing alternative strategies. However, even if OSIP creates some particularly important advantages for the firm, as discussed in this paragraph, managers also identify specific disadvantages at the management and business model levels. The next section discusses four negatives aspects.
4.2.13 CORPORATE DISADVANTAGES
Corporate disadvantages come principally from issues in: management; business model; distribution strategies; and free rider effect.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 105 106
4.2.13.1 Management disadvantage Firstly, the management of OSIP seems much more complex than that of traditional innovation processes. Virtual teams are pushed to the extreme, different platforms of development are used, as well as different tools, different languages and different ideas. Consequently, all interviewees indicate a need to have a macro and micro management in place to drive the project forward, mainly due to the degree of complexity generated by OSIP. PHD Project linked the lack of success of its first product launch to this specific issue, as they did not have the resources to manage the project properly at the time.
“So umm with the [product name] right we ended up with lots and lots and lots of different interesting pieces but no coherent picture.”(Telephony)
“Complex problem solving approaches with numerous components and limited data shared between community and company.” (Transportation)
Moving away from the complexity of the project, further comments identify potential issues between community development and strategic decisions at the company level. In fact, managers shared some of the issues they deal with, especially in regard to supply chain and strategic decision making.
“The cons were people right away would say I want this why can’t you add that right? And with hardware they don’t understand the whole process of picking a hardware component. We might use a particular component because we know that supplier six months from now is not going to have a shortage problem. Or we might pick another component that is technically inferior because we have a very strong business relationship with that company. And so there is all of these real life if you can call it that and that and not sound too insulting but there’s all of this real life constraints that come about from the business side of picking components that, that when you open
106 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 107
that up to you know to many, many, many, many people who perhaps have never even you know worked you know on any kind of hardware device before the expectations become convoluted. And I’m always nervous when expectations are either too high or too low.”(Entertainment)
It seems that management issues are mainly due to managing information flow as well as asymmetry of information between the parties involved in the project. These items are further discussed in the next chapter where managers offered solutions to these hurdles.
In addition, as discussed above and previously in paragraph 4.2.2, driving OSIP cannot be done without extra management, at least to manage the community and the development platform. As a result, extra management means extra costs for firms.
“I can think about another disadvantage common to OSS and OSH, which is management. If you do not have enough people to manage the project it does not work.”(PHD Project)
This last statement illustrates an important point which will be further investigated in the discussion. For OSIP to be sustainable, benefits associated with the model and processes should at least equal the extra costs and disadvantages incurred. Thus, OSIP should be integrated in a broader strategy to be valuable. This is further discussed in both the paragraph 5.5, and the next paragraph, identifying disadvantages in some of the business models presented in the different projects.
4.2.13.2 Business model disadvantages Discussed at different points in the Results section, especially as a legal disadvantage, there is a potential risk from OSIP if the right business model is not developed. In fact, as OSIP products can easily be copied and lack protection, there is a high risk for commoditisation of the product created. This in turn limits the
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 107 108 strategies and revenue models a company using OSIP can set up to ensure its survival and sustainability. Manufacturing, in particularly, illustrates this point well, being in an ultra-competitive environment.
“For a company it is really easy to get a product commoditized and copied by other if it is open Source thus, company business model should not be based on product commercialisation. As anybody can copy it and commoditise you product. Selling your own product at a lower price. This is one of the big problems for us as manufacturer.”(Manufacturing)
In addition, a lot of those projects rely essentially on do it yourself (DIY) as distribution and revenue strategies, and there is a common understanding that DIY is not scalable, therefore does not provide a sustainable business strategy.
4.2.13.3 Disadvantage of Do It Yourself (DIY) The distribution stage in OSIP appears to be another issue. Managers report that if people love the project and the product, offering them the opportunity of DIY is not enough. On the other hand, issues with manufacturing have plagued OSIP, especially during the start-up phase13. In fact, potential customers do not want to spend time building the final products. PHD Project has seen organisations built around its product to offer already made kits. Similarly, Network has seen micro- businesses developed around sourcing material and already-made parts of its product.
“DIY does not work for 2 reasons, the main one being the fact that people want the product ready and do not want to tamper with. The second is a question of cost, in the end, I cost the same amount of money to the end user. Moreover, there is a problem as if you have only a DIY product, you cater only for Beta and early adopters not for the whole community which is where you want to go as a company.
13 see paragraph 4.1
108 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 109
Thus locking potential market and missing on development.”(Entertainment)
This has had a positive impact for the community, encouraging small businesses to provide products already mounted or kits, especially for education purposes. However, a negative impact appears to be a restriction of business models and strategies available. These comments helped us to understand how OSIP impacts the company and provide elements of an answer to the important question of sustainability, further discussed in paragraph 5.5.
One last element has also been discussed in this study, regarding limitations of OSIP. From a corporate perspective, there is an important disadvantage linked to other organisations piggybacking on the project without contribution.
4.2.13.4 Free rider effect disadvantage The free rider effect is seen as a cause of loss of revenue for the firm but, more importantly, also as an increased risk of generating competition if the product is well designed. Again, Manufacturing is a good example, as some of their products have been copied quickly by competitors.
“They do not have to pay royalties or licences. Because they do not have to pay anything and do not have any R&D, they can sell at a lower price point.”(Manufacturing)
“There’s been several versions of the [product] or derivatives out there by other organisations who started manufacturing them. “(PHD Project)
However, an increase in competition is not the main issue for organisations doing OSIP. Further indirect risks arise, such as decreasing margins linked with a low price policy, but also potential cannibalisation of the brand. These issues are further discussed in the next section, when discussing risk mitigation strategies.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 109 110
Some of the most important advantages and disadvantages from OSIP have been presented in the corporate section. Benefits ranging from strategy to management and competitive advantages have been described, while particularly important disadvantages of OSIP have also been presented. Business model and management disadvantages present two significant areas which are further discussed in the next chapter, as their importance for business survival makes their mitigation a top priority for managers.
The next section analyses advantages and disadvantages linked with OSIP by comparing the findings with what was discussed in the literature on OSIS.
4.3 COMPARISON OF THE RESULTS WITH THE LITERATURE ON OSIS
When comparing the results with the literature on OSIS, lot of similarities were found but also some limits to the translation of OSIS research in the OSIP environment. More importantly, discrepancies were uncovered. In fact, some advantage elements observed in OSIS turn out to be disadvantages in OSIP or to carry some extra costs, as the physical characteristics of OSIP projects impact the way advantages and disadvantages are realised.
4.3.1 ADVANTAGES & DISADVANTAGES OF OSIP: SIMILARITIES WITH OSIS
Looking at Table 4-3, which presents advantage and disadvantage elements of OSIP, there is no surprise in discovering that the themes covered by the study already appear in the literature on OSIS. OSIP builds on community involvement (Raymond, 1999, Lackani & von Hippel, 2003). Therefore, it does not come as a revelation to see networks being common to both OSIP and OSIS. Similarly, Marketing, Product, Costs, Learning Experience and Corporate are common to both innovation processes. Table 4-4 summarises those results.
110 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 111
Table 4-4: Advantages and disadvantages elements common to OSIP and OSIS
Elements of Summary of the advantages and disadvantages advantages & common to our OSIP research & the literature on disadvantages OSIS
Network End-user innovation, screening of new opportunities and options by the community. New markets accessibility. Need for critical mass to be reached to support the project Marketing Involvement of the community in marketing the product, Brand endorsement and sales Products Continuous testing, peer review, and overall better quality are similar advantages between OSIS and OSIP. Overall low costs of products are also described Legal Simple protection alternative to copyrights with no or low costs Costs Early adoption of the product by the community which increases sales. Saving on the development costs due to integration of the community in the OSI process Learning experience OSI allows for instantaneous skills transfer, better product & knowledge, peer recognition & increased expertise Corporate
4.3.1.1 Network As described in the literature on OSIS, especially in academic work on end- user innovation, the community and networks in general are huge advantages associated with OSIP when compared to traditional models of innovation. Advantages mainly spawn from the community‟s ability to: screen ideas; see new opportunities for development; and identify new markets and new products (von Hippel, 2005; Lakhani et al. 2007). These elements have been identified and described in the research. In addition, the advantage of a network of skills to complete the innovation process was also reported. This latest element takes a very important place in OSIP as there is a need for multidisciplinary teams to work together to secure an outcome.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 111 112
Finally, similarly to OSIS, the fact that the community needs to be attracted to the project, and a certain number of members reached to ensure viability and continuity, was also found to be a disadvantage in the study. Indeed, this disadvantage appears when members are not gathered in sufficient numbers around the project to provide a continuous inflow of new ideas, projects and people.
These network advantages impact on three different interlinked elements: Costs; Marketing; and Product.
4.3.1.2 Marketing, Product and Costs levels Marketing, Product and Costs advantage and disadvantage elements all show similar patterns to the ones discussed in OSIS. Flowing from the networks and community, OSIP provides direct advantages in marketing the product toward the end-customers, with project members serving as beta testers and even early adopters. This not only generates sales, but also improves market penetration. At the same time, products developed through OSI processes have numerous advantages flowing from their openness to the public. They provide solutions which are more flexible and which better address consumer needs, while showing better specs, quality and value for money. Overall, these elements create a cost advantage for the firm. However, the costs dimension stands apart in the research. Even if OSIP offers some costs savings directly provided by community involvement and product support, important differences can be noticed in OSIP, which are further discussed in paragraph 4.3.2.
4.3.1.3 Legal The main advantage, which is core to the adoption of this strategy by the firm, is the simplification of the legal environment and the development of a collaboration space with little or no costs. This advantage is common between OSIS and OSIP (Lerner & Tirole, 2002)
112 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 113
4.3.1.4 Learning experience & Corporate In addition, logical advantages flowing from OSIP in these categories are similarly found in the literature on OSIS. In fact, the openness of this innovation process allows for skills to be transferred between participants within and outside of the firm boundaries, while increasing a stakeholders‟ and a company‟s product knowledge (Chesbrough, 2003, 2006). In the end, the use of OSI builds up the firm‟s expertise to be recognised by industry partners.
All the advantages common to OSIS and OSIP were expected to be found in the study. Nevertheless, interviewees also identified that those same advantages can become disadvantages in particular circumstances, while other disadvantages of OSIP have also been identified. Those elements are further discussed in the next section.
4.3.2 ADVANTAGES & DISADVANTAGES OF OSI IN PHYSICAL PRODUCTS: DIFFERENCES WITHIN THE LITERATURE ON OSIS
There are a few differences between what was expected from the literature on OSIS and the findings, which are summarised in Table 4-5. Firstly, Network advantages are limited in OSIP. Secondly, Marketing, Product, Learning experience and Corporate elements all bore more costs than in OSIS. In addition, in the research, the Legal environment gains emphasis, as both an advantage and disadvantage. Likewise, Costs elements, which were cited as having a positive impact for OSIS organisations, have been noticed as a disadvantage in OSIP. Indeed, managers were keen to highlight the extra costs in driving OSIP projects. This was, however, foreseen in the literature and causes are discussed in section 4.3.2.4. Additionally, some new elements appear in OSIP at the network, design and management levels, which are discussed in section 4.3.3.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 113 114
Table 4-5: Advantage and disadvantage elements, differences between OSIS and this research on OSIP
Elements of What was said in the OSIS Differences between the literature advantage & literature on OSIS and this research on disadvantage OSIP Network Community leverage is the Higher technical difficulties in corner stone of OSIS OSIP highlight that community strategy with the view that participation is limited to the extent the more community of specific skills availability members the better Marketing Direct advantages in selling Those advantages are limited by the product, branding and additional costs of building the right low pricing communication platform Products Cheaper and better quality Advantages are limited by products, high speed of additional costs appearing in development and building a common development instantaneous testing platform In addition, prototyping and testing appear as hurdles in the development process Legal Simple protection alternative The patent environment appears as to copyrights with no or low a hurdle to OSIP innovation. costs The legal protection offered by OS licensing does not seem to be sufficient in a competitive environment Costs Costs savings due to Extra costs arise in OSIP especially community involvement when looking at prototyping, testing and project management Learning Instantaneous transfer of Advantages are limited by experience & skills and knowledge better additional costs in maintaining the
Corporate product knowledge, peer development platform recognition & increased expertise
4.3.2.1 Network All advantage elements described in OSIS and linked with network are strongly limited in OSIP. Indeed, developing physical products is much more complex than software. OSIP can require skill sets as varied as engineering, mechanical and electronic, whereas software only needs coding. In addition, higher technical difficulties in OSIP highlight that community participation is limited to the extent of specific skills availability. Therefore, where OSIS was relying on quantity,
114 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 115
OSIP has to make up with quality, but some of the skills required are simply not available. Furthermore, there are additional costs associated with maintaining network cohesion. Indeed, encouraging active participation from the community, thus leveraging common effort toward a common goal shared between project members and firms, is not always possible. As described by Entertainment, it is not always easy to align the firm‟s strategy with the community‟s “will”. These particular elements are further discussed in section 4.3.3.
4.3.2.2 Marketing, Product, Learning experience & Corporate Advantages identified in OSIS, while still applying in OSIP, are limited by the extra resources needed. Indeed, a common platform of development and communication has to be built to leverage those advantage elements. Where the OSIS community was providing a simple platform to share code, this is no longer sufficient in OSIP: prototyping; testing; and the broader skill set needed to bring the project to fruition, require extra investments. This is discussed in section 4.3.2.4.
4.3.2.3 Legal In OSIP, contrary to OSIS, the legal environment stands as both an advantage and disadvantage. Indeed, in certain projects, such as Global Communication or Entertainment, copyrights and patent systems were seen as a hurdle to develop OSIP projects. In those instances, interviewees described situations where innovative products were barred from using existing proprietary and patented technologies, thus forcing the innovators to either pay huge licence fees to access technical solutions, or forgo their development. In addition, some of the interviewees, such as Gaming, indicated that OSIP legal protection is not sufficient. The fact that some firms using OSIP are still relying on other traditional protection systems indicates limits to this advantage.
4.3.2.4 Costs Costs advantages linked to OSIS are mostly not transferable toward OSIP, due to the tangible characteristics of the products and disadvantages rising from testing and prototyping needs, i.e. such as those described in Manufacturing. In fact, these
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 115 116 additional costs appear to limit the advantages of OSIP. At the Marketing, Product, Learning experience and Corporate levels, more resources are necessary to benefit from OSIP.
Section 4.3.2 offers a quick summary of the differences between OSIS and OSIP. Those differences are further developed in the next section, when looking at the source of OSIP disadvantages.
4.3.3 MAIN DISADVANTAGES OF OSIP: WHERE DO THEY COME FROM?
The literature on Open Source (Lakani & von Hippel, 2002; von Hippel & von Krogh, 2003) already discussed advantages that would be lost in translating the OSI advantages from software to product. For example, Lakani & von Hippel (2002) reflect on the fact that no supplier is required in OSIS which is not the case with OSIP. The same comments stand true about diffusion of Innovation as manufacturers are needed to create the final product. “In the case of innovation embodied in physical product one would expect that while users would innovate, general diffusion would require the involvement of manufacturer” (von Hippel & von Krogh, 2003, p. 219). The need for suppliers of raw materials and, generally speaking, building-up an entire supply-chain, would strongly influence OSIP. When von Hippel (2001) looks at different perspectives on OSI from software to hardware, his principal comment is that manufacture of physical products and their distribution involve important economies of scale not required in the software industry. In the end, the advantages linked with intangibility of electronic data are nonexistent in OSIP (Abdelkafi et al., 2009). Hence, multiple possible disadvantages appear in OSIP.
The majority of OSIP disadvantages flow from the difference between software and hardware, which limits the applicability of the advantages described in OSIS outside of the software industry, as described in the literature review. Some of these advantages are simply not transferable when looking at physical products. For example, electronic data transfer can be applied to the overall software, while in
116 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 117 physical products only small parts of the product might be shared that way. Unlimited life of software code is not transferable in physical products, which are subject to wear. In addition, some advantages from OSIS become disadvantages in physical products. As a matter of fact, the legal environment which protected OSS becomes a hurdle to innovation. I focused on direct elements of advantages and disadvantages, while other factors impacting advantages and disadvantages such as production, difficulty to prototype, resources allocation/ limitation, which were raised in the interviews, are discussed in the next chapter.
From the analysis, it seems that all disadvantages arising from OSIP have a negative economic impact on the firm, however, they are not economic in nature. This is principally due to the fact that there are a lot of tasks which cannot be completed by the community. This is further discussed in the next chapter. In fact, issues can be grouped into two categories: those linked with management and the others linked with the legal environment discussed above.
4.3.3.1 Management disadvantages Management appears as the first issue for OSIP projects. In fact, management issues can be summarised as flowing from complex management environments linked with OSIP projects. For OSIP to be successful, virtual management has to be pushed to its limits. Indeed, there is an issue which is difficult to solve: How to extensively use virtual teams to coordinate OSIP projects, which focus on the development of physical and tangible goods? In fact, prototypes and the need for product testing to bring a new product to market, put strains on virtual management, and highlight the limits of what an OSIP project can do.
In addition, issues arise when additional testing might be required in regard to compliance and meeting regulations. While in software development, compliance and standards issues might exist, additional testing can be done by the community with none or low costs. In physical products, health and safety requirements appear which can include testing or approval of the product by a third party. Very often the
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 117 118 community is simply not equipped to do the testing required. All these situations were unknown in the software industry.
4.3.3.2 Legal environment disadvantages The low level of regulation described by Müller-Seitz (2009) in OSIS does not apply anymore in OSIP. Firstly, as raised previously, other rules might apply. Secondly, physical innovations fall under patent law, a much more complex system than copyright , which protects software‟s source-code. This raises three issues already discussed in the literature review and with interviewees.
Firstly, additional legal requirements make the legal environment in which the OSIP project evolves more complex. In fact, firms might have to respect an increasing additional number of rules during the innovation process. This is linked with the broader legal environment and regulations specific to the country in which the OSH is produced or sold. They can be linked to health and safety requirements, but also with technical specs. Even if those elements apply similarly to traditional innovation processes, it is important to raise it here as one of the main points differentiating OSIS from OSIP (Müller-Seitz & Reger, 2010).
Secondly, while protected by the specific licensing system under which the OSIP is published, physical products also fall under patent law‟s jurisdiction, especially regarding other patent infringements. This new dimension creates a huge risk for organisations, as they could be using OSH in their strategy while infringing other patents and be liable in court. Consequently, there is a lot of background work to be done by firms involved in OSIP to be certain that their product can be disclosed in the public domain. In addition, the legal environment around OSIP has been pointed out as a consideration, as it allows for a product to be commoditised much more easily, pushing the firm to be more creative in their business model. In the end, as raised in the literature review, the licensing system defining OSI has not yet been defended or challenged in court, which leaves a lot of questions unanswered, especially regarding validity limitations and applicability of the licence to effectively protect OSH.
118 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 119
4.4 CONCLUSION ON THIS RESULTS SECTION
OSIP offers elements of advantage and disadvantage to organisations. While the majority of these elements were known from previous research on OSIS and speculation on OSIP, the research also introduces new additional elements. The later shows significant differences with the existing literature.
The next chapter expands on the fact that advantage and disadvantage elements of OSIP are contextual in nature and complex to measure, by discussing factors that impact said elements. In addition, Chapter 5 offers an insight on how firms enhance OSIP, and develops propositions regarding important factors linked with the use of OSIP.
Chapter 4: Results: Elements of Advantage and Disadvantage in OSIP 119 120
Chapter 5: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP
Flowing from the previous chapter findings, Chapter 5 seeks to enhance the understanding of the mechanisms behind OSIP. This chapter presents factors identified in interviews that have a particular impact on advantages and disadvantages elements of OSIP. In addition, the results discussion puts these factors into a management perspective.
Chapter 5 is composed of eight sections, where section one introduces results and specific factors studied. The second, third and fourth sections report the impact of three factors on advantage and disadvantage elements namely: Company‟s life cycle; Industry; and Strategy. Section five offers further factors identified during the study and discussed by interviewees. Section six summarises the important factors and puts them in a management context while introducing a contingency model. Section seven discusses propositions on OSIP, while section eight concludes this results chapter.
Table 5-1: Outline of Chapter 5
No. Content 5.1 Introduction 5.2 Impact of the firm‟s life cycle 5.3 Industry impact 5.4 Influence of strategy on advantage and disadvantage elements 5.5 How do organisations enhance OSIP? 5.6 A contingency model to explain advantages and disadvantages of OSIP 5.7 Propositions 5.8 Conclusion
Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 120 121
5.1 INTRODUCTION
The preceding chapter identified that advantage and disadvantage elements of OSIP are highly contextual. Some advantages can become disadvantages and disadvantages can worsen in certain circumstances. On the other hand, some factors enhance advantages and mitigate disadvantages. The literature on OSIS has already identified some of those factors, while interviewees described others. These factors are summarised in Table 5-2.
When describing advantage and disadvantage elements of OSIP, interviewees also spoke of “indirect advantages or disadvantages”. While direct advantages were discussed in the previous chapter and represent the majority of the comments, other factors were also mentioned, such as access to resources and skills and issues with manufacturing. Interviewees also described factors which limit the utility of OSIP, the risk mitigation strategies they employed, and overall how they enhanced their OSI strategy.
Table 5-2: Factors impacting advantage and disadvantage elements of OSIP from the literature and the research
Factors impacting advantage and disadvantage elements Identified in the OSIS literature Found in the research on OSIP (Table 2-3) Resources Firm‟s life cycle is identified as having an Experience impact on OSIP projects with particular attention to: Access to resources (skills and finances) Experience
Industry No specific impact is found from the industry within which the project takes place. However, manufacturing is identified as having a negative impact on OSIP projects Relation between firm and OSI The strategy behind the choice of OSIP projects seems to have an impact on advantage and disadvantage elements
121 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 122
Type of projects and motivation It does not seem that there is any impact from the type of project. However, motivation to participate in OSIP is cited by all without any clear data regarding the impact on advantage and disadvantage elements The Community, Team & Two elements have been identified in our Individuals research as having an impact on advantage and disadvantage elements: at the firm level: firm‟ CSR values at the community level: value of the OSIP project for the community
Management, Leadership and Project management seems to have a Organisation positive impact on advantage and disadvantage elements. This is divided into three components: Project Oversight Project Modularity Project Scope
Degree of openness Openness is an important element in OSIP with particular attention to two elements: Time of release of IP in the public domain Degree of openness of the OSIP projects
Not identified in OSIS Positive impact of OSIS community in OSIP Advantages linked with firm altruism
As an example, major advantages associated with networks are limited by the firm‟s own strategy, boundaries, and resources. Leveraging the community is not always possible and the firm has to deal with limited resources. This is one of the main differences between OSIS and OSIP, as the latter strategy requires more resources. In addition, tangibility of physical product adds a new dimension and increases complexity, especially at the supply-chain and project management levels. All these dimensions are further discussed in the sections below.
122 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 123
5.2 IMPACT OF THE FIRM’S LIFE CYCLE
I considered mainly projects in start-ups, which form the backbone of the study setting. Therefore, it does not appear as a surprise when, sometimes, interviewees‟ answers are strongly influenced by the fact that their company is still at an early stage of its lifecycle. The majority of the hurdles described and faced by some of the projects have been extensively discussed in the literature on entrepreneurship and early stage ventures. In fact, interviewees describe factors in Table 5-3 such as: difficulty to prototype; access to finance; lead-time with manufacturers; and access to resources and skills. These factors, common to almost all new ventures, have a direct impact on firms. However, even if a clear impact of the firms‟ life cycle can be expected in any innovation setting, there is no additional impact from the life cycle on advantage and disadvantage elements of OSIP.
Table 5-3: Factors linked with organisations’ life cycle found in interviewees comments
Factors Comments Access to resources: “I mean we are working on the [product name, Skills [name]] is working on [specs] and that’s very high frequency which gives you all kinds of difficulties in laying out your boards and then a design impotence mismatching etc and you really need very dedicated and specific engineering skills for that and not everybody has that”.(Global Communication)
Finance “When you want to manufacture a new product, costs are very high. Where I am it is easy to access manufacturing. Realising a commercial product is very costly for organisations that are not in Asia.”(Manufacturing) “We just weren’t able to fund investments needed to make...” (Telephony) Experience: “Starting an OS project is costly, you need to employ engineers, you need the parts... and you do not know if it is going to be a success it is risky. Our second project is strongly influenced by our experience with [Telephony]”.(Knowledge Access)
123 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 124
Overall, firms‟ maturity and experience play an important role in entrepreneurship, as mature firms usually have access to more resources and have more experience in running complex projects. As a matter of fact, Knowledge Access built its success on the failure of their first project, Telephony. PHD Project was not successful the first time it was launched and it was only after a relaunch that the project took-off. However, there are no particular rules in that regard: for instance, Entertainment is run by a young firm which is very successful. Prototyping, in the same circumstances, has been able to secure funding and has attracted the attention of the community.
Outside of the traditional advantages discussed in entrepreneurship literature gained by mature firms in regards to access to resources and network, there is no particular impact of the company‟s life cycle on advantage and disadvantage elements of OSIP.
5.3 INDUSTRY IMPACTS
Contrary to what was expected from reading the literature on OSIS, there is no direct impact of the Industry environment on advantage and disadvantage elements of OSIP. However, manufacturing does have a negative impact on OSIP, especially when looking at costs of prototyping, delays related to production and lead-time to get the final product. These elements are summarised below in Table 5-4.
124 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 125
Table 5-4: Managers’ comments on manufacturing elements impacting OSIP
Manufacturing issues Managers comments
Prototyping “Open source hardware you have to produce. So you have to prototype and you’ve got boards that are expensive in the end.”(Telecom) “So if you order a board it takes about one to two months until you get the prototype board before you can do any coding before that you can’t do any development. Also prototype boards are very expensive, I think it is about ten thousand US dollars for one prototype board, so if you have five or six developers you have to spend fifty thousand US dollar on that.”(PHD Project) Lead time “So lead times really matter a lot when you’re trying to get hardware on board and you know we were getting a lot of these crazy lead times and the parts would be pretty expensive.” (Prototyping) “I think it’s really the size, size that matters because we you know I’m not sure if our parts organisations are even aware or even really care that we’re open source.”(Prototyping) “We’re basically in production still fighting a bit with the organisations because they well they don’t take you too seriously. We only order four thousand [product] because the normal customers usually order at least sixty thousand fifty thousand. So we’re fighting to get a bit of a higher priority so that production goes faster. “ (Gaming)
The need for prototyping in OSIP, as well as subsequent testing, increase cost disadvantages and decrease advantages linked with speed of development. In addition, mounting manufacturing lead-time appears in OSIP, as there is a need to physically build the product. The difference with OSIS flows simply with the limits of what the community can do for free for the firm. However, it is difficult to say if there is a specific and direct impact of the industry on advantage and disadvantage elements of OSIP, as traditional innovation strategies also confront similar hurdles.
125 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 126
Still, the extra cost elements might appear as a result of a need to prototype and physically test OSIP products within a “virtual” organisation.
5.4 INFLUENCE OF THE FIRM’S STRATEGY ON ADVANTAGE AND DISADVANTAGE ELEMENTS OF OSIP
5.4.1 PLANNED AND EMERGING STRATEGIES
OSIP projects can be divided into two categories: the majority of the projects result from an emerging strategy; while the remainder are part of a planned strategy. However, there is no data available to make a clear conclusion on the impact of these strategies on the advantages and disadvantages of OSIP. In fact, out of thirteen projects, eight use OSIP as part of an emerging strategy (Mintzberg, 1985) and two are hobby projects. Only Knowledge Access and Prototyping projects follow an OSIP strategy, which is a planned and conscious decision rather than a more opportunistic one. Telephony, which was discontinued, was part of the last category.
5.4.2 IMPACT OF THE USE OF OSIP
In addition, the strategies behind OSIP are a strong driver for organisations to bring the project to fruition. Three categories have been observed in our projects, which were previously described in the literature on OSIS:
1. Showcasing/platform for a particular technology/concept (Müller-Seize, 2009);
2. Sharing with the community (Lakani & von Hippel, 2002);
3. Developing a product strategy (Grand et al. 2004).
126 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 127
It does not seem that these drivers have a strong impact on advantage and disadvantage elements of OSIP. However, it can be noticed that firms using OSIP as a product strategy, such as in Entertainment, Telephony and Knowledge Access, tend to dedicate more resources to the projects. Organisations building platforms showcasing their products or building particular/complex technical projects, such as Prototyping, follow the same trend. In the end, organisations with a simple willingness to share with the community do not seem to be interested in building advantages for themselves. They certainly develop some advantages linked with the fact that the community is more helpful and network advantages can be positively impacted. However, those advantages are ruined by cost disadvantages.
If the strategy behind OSIP impacts advantage and disadvantage elements of OSIP, there is no clear data to substantiate a clear cut answer
5.4.3 IMPACT OF THE MOTIVATION BEHIND OSIP
The firm‟s reasons for following an OSIP strategy impact on advantage and disadvantage elements. One of the first characteristics observed during the study is the fact that each project followed a different path toward OSIP. However, the projects share some similarities, as the projects are either unique (one-off; i.e. Prototyping, Network) or are the outcome of a series/aggregation of some previous OSI work (i.e. Gaming, Automation). In all cases, motivation and participation in OSIP parallel what was described by Grand et al. (2004) in the software industry. Reasons for using OSIP are varied and include: altruism; information sharing; and personal needs. Altruism and information sharing follow similar philosophies in which the firm is interested in delivering outcomes for its stakeholders, namely the community, without particular expectations for itself.
5.4.3.1 Altruism Even if OSIP shares the same ethos as OSIS, it seems that the altruistic dimension described in the software community is enhanced at the hardware level. At first sight, the motivations and contributions to an OSIP project seem rather
127 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 128 similar to those described in OSIS (see literature review section 0). However, it appears that a more altruistic dimension exists in hardware than that reflected in the literature on OSIS (Raymond, 1999). The altruistic dimension of the firm has a positive impact on advantage and disadvantage elements in OSIP, especially at the network and corporate levels. When looking in detail, Altruism is expressed at three levels in the projects studied:
1. Making a difference in the world;
2. Sharing skills and knowledge;
3. Or simply helping people and giving back to the community.
“To me it’s to make the world a better place...I want to help people in the developing world. I have these skills, now I can go and become a teacher in a village somewhere and help a thousand people over my life or I can design some things, give away the designs and help millions of people over my life ... So that’s my motivation, to improve the world a little bit. And Open hardware seems a neat way to do it”. (Global communication)
If the idea of servicing the community using OSIS is not new and is well illustrated by Canonical Ltd and its operating system Ubuntu, it seems that the tangible characteristics of OSIP are easier to assess and can be felt by everybody, with a visible and positive impact on community engagement. A recent study of nearly five hundred organisations in the high-tech industry seems to confirm this impression. Indeed, De Jong & von Hippel (2009, p. 1181) notice that “open source economics may be a general pattern in the economy” as firms do transmit important knowledge, privately acquired, for free to the community and back to the user innovator. That information seems to match what was observed during the research, especially in Global Communication and Optical. However, it is in contradiction with Bonaccorsi & Rossi‟ s findings in OSIS (2004), as in OSIS, firms seem to emphasise economic and technological reasons for contributing, with no subscription
128 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 129 to any of the social motivations underlying the open source movement at the individual level.
Again, organisations with an altruistic drive do not seem to be interested in developing advantages for themselves, similarly to what was described above when firms only wish to share with the community.
5.4.3.2 Information sharing Some respondents reported information sharing as motivation for using OSIP. Projects, like Network, were started as a way of sharing an outcome with the community. Another essential element was to ensure that the project value was not lost and/or shared without any limits. As a good example, some of the OSIP projects were first developed as part of an education program: PHD Project is a spin-off of research done for a thesis program. All these factors have a positive impact on network advantages and all allow for an increase in community buy-in.
In addition, underlying the concept of “sharing” with the stakeholders are two factors which seem to impact advantage and disadvantage elements in OSIP: the necessity of a common platform of development; and project governance. These elements are common to all projects, with importance rising with the complexity of the projects.
“If I build a physical thing and the web page is not describing good, this is actual useful because I have my prototype at home, I can show up everywhere but no one else can build it. On the other hand if I develop a good website where people can build it but my prototype is crappy because I don’t know, it goes rusty or I didn’t build it proper, it doesn’t matter you know”.(Network)
Technical and electronic projects such as Telephony and PHD Projects were particularly impeded in their development until the right platform for collaboration
129 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 130 was designed and the right management put in place. Indeed, the projects lacked a clear vision and goals as well as the means to collect stakeholders‟ inputs.
In addition, having the right tools in place certainly enhances OSIP. An important factor noticed in these projects is the use of OS software or help received from the OSIS community. This can provide free and well-developed tools, but also improves the development of the platform for the OSIP project, which in turn can have a positive impact on elements of advantage and disadvantage.
5.4.3.3 Personal need In the end, similarly to OSIS, OSIP can be a direct outcome of one‟s personal need. “(OSI caters for) user‟s direct need for the software and software improvement” (Lakhani & von Hippel, 2002, p. 923). However, except for the direct advantage firms acquire in this particular case, there is no impact on advantage or disadvantage elements of OSIP. This is particularly well summarised in our Telecom project.
“The processing power of the hardware which was selected, was a limiting factor and at that moment, so it was four years ago, I was looking at some alternatives. And one of his alternatives was to develop a new product..., we were talking with the designer, another friend of mine, and we decided as a hobby project to develop a small hardware board and to try this new process, interactive process put on the other device.”(Telecom)
When OSIP caters for organisations‟ own needs there is automatically a higher advantage for the firm to run OSIP projects. Only in the specific Manufacturing project, which provides services to other OSIP projects, did I see a positive impact on advantage and disadvantage elements.
130 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 131
“It increased our network with engineers, they know now that we have the ability to design good hardware so they come to use to get help designing other products.”(Manufacturing)
Advantage and disadvantage elements of OSIP are not really impacted by the fact that OSIP is run to satisfy the firm‟s personal needs, except when this is part of a revenue generation strategy.
In conclusion to section 5.4, factors which impact both the community and the development of a common platform for firms and community also impact elements of advantage and disadvantage in OSIP. Altruism of the firm and better project management appear to enhance OSIP; these factors are further discussed in the next section when looking at the way organisations enhance OSIP.
5.5 HOW DO ORGANISATIONS ENHANCE OSIP?
First, enhancement of OSIP is defined as the mitigation of OSIP risks and the increase of advantages linked with the strategy. As described above and in our preceding results chapter, a lot of factors are intricately linked to the OSIP process. In our series of interviews, particularly those conducted in the second round, as described in the Methodology chapter, I also asked managers to describe and explain how they enhanced OSIP. Particular attention was drawn to how they were dealing with disadvantages arising as part of the OSIP process and their risk mitigation strategies. Four main themes have been discussed by managers in that regard:
1. Modularity characterised the way the project can be put together and how the different parts of the project articulate and interact;
2. Management is discussed regarding three areas: Communication, Project and Contribution;
3. Value, identifies the need for value creation at the firm and community level;
131 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 132
4. Openness of the OSIP process, which is based on two components: the degree of openness of the project and an element of timing, linked with the release of the project in the public domain.
5.5.1 MODULARITY OF THE PROJECT SOLUTIONS
A modular organisation seems to provide a lot of answers in balancing some of the disadvantages of OSIP described previously. Firstly, modularity of the project facilitates the design phase while improving creativity. Secondly, it makes it easy for the community to participate and offers a more efficient and effective design platform, “without having to reinvent the wheel” each time that there are changes made in the product.
“Moreover, if your design is modular, it make it easier to design develop and deliver small portions to make new products.”(Transportation)
“Customers can hack the product and produce their own design. That is why we use a modular design to give other the ability to design other modules. This changes the purpose of the product and increases its usage range.”(PHD Project)
Modularity of the project makes it easy for participants to focus on small portions of the product instead of having to redesign the overall product. Managers also noticed that facilitating the contribution to design increases creativity. In PHD Project, when the right communication tools were in place, the project saw a surge in creative solutions. Then, modularity improves community buy-in and makes it more efficient and effective to contribute to the design during the OSIP process.
“We are working on the wifi which is working on two to four gigahertz and that’s very high frequency which gives you all kinds of difficulties in laying out your boards and then a design impotence mismatching etc and you really need very dedicated and specific
132 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 133
engineering skills for that and not everybody has that. So if you want to expand your community you should take out the most difficult parts and then leave the customisation parts over to your yeah to those other people.”(Global Communication)
More specifically, modular projects allow for community members to participate in a more effective and efficient way by focussing on their specific area of competence.
“If you do open source product you are not going to reinvent the wheel you know, every other optical open source project can use my ideas. My designs, my circuits, my mechanical parts everything.”(Network)
“If you made a modular hardware design where you take off all the hard parts yeah that have already been solved...And that’s where you get the really exciting developments because there you get designs that you didn’t have before because you don’t have that problem or that barrier of transferring the domain knowledge to somebody else because that’s almost impossible to do... So that actually is a big, major advantage of having open source hardware in that aspect is that you can transfer the design itself to the person having the problem and he can design his own solution. In a perfect world of course and not everybody can but there are a lot more people if you make it easier you can reach a lot more people who can do it. Not everybody but a lot more.”(Telecom)
In summary, modularity enables participants to contribute where their skills and knowledge are the most valuable. Prototyping has pushed this concept further by providing both a modular product development platform but also modular products. Modular kits of development allow participants to explore ideas and concepts, increasing innovation potential. On the other hand, modular products allow
133 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 134 customers to access multipurpose items, but also to play in different spaces and provide new innovative solutions to their own problems.
Section 4.3.4 shows that managers have already thought about strategies to get community buy-in in OSIP projects, hence ensuring a high degree of participation from the community. They have also thought about simplifying the way participants can leverage their skills to help with the design of the OSH. However, modularity cannot be implemented without an important element, which forms one of the themes developed during our interviews: management. In fact, modularity of the project would not mitigate disadvantages of OSI without proper management in place.
5.5.2 MANAGEMENT SOLUTIONS
When speaking about management, interviewees refer to three different levels: managing communication; managing the physical project; and managing contributions. These different elements of project management seem to offer solutions, particularly in regard to extra costs and difficulty to manage OSIP. From our interviewees‟ perspective, and especially Knowledge Access, whose manager was reflecting on issues encountered with its previous Telephony project, it seems important to apply basic project management rules.
“Because when you use open technologies you have no limitations, you are able to really change any possible thing...that really can bite you in the ass if you don’t impose yourself limitations. So we tried to create or I have tried to create a culture here where we umm where we embrace and even put limitations you know on our products ourselves because I think that that creativity right? That (illumination?) all of that stuff comes out of someone facing limits, facing limitations and thinking through new and elegant and exciting solutions to those limits.”(Knowledge Access)
134 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 135
Openness of the project is the source of numerous advantages, but can also be a curse. In fact, the development process in OSIP is only limited by members‟ imagination. Managers describe a need to set boundaries to projects to foster creativity and challenge the community, creating a common goal and excitement which is discussed further in the next paragraph. Knowledge Access has been successful in its space, by applying those concepts, after having experienced issues in the totally free environment of its Telephony project.
In addition, answering to potential management issues and getting rid of the extra costs in management, seems to be achievable if the community manages itself. Limited by resources, PHD Project used its own community members to manage the project, but quickly experienced the limits of such organisation, as a project-manager or management team is always needed to drive the community.
“We did not have the resources to manage everything so in the end, the users and creators of the hacks were encouraged to build their own wikis to share their own design and prototype. Now users are totally driving developments.”(PHD Project)
However, managers using OSIP are adamant on the fact the strategies discussed above cannot be successful without the right communication tools (i.e.: internet website, forum, wikis...). In conclusion, introducing proper management systems in OSIP seems to solve some of the disadvantages discussed with managers. In addition, proper communication and tools appear to limit the negative impacts generated by management of complex environments and virtual teams. The next paragraph switches focus from project and operational levels of OSIP toward something less tangible: value creation.
5.5.3 VALUE CREATION SOLUTIONS
The third theme is linked to value creation. According to managers, creating value allows for the community to be leveraged in OSIP but also ensures
135 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 136 sustainability for the company. Value creation has already been extensively studied from a software perspective (Casadeus-Massanell & Ghemawat, 2009) and briefly touched upon regarding product and customers value in section 4.2.3.6. From a corporate perspective, half of the managers referred to business models as central to the concept of value creation for both the customer and the company.
5.5.3.1 Business model Choosing the right business model is about choosing how to create value for both the company and its customers. This section focuses on the firm‟s value and how managers deal with the disadvantages flowing from OSIP in their business model.
Firstly, it appears that organisations using OSIP should not rely solely on gaining revenue from selling OSIP products, as competitors can always produce them cheaper. On the other hand, OSIP enables firms to leverage other revenue streams. Manufacturing experienced these issues firsthand and focussed on specific niche products, for which they are now experts at producing, in addition to providing consulting services.
“Disadvantages… people at [company] get very nervous when people clone the [product].Manufacturers tend to be in a cost game, who’s got the lowest cost wins. But in practice I’ve found that having built small businesses, a couple, a bit bigger than this one before as well, but there’s much more than just the hardware IP to accompany. There’s sales, relationship support, the hardware is just one part of it. So I don’t really buy that as a disadvantage, that people can clone your products because I think products are much more than just the hardware. But some people do perceive that as a disadvantage. It’s a bit scary for some people.” (Network)
136 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 137
“For a company it is really easy to get a product commoditized and copied by other if it is open Source thus, company business model should not be based on product commercialisation.”(Entertainment)
This first part highlights the dangers of running OSIP without the right business model, but also points out the need for the right strategy to ensure sustainability of the company. In addition to finding the right business model, closing some of the components during the OSIP process might allow the company to create competitive advantages, increase value capture and generate cash flow.
“If a Chinese company appears with your product exactly, you should start thinking about protecting this somehow. So this is the place when you need to close something and in our activity for example, we developed another hardware [technical information with product name] and this was what we decided to close, not open. Because there is nobody can do it. We have invested a lot of time. So at that moment we say okay for the moment we’re not going to open this”. (Entertainment)
“Get copied by Chinese organisations. But does it mean that those organisations are getting bankrupted... no. It does show that they are making attractive designs which are worth copying... Why should I go to a company that just ripped off the design and built it and just hope that for $5 less you will buy their product? Let those people be, that just mean that instead of having 100% of the market, you will have 90% 80% or 70%. It does not mean that your business model is not valid anymore. Compare to a close system it means that when you have an open project, you can build a community with people with different back ground, different expertise and skills. And I think a lot faster.”(Global Communication)
In the end, interviewees agree on the fact that commoditisation of the OSH represents a high risk for the firm, and they recommend building business models
137 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 138 generating revenue separate from straight product selling. Some managers offer interesting alternatives such as:
An “applications” model similar to the model developed by Apple for the iPhone;
A more traditional approach which has been successful in the software industry, by selling additional proprietary products;
A service model built around the product, such as around the Linux community in the software industry.
Additionally, commoditisation is not an issue if it is part of the company‟s strategy to develop a competitive advantage. Indeed, using this approach, the company switches the consumers‟ value away from the product, but needs to have alternative tactics to ensure that cash flow is not solely based on units sold. The next paragraph focuses on the other side of the equation, value for the community.
5.5.3.2 Value to the community As touched upon in section 4.2.3.6, there are two components in value creation: one which is constructed and linked to individual‟s perception; and the other, linked to individual‟s satisfaction (Eggert & Ulaga, 2002). Managers seem to have solved this equation in a very simple manner: firstly, by offering something fulfilling an identified community need; secondly by creating the right environment; and finally, in a more altruistic way by giving directly to the community.
Projects like Telephony and Network give us a very good insight of what should be done. In both cases the OSIP projects were abandoned following a change in the technical environment. Until this change, the community was involved in the project solving one of their needs. When better solutions became available, the community deserted the project. Alternatively, with other projects, when the community has its needs covered, the project takes off.
138 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 139
“No it’s finished because people aren’t interested any more. Wireless is so advanced that [product] is not interesting anymore.”(Network)
“The project was open from the beginning, all design were released but that did not attract the public straight away. We had to realize a second version of the product incorporating their innovation before reaching a critical mass.”(PHD Project)
In addition to fulfilling a need, which seems to be a prerequisite in getting the community onboard, creating the right environment for the community to develop is of utmost importance. This is accomplished by managers maintaining and creating excitement, but also in developing a sense of belonging. Entertainment rewards its best community members by recruiting them in their beta testing program and providing them with cheap access to the new hardware.
“It could be because of the wahoo! factor, if you get some things this never goes down. Or maybe people found it fascinating you know, oh my God how is it possible to make such high tech in your garage... They are telling [product] are something super special you need NASA’s research for that or to wait for the future. So it must be some kind of surprise for the people and they were just thinking oh I want to see, is it a hoax or is it true? I want to create that, I think that’s why the people are coming.”(Network)
It is important to create a “specific environment” and a “story” people are “proud to be part of” to ensure long-term involvement. Indeed, accessibility, discussed in section 4.3.4, plays an important role in attracting the community, but it is of equal importance to keep the community involved in the projects. Thus, managers also create value for the community by building a sense of belonging to something “bigger”.
In the end, giving back to the community is seen as an essential element. Undeniably, this is the fundamental of OSIP, which is creating public knowledge. By
139 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 140 being Open Source, the project already shares outputs and knowledge with the community, but this can be developed further. In fact, the majority of those organisations involved in OSIP projects are also involved at different levels in charity work, and for some of them it is even embedded in their business values. Global Communication works toward developing new communication products but also bringing communication technologies to the third world. Similarly, Network, in its time, worked at providing low-cost shared internet connections.
“We were very interested in bringing technology to the third world; particularly communication technology... a second interest is the whole renewable ecology stuff.”(Global Communication)
This idea of corporate social responsibility (CSR) (McWilliam & Siegel, 2001) and creating a better world seems to further attract the community to the project while having few linkages to the OSIP in itself.
In conclusion, it appears that managers leverage modularity and management described in the two previous paragraphs, to be certain that the project offers value to the community. Issues linked with business models and strategies were briefly discussed, and the fact was raised that few people in the OSIP space have been successful. The case of IBM as the first company to use this strategy successfully was also shared. Today, organisations like IBM, TI and to some extent Intel, spend billions on encouraging open source community but keep some element closed, providing them with a measure of competitive advantage and ensuring cash-flow from their products (Chesbrough, Vanhaverbeke & West, 2006). More recently, on a smaller scale, Arduino has been pretty successful and appears as a role model in the OSH community (Arduino, 2010). This leads us to the last part of the research and openness of OSIP projects.
5.5.4 OPENNESS SOLUTIONS
140 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 141
Managers define openness as a concept made of two components: the degree of openness, as briefly described previously; but also the time of release of project to the community. According to them, both of these components are critical as they impact community buy-in and contribution, but also the business‟ strategy. Managers identify four possible scenarios depending on the openness of an OSIP project:
1. Released too early, the project can be copied and there is a risk that the community will not go further than the idea generation stage;
2. Released too late, and the OSIP cannot leverage the community and loses its advantages over traditional innovation process;
3. Not open enough, the community is not attracted and cannot be leveraged;
4. Too open and the company may not be sustainable, creating both issues with copying and business modelling, as seen previously.
5.5.4.1 Degree of Openness According to managers, there are a certain number of elements which can be made open in an OSIP project. Then, depending upon which ones are open, the environment of the company will be impacted in different ways. The difficulty appears to be in defining which ones to release to maximise advantages of OSIP. There is, however, consensus on the fact that, to be viable, a project should not be totally open. Gaming, in that regard, represents one extremity of the scale and has chosen to keep almost all elements closed to protect its product from giant competitors in its industry.
“So initially what we had was we had the data sheets open. Our product had I think three or four hundred different components and whenever possible we tried to open source the data sheets and what that allowed was for current developers to get in and make changes. You know make modifications and learn how the actual hardware itself worked. As that progressed we saw a greater need for that and so we released the schematics to the phone and then, and then even as
141 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 142
that progressed we saw even an interesting opportunity to release the CAD files.”(Telephony)
In summary, different elements can be made available to the community during the design process. Managers seem to agree on the fact that the more open the project, the better. However, they also identify that some elements should be left closed to create competitive advantages. This strategy seems to protect some revenues, as organisations driving OSIP projects are the only ones able to support or supply those items. Nevertheless, another element should be taken into account: time.
5.5.4.2 Time of release This concept is linked to “when” the project becomes open source and the “time” of the release to the public of the different elements discussed above. The study provides three different cases, with the consensus that a late opening to the public offers a better risk mitigation strategy:
1. When the idea is open to discussion even before anything is built. Here, the community is part of the idea generation process (e.g. Telephony);
2. When the idea and the solution are already provided, it is the development which is open (e.g. Network);
3. A prototype or final product is already designed and manufactured and then opened to the public (e.g. Entertainment).
“We opened everything from the beginning. And so we got some early on interest, someone did some just amazing designs on...and then they produced some fascinating things, so when we took that approach what we were left with was an extremely diverse product where we had all sorts of different things that could work on it that was the positive side.” (Telephony)
“So with that said the next product we did I tried to go at it from another angle. What we tried to do then was to say look let’s make
142 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 143
something extremely simple, let’s make it as simple as possible and let’s work on one particular interface, one particular let’s just call it a user experience that we wanted then release it and release everything openly.”(Knowledge Access)
Time of release seems to be an important factor as it impacts the integration of the community in the project and therefore its participation. There is, however, a common view from managers, that later is better as it allows for the OSIP to provide direction for further developments, while ensuring a certain protection against copying.
In making a conclusion about openness, it appears that OSIP is much more complex than thought previously. Depending on elements open to the public and time of opening, different scenarios, which impact advantages and disadvantages cited previously, appear. However, there is agreement on the fact that opening a project later, but not entirely, seems to balance some of the disadvantages cited in section 4.2. Different cases are further discussed in the next chapter, while the next paragraph offers a conclusion on the Results section.
143 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 144
5.6 A CONTINGENCY MODEL COULD EXPLAIN ADVANTAGES AND DISADVANTAGES OF OSIP
As highlighted in the previous sections, the advantages and disadvantages summarised in the results sections are highly context-dependant. In fact, in different projects, the same elements were both described as disadvantages or advantages of OSIP. However, contingency factors explaining these changes were present in every case and identified from the results as:
Degree of openness in OSIP projects;
Time of release of OSIP in the public domain;
Use of OSIS in OSIP;
Project management, including: project oversight; scope; and modularity;
CSR, philanthropy and sustainability ideals;
Value of the OSIP project to the community.
Table 5-5 is built from the results displayed in sections 5.2 to 5.5 and indicates the relative impact of an increase in those contingency factors on advantages and disadvantages elements in OSIP.
144 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 145
Table 5-5: A contingency model of OSIP: Impact of an increase in contingency factors on advantages and disadvantages for firms engaged in OSIP.
Increase in Advantages and Disadvantages elements contingency Learning factors from low Network Marketing Product Legal Costs Corporate experience to high
Degree of ∩ ∩ ∩ ∩ Openness Time of Release ∩ ∩ ∩ ∩
Use of OSIS
Project ∩ oversight Project ∩ Scope Project
Project Mgmt ∩ ∩ Modularity Value to the community Firm’ CSR values ( ) Identifies a negative impact on the firm either by limiting advantages or increasing disadvantages; ( ) Shows no difference when contingency factors changes; ( ) Shows a positive impact on the company either by increasing advantages of OSIP or limiting disadvantages; ( ∩ ) Shows first a negative impact then a positive impact and in the end a negative one.
At first sight, it seems that there is generally a positive impact on OSIP when there is an increase in the contingency elements described above. This is, however, not the case for the Legal aspect of OSIP, which seems logical given that this dimension is rule-based and is not influenced by external factors.
Degree of openness and time of release of OSIP both have similar impacts on advantages and disadvantages elements. However, there is a limit to the positive influence of these contingency factors. In fact, too much openness and too late release have a negative influence on advantage and disadvantages elements in OSIP.
Use of OSIS, while being a positive factor, seems to have a negative impact on Legal as it makes the legal environment more complex. Thus, the legal environment
145 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 146 is not subject to changes except if there is less project management, which means fewer resources to enforce an OS licence.
All the Project management factors have very similar impact on advantage and disadvantage elements. Showing globally a positive impact on: Network: Product; Costs; Corporate; and Learning experience. It has no impact on marketing. Project Scope and Modularity have only a positive impact up to a certain point. Similarly, the firm‟s CSR values impacts positively on Network, Marketing and Product. In the end, Value to the community has a positive impact on Network, Marketing, Costs and Corporate, but overall a negative impact up to a certain point on Product and no impact on Learning experience.
Learning experience is positively impacted by an increase in any factors, except if there is too much modularity, which would become a hurdle for learning. Project modularity seems to enhance OSIP, however, balance should be found to deliver the right learning experience, as well as the right product. Similarly, a high degree of openness has a positive impact. Project managers need to strike the right balance; if they do not, network quality decreases and so does product output.
In general, an increase in any of the management factors greatly improves the advantages gained from OSIP. However, it is important to balance this with costs generated. In addition, the project‟s scope should not be too broad as it causes issues during the product development phase. Modularity of the project has a similar impact. High scope and modularity, while allowing for a large number of participants to improve the product, increases the risk of fragmenting standards and creating non- operability between modules. Product and economic factors again illustrate the need for finding the right balances in OSIP, thus highlighting the importance of management.
Finally, external factors, such as value for the community, which can be either seen from a product perspective or a firm perspective, as well as CSR, follow the
146 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 147 same trend: whereby an increase in those elements has a positive impact overall except when increasing costs.
The above analysis provides important elements which highlight the impact of contingency factors on OSIP. The researcher is aware of the fact that some other factors not discussed in the research might also have further impacts on outcomes. The next section takes this into account and presents questions for future research regarding advantages and disadvantages elements in OSIP.
5.7 FUTURE RESEARCH QUESTIONS REGARDING OSIP
This section highlights seven areas of importance for future research built from the preceding result sections and Table 5-5.
The first and second elements highlight the impact of openness in OSIP on its associated advantages and disadvantages elements, where openness is defined as both the degree of openness of the OSIP project and its time of release in the public domain. The Third element presents OSIS as an enabler of OSIP. The fourth introduces some additional elements to understanding the importance of project management in OSIP. The fifth elements comments on the impact of an OSIP project value to the community on advantages and disadvantages elements. The sixth element reviews the impact of the firm‟s CSR value on advantages and disadvantages elements. Finally, the seventh discusses the impact of advantage and disadvantage elements on an OSIP project‟s sustainability.
In the following, sustainability has two interlinked meanings:
At the project level, sustainability is defined as getting an output from the OSIP process;
At the firm and external environment levels, sustainability means that projects break even or at least provide enough return to reward both the
147 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 148
firm and stakeholders‟ investments, while ensuring maintenance of the development platform, and high level of networks‟ inputs.
5.7.1 WHAT IS THE IMPACT OF OPENNESS IN OSIP PROJECTS ON THE FIRM’S ADVANTAGE AND DISADVANTAGE ELEMENTS
This section covers the first and second questions. As discussed previously, managers define openness as a concept made of two components: the degree of openness of the project, which is linked with what elements are released to the public; and the time of release to the community. Both are critical to the project and OSIP is enhanced when the right balance is found.
5.7.1.1 Impact of the degree of openness in OSIP projects Depending on which elements are open, the company and its environment react in different ways. However, low levels of openness in a project limit the advantages of OSIP, while high levels of openness in a project create more disadvantages than advantages. There are up to five product elements which can be made open during the design process of an OSH depending on its nature, such as:
1. Schematics, which can refer to the way a circuit flows (i.e. when a switch is in an open position the electricity flows through and can turn a toaster on.). These allow for a basic/theoretical understanding of the product and its functioning;
2. Printed Circuit Boards (PCB), which refer to the green boards located in any electronic component (i.e. remote control, mother board). This blue print is the physical component of the schematic and allows for testing and deep understanding at a technical level. Manufacturing without extra data would need a complete redesign of the product;
3. Gerber files (or other type of electronic files) refer to the technology which allows for printing of the PCBs with some additional details regarding
148 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 149
manufacturing. This is the most important element, nevertheless, without the two others manufacturing would be very difficult;
4. The casing or external appearance of the product;
5. The program running the chipset (OSS or not).
While the fourth element does not really impact the OSIP, this is an important part of the project (as it is easy for people to hack at this level), where usability is determined. From those five elements, three levels of openness can be proposed.
Table 5-6: Levels of openness in OSIP projects and their influence on advantage and disadvantage elements
Level of openness in OSIP Influence on advantage & disadvantage elements project A closed OSIP project Only the fifth element is open, allowing the use of OSS. This situation is close to a proprietary solution and therefore limits advantages of OSIP A partially open OSIP Only some of the elements above are open. This project situation seems to maximise advantages and minimise disadvantages in OSIP A totally open OSIP project All five elements above are open. While increasing advantage elements in the external environment, this scenario increases disadvantages elements at the firm and project levels
Logically, a project which only uses OSIS leverages few of the advantages of OSIP, while conserving advantages of a proprietary strategy but none of the disadvantages described in OSIP. At the network level, only the OSIS community can be leveraged and other networks cannot be used. From a marketing perspective, the project is not open. At the product level, user innovation is not possible. This situation leads to high costs of development as everything has to be done in-house. While being completely closed, these products are still named Open Source. This is linked to the fact that the software or chipsets they use allow the user to download or upload Open Source Software: this is the case with most of the Droid phones nowadays.
149 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 150
A partially open project seems to have a positive impact on advantages and disadvantages elements in OSIP. While leveraging advantages of the strategy, keeping closed elements seems to dampen disadvantages discussed with managers. At the network level, a partially open OSIP still attracts a broad community and leverages external skills and network. A similar impact can be noticed at the marketing and the product levels. At the Costs level, the OSIP project benefits from all the advantages flowing from user innovation while keeping closed elements, which ensures cash flow and provides elements of protection against competitors.
A totally open OSIP project however, while leveraging advantages of the OSIP strategy, creates too many disadvantages which challenge a project‟s sustainability. At the network level, issues appear, such as managing contributions and rewarding the whole community. This, in turn, has a negative impact on Marketing and Product levels, while increasing Costs to ensure output from the project. Negative word-of- mouth opinions can then appear, damaging the brand, whilst the emergence of multiple standards also threatens the viability of the development platform.
When looking at section 4.3.6, it can be seen that firms using OSIP need to understand their business model. Once organisations know where they are getting their revenues from, they can choose different strategies and implement them. Maintaining some closed elements is a strategy which secures cash flows when a company is the only one able to support and provide certain items. This strategy is used by both Texas Instruments and IBM (Vujovic & Ulhøi, 2008). Another strategy can revolve around building ancillary services to the OSH product; if it is entirely open (e.g. the Linux strategy). In the end, closed OSH can be used, especially when products are high-tech and therefore very difficult to produce. This guarantees that the company will be the only available provider of a broad range of services and additional products.
Finally, it is worth noting that an increase in openness of OSIP projects has a positive effect on firms‟ Learning experience, since the barriers between these corporations and their external environment becomes more permeable. In fact, the
150 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 151 more open a project, the easier it is for exchange to occur, especially when looking at skills and knowledge transfer.
Element 1: Openness might have a curvilinear effect on Network, Marketing, Product and Costs advantage and disadvantage elements of OSIP, while increasing advantage elements in Learning experience. The effect is such that when Openness goes from low to medium it increases advantage elements, and decreases or limits disadvantage elements of OSIP at the Network, Marketing, Product and Costs levels. However, when Openness increases from medium to high these advantages disappear and disadvantage elements are increased.
5.7.1.2 Time of release As described in the previous chapter, time of release is a crucial element in OSIP. Table 5-7 describes three observed timeframes and their effects on the OSIP community.
Table 5-7: Time of release in OSIP and its impact on advantage and disadvantage elements
Time of release Impact on elements of advantage and disadvantage of OSIP Advantages Disadvantages Problem solving stage Better network integration Need to manage the Stakeholders involved community; from the ideation process Need for project as well as in building a management; common platform of Need a development development strategy and a vision to drive the project; Risk of solving the wrong problem; Long process; No guaranty to attract the community. Development phase Product can be tailored to Need for project Stakeholders involved better match customer management from the development needs phase, provided with a Well-defined development development platform space; Project and product marketed by stakeholders.
151 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 152
After manufacturing Protection from copy Narrow development Stakeholders involved in space; further product Need to market the project developments and product; Product cannot be tailored.
What is important for an OSIP projects is sustainability. Simply put, the project needs to break even or at least provide enough return to both the firm and the stakeholders to reward their investments. However, early involvement of the stakeholders does not guarantee that the project is going to be successful, nor that the common platform of development will be operational in the long-term. On the other hand, late release of the project can disconnect the product from the community and not attract the necessary buy-in. Nevertheless, late release focuses the community on further development of the product.
Too early a release of OSIP in the public domain is associated with low buy-in, low marketing and no or low product inputs with high economic costs, as the platform of development still has to be built. Releasing the OSIP later during the development phase allows for a quick build-up of the network, quick marketing impact, and positive product contribution, while fully leveraging costs advantages from the OSIP strategy. Late release, however, has an opposite effect: the community still has to be developed, thus marketing and product disadvantage elements are higher, while costs disadvantages of the strategy are high too.
From the company perspective, limiting costs and maximising resource allocation should be considered. This has been extensively discussed by Grand et al. (2004) from an OSIS perspective. However, there is no right or wrong solution in considering time of release as it is strongly linked with the organisations‟ own strategy. Elements such as resources available/ costs and network play an important role. A first go at OSIP with a community involved from ideation might not be a smart decision without project management experience. Similarly, the impact of opening a project after the manufacturing stage should be clearly understood.
152 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 153
Element 2: Time of release of OSIP projects in the community might have a curvilinear effect on Network, Marketing, Product and Costs advantage and disadvantage elements of OSIP. The effect is such that early to medium time of release increases advantage and decrease or limit disadvantage elements of OSIP at the Network, Marketing, Product and Costs levels. Later release has an inverse effect.
5.7.1.3 Relationship between time of release and openness of OSIP projects
Table 5-8 summarises some of the potential disadvantages influenced by these two factors.
Table 5-8: Effects of openness of the project and time of release on the OSIP project
Time of Openness of the project Release LOW HIGH Might not attract the community Might be copied; EARLY Lack of direction; Blank-page syndrome. Loses all benefits from OSIP as it Low and slow buy-in from becomes similar to traditional the community; LATE innovation process Increases the lead time to first contribution.
As discussed with managers, releasing a project too early with low openness does not attract the community and increases the risk of not reaching “the mass effect” described as the point of sustainability of the community. On the other hand, high openness of the project and late release seem to increase community buy-in but without guaranteeing sustainability, while also limiting potential contributions and creating other disadvantages linked to the business model and revenue generation.
Degree of openness is a delicate subject because it is highly context-dependent and linked to the business model of the company. Moreover, it depends on the nature
153 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 154 of the OSH produced and what is considered as “open”. To make the picture more complex, each licence or legal environment under which the project is published offers the potential for a different definition on openness. In addition, each OSIP project can integrate elements which are proprietary and, by definition, not open (such as chips and mother boards). To simplify, there are a certain number of elements which can be made open in an OSIP project, with different times of release. Those factors strongly impact elements of advantages and disadvantages in OSIP.
In conclusion on the impact of openness, OSIP is an innovation strategy which needs to be understood and planned for. In addition, each step in this innovation model needs to be in line with the overall strategy of the firm. From the first exploration of this concept, it seems reasonable to say that, firstly, managers should not open all the elements of the OSIP as this does not guarantee success and does not seem to influence community buy-in. Secondly, maintaining some closed elements provides far more avenues to generate revenues. Finally, a later release to the public, while increasing the lead-time for community buy-in and first contributions, offers some protection against copying and provides a clear direction for further product developments.
5.7.2 USE OF OSIS IN OSIP During the results exploration in the previous chapter, managers spoke clearly about the possible synergies between OSIP and OSIS. Three types of synergies appear from the study: direct synergies flowing from the use of open software in the design stage; synergies from the software used in the final product; and, in the end, indirect synergies with the OSIS communities.
Firstly, there are logical advantages at the Product level flowing from the synergy between OSIS and OSIP, with OSIS providing means and tools to develop OSIP products. It is interesting to notice that, as described previously in section 4.2.3.1, OSIS also provides alternatives to proprietary software which dominate the
154 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 155 market, such as CAD14. In addition, cost advantages appear, as the majority of the software is available for free (freeware), which further enhances access and availability to end-users, thus fostering contribution to the OSIP projects and increasing network advantages. The Manufacturing and PHD Project demonstrate that anybody can now use free and open source tools to become a designer. Two of their managers even raised the fact that until recently, proprietary design packages were really expensive for individuals. Therefore users were limited to using organisations and highly skilled individuals in the trade. It seems that the rise of OSIS in that domain has not only enabled the community to take a more active role in product design, but also has had a positive impact on the pricing of the commercial software, thus increasing accessibility of these tools.
Secondly, there is more and more embedded software in products, especially with the rise in consumer electronics. Here, there is another synergy and positive impact at the product level, with OSIS used to power OSIP products. As discussed previously, firms like TI, IBM and to some extent, Intel, have embraced Open Source strategies in order to sell their products to the Open Source community (Vujovic & Ulhøi, 2008). Thus, the community can now write code for these open chips, controlling the product openness from inception to delivery, with high product and costs advantages. This leads to the third element of synergy, which lies with the community.
Finally, there is less and less difference between OSIS and OSIP communities. This positively impacts Network advantages as both communities use similar tools, are driven by the same ethos and have common licensing agreements. Thus, OSIS and OSIP communities should not be considered as two separate entities but as one under the denomination OSI community, which can be leveraged either at the software level, at the product level or both. Proof is that online repository websites for the community, such as Source Forge, offer both types of projects and very often do not differentiate them. As described earlier, there is an additional leverage and community support to be gained in using OSIS in conjunction to OSIP. This finding
14 Computer Aided Design
155 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 156 highlights the fact that firms can also learn more by using both the OSIP and the OSIS communities, allowing firms to tap both sources for knowledge. In addition, this increases corporate advantages by providing a broader area of expertise and recognition in diverse industries.
Nevertheless, proprietary tools used during the design phase still offer more advanced features compared to open source software. In addition, this software is highly complex, requiring hours of training. This can still limit, in some respect, the Network and Learning experience elements, which might still be a limitation of OSIP. However, there is no doubt that OSIS appears as an enabler of OSIP, providing the tools and community support to drive OSIP projects forward. In that sense, the OSI community should be treated as one heterogeneous entity instead of two separate ones.
Element 3: The use of OSIS in OSIP might increases Network, Product, Costs, Corporate and Learning experience advantages, but OSIS usage might also have a negative impact, increasing Legal disadvantage elements.
5.7.3 POSITIVE IMPACT OF PROJECT MANAGEMENT ON OSIP
The literature on OSI highlights both the importance of end-users and the community. Indeed, community involvement drives an OSIP project forward and decides if it is a success or a failure. Undeniably, the importance of the community has been demonstrated in the software industry and there is a similar need in OSIP to achieve critical membership mass to drive a project. I agree that the community and networks are important in OSIP but crucial advantages from OSIP also appear from community involvement/participation at the Product, Costs, Corporate and Learning Experience levels. I propose that project management has a positive impact on those elements, as summarised in Table 5-9.
156 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 157
Table 5-9: Project Management contingency factors and their relative impact on advantage and disadvantage elements
Contingency Impact of Project Management Contingency factors on factors advantage and disadvantage elements of OSIP Project Oversight Increases user-friendliness and ability for members to participate; Increases accessibility which has a positive impact on network and product advantages. Scope & If the scope is too narrow, there is no space for the Boundaries of the community to be built; project If the scope is too large the community cannot really be effective in its participation; Both of these situations increase disadvantages of OSIP. Modularity Impacts the ability of the community to participate and access to the OSIP project:
Too low modularity and participation is limited rendering the project accessible only to highly skilled individuals or members with a particular skill set; Too high Modularity and the project loses cohesion.
Again both extreme situations increase disadvantages of OSIP
Firstly, it is important to highlight that the ability to participate and community accessibility can be leveraged from both a management, as well as physical organisation perspective. In addition, Scope and Modularity are part of the project organisation and are interdependent, and thus can be studied as one element. In the end, oversight represents the realisation of the innovation strategy and impacts heavily on the variables described above.
5.7.3.1 Scope and modularity As discussed in paragraph 5.5.1, the challenge with OSIP is finding the right balance in a project for scope and modularity. As for any project, if the scope is too small, the community might have issues attracting new members and might die early, without reaching critical mass. Too large a scope (as described by interviewees), and it becomes impossible to have a clear driver and purpose. Similarly with modularity, too modular a project fragments the community; not enough modularity and it is
157 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 158 difficult for the public to participate. Figure 5-1 summarises these situations and their impact on advantage and disadvantage elements in OSIP.
Project’ Scope
Low High
Low Focus and limited High range of
support stakeholders catered for
High Exposition of product Idea generation Project’s Modularity hackings
Figure 5-1: Scope and Modularity scenario in OSIP and their impact on advantages and disadvantages elements.
Von Hippel (1982) describes this particular situation as a competence domain in OSI. According to him, modularity allows for people to participate without being an expert, while focusing on their core skills and discipline. Here, the firm needs to understand what needs to be achieved:
If the strategy of the firm is to get strong community support around a specific product, a medium scope and medium modularity is fine;
If the strategy of the firm is to get new idea generation, scope and modularity should be as broad as possible.
In the end, if the firm wants real collaboration on a specific project, scope and modularity should be kept at a minimum. This highlights the fact that different strategies have different impacts and the firm must know which ones to employ to keep in line with its objectives.
158 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 159
5.7.3.2 Oversight As described extensively in Chapter 3, sections 4.2.13.1 & 5.5.2 and above in section 4.3.3.1, project management plays an important part in the success or failure of an OSIP project. While managing scope and modularity of the project, managers have to ensure that the project is user-friendly to attract the community. In addition, it should be made easy for members to participate. Those tasks are linked to overseeing the collaboration platform, making sure that the community inputs are integrated in the project, but also ensuring that the right tools and communication systems are in place. This activity is strongly supported by the use of CMS (Content Management System) software to display content elements for the community. Managers interviewed also mentioned that numerous OSS tools have been developed by the community to help in completing OSIP projects. Furthermore, the degree of openness and time of release to the public have to be managed. These specific cases have been discussed previously in section 5.7.1.
It seems that management issues were largely underestimated in the projects studied. Moreover, there are few cases of proactive actions and risk mitigation strategies put in place by firms using OSIP. Lichtenthaler (2010) highlights the fact that a proficient management needs to assess risks and devise appropriate strategies if organisations want to fully benefit from OSIP. In addition, actions summarised in Table 5-10 can be taken at different levels to mitigate the above risks. The first action is to have a clear strategy regarding OSIP, with specific objectives, and a long-term vision for the firm. In addition, sufficient budget and resources have to be channelled into those projects. Finally, managing stakeholders and building the company knowledge are of utmost importance to provide alternatives in case of failure of OSIP.
159 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 160
Table 5-10: Risks and risk management actions in OSIP (Adapted from Lichtenthaler, 2010)
Risks Management actions Strategy issues Formulation of a corporate strategy with specific objectives; Sufficient investment in R&D; Clear risk evaluation; Long-term perspective and strategic planning. Dependence on Focus on network management with particular external stakeholders attention to main partners; Development of a strong knowledge base.
However, as highlighted in the research and by other researchers in OSIP, management issues also have simple causes and simple remedies, such as: having the right people onboard; selecting the right issue to be solved by the community; and formulating the problem in a way that allows the community to solve it in a creative and novel way (Sieg, Wallin & von Kroght, 2010).
Element 4: Project management, which includes project oversight, project scope and modularity, might increase advantage elements of OSIP at the Network, Product, Costs, Corporate and Learning experience levels. The effect is such that any increase in the project management component enhances OSIP at the identified levels.
5.7.4 POSITIVE IMPACT OF VALUE TO THE COMMUNITY
Value for the community is difficult to assess, as its appreciation changes from individual to individual. In OSIP, value for the community can be defined as direct, such as offering benefits or more generally answering/fulfilling a need; or indirect, such as transferring skills between members or simply catching the interest of the community. As there is rarely monetary reward for participation in OSIP projects, there is a need to provide value for community members (e.g. creating a belonging feeling, keeping alive a WOW factor, but also fulfilling a need/want). Value to the
160 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 161 community is intrinsically linked to the output of the project but also to benefits for the community.
At the network level, the more value to the community, the more networks can be connected to an OSIP project. At the product level, the more value to the community, the better the product satisfies their needs and wants. Similarly for Marketing, the higher the value, the faster and more important the impact of word-of- mouth marketing is in the community. At the corporate level, higher value to the community means more exchanges between the firm and the community.
It is important to notice also that a high level of value to the community is necessary to limit any disadvantages on the product and Learning experience. Without a high level of value to the community, there are no product advantages and, similarly, no learning experience for the firm, as the firm would be the only one to transfer skills to the community.
Element 5: Value to the community might increase advantage elements at the Network, Marketing, and Corporate levels. The effect is such that increasing the project value to the community will enhance OSIP advantages at the identified levels.
5.7.5 FIRM’S CSR VALUES AND THE IMPACT OF PHILANTHROPY IN OSIP
Even if firms pursuing OSIP share the same ethos as those pursuing OSIS, it seems that the altruistic dimension present in the software community is enhanced at the hardware level. At first sight, motivation and contribution to a physical open source project seems rather similar to the drivers described in OSIS15. However,
15 See section 0
161 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 162 when looking in detail at managers‟ answers, a new dimension seems to appear regarding motivation for OSIP at the firm‟s level which is expressed at four levels:
1. Making a difference in the world;
2. Sharing skills and knowledge;
3. Simply helping people and giving back to the community;
4. Sustainability.
The idea of servicing the community using OSI is not new, and is well illustrated by Canonical Ltd and its operating system Ubuntu, it seems that the tangible dimension characteristics of OSIP are easier to assess and can be felt by everybody with a more visible and direct impact on their day-to-day life. A recent study of nearly five hundred organisations in the high-tech environment seems to confirm this impression, with De Jong & von Hippel (2009, p. 1181) describing that “open source economics may be a general pattern in the economy” as firms do transmit important knowledge privately acquired for free in the community and back to the user innovator. This information seems to match what was observed during the research, especially in Global Communication and Optical projects. However, it is in contradiction with Bonaccorsi & Rossi‟s (2004) findings in OSIS, as in OSIS firms seem to emphasise economic and technological reasons for contributing in OSIS, with no subscription to any of the social motivations underlying the open source movement at the individual level.
There is therefore an important discrepancy between OSIS and OSIP motivation at the firm level, which needs further enquiries, but which might be linked with the last proposition. At the network level, high levels of CSR tend to attract likeminded stakeholders and community members, building up networks which are in line with the firm‟s vision and strategy. This in turn impacts the firm‟s marketing, by increasing community members‟ advocacy due to a feeling that they are working for a “good cause”. High levels of CSR seem to be linked with organisations who are more aware of their environment, and who are actively
162 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 163 integrating the needs and wants of the community into their product development. This positive image is strongly reflected in the marketing elements, creating a differentiation advantage.
Element 6: A firm‟s CSR values might increase advantage elements at the Network, Marketing and Product levels. The effect is such that firms with higher CSR values would enhance OSIP at the identified level.
5.7.6 ADVANTAGE AND DISADVANTAGE ELEMENTS OF OSIP THAT IMPACT A PROJECT’S SUSTAINABILITY
Advantage and disadvantage elements impact the sustainability of OSIP projects for the firm. Logically, if advantages outweigh disadvantages for firms involved in OSIP, then a project‟s sustainability is almost ensured. In addition, contingency factors also have a direct effect on project sustainability. However, managers agree on the fact that sustainability can only be reached when the community is attracted, leveraged, and well integrated in the innovation process, to provide full support and rich inputs. In that regard, strategies aimed at increasing community inputs while increasing advantages of OSIP and mitigating disadvantages of this innovation strategy have been discussed.
Two interlinked elements seem to be good predictor of a project‟s sustainability: community involvement in the project; and the right platform of development and collaboration. With the view that one cannot exist without the other, the community clearly helps with developing the platform and the platform is necessary to attract a community‟s participation.
Element 7: Network, Marketing, Product, Legal, Cost, Corporate and Learning Experience advantage and disadvantage elements might influence the sustainability of a given OSIP project. The effect is such that when advantage elements at these levels increase, so too does a project‟s sustainability. Conversely,
163 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 164 when disadvantage elements increase, sustainability tends to decrease. In addition, any increases in the contingency factors seem to have a direct impact by increasing a project‟s sustainability.
5.8 CONCLUSION
Chapter 5 offers an in-depth understanding of the mechanisms behind OSIP. In addition, this chapter provides a list of factors which impact advantage and disadvantage elements of OSIP. Building on this knowledge, the research offers a contingency model for OSIP and elements which might have a direct impact for managers and need further study. Even if the researcher understands that these elements need to be validated by further research, some strategies presented by interviewees enhance OSIP and highlight that the platform of development, as well as community participation, are two important measures of OSIP sustainability.
164 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 165
Chapter 6: Implications and Conclusions
This final chapter outlines the findings of this study and concludes the research with particular regard to advantages and disadvantages of OSI in physical products. Chapter 6 is composed of four sections which include a discussion on the contribution of this work to the theory and summary of key findings, implications from a management perspective and the limitations of the study itself. The last part of this chapter concludes this research while presenting some recommendations for further studies.
Table 6-1: Outline of Chapter 6
No. Content 6.1 Contribution to the theory and summary of key findings 6.2 Implications for management 6.3 Limitations and suggestions for further research 6.4 Conclusion and recommendations
Chapter 6: Implications and Conclusions 165 166
6.1 SUMMARY OF KEY FINDINGS AND CONTRIBUTION TO THE THEORY
This research has identified advantage and disadvantage elements of OSIP that affect a firm‟s: Network, Marketing, Product, Legal, Costs, Corporate level and Learning experience.
Furthermore, contingency factors that affect OSIP advantages and disadvantages stand out as:
Degree of openness in OSIP projects;
Time of release of OSIP in the public domain;
Project management, including: project oversight; scope; and modularity;
CSR, philanthropy and sustainability ideals;
Use of OSIS in during the OSIP process;
Value to the community.
Overall, contingency factors affect advantage and disadvantage elements in a variety of ways. They can either increase or decrease advantage and disadvantage elements, might also have a curvilinear effect on these elements. The effect is such that a low to medium increase in contingency factors will increase advantages and decrease disadvantages, whilst a medium to high increase in contingency factors has the opposite effect. Overall, a slight increase in these contingency factors enhances OSIP.
This research makes a contribution to the body of innovation theory literature by identifying advantage and disadvantage elements of OSIP. A better understanding of OSIP might allow project managers to mitigate risks associated with this innovation model and process, while developing the right strategies to maximise
166 Chapter 6: Implications and Conclusions 167
OSIP outputs. From a contingency perspective, this research also contributes to theory by identifying factors which, in an OSIP project, influence whether an element is going to be an advantage or a disadvantage. In addition, the research increases understanding of OSI by clearly setting apart OSIP from OSIS.
The main contribution of the research resides in identifying advantage elements in OSIP. The research also identifies disadvantage elements of the strategy. Ultimately, this paper combines these findings to build a lens to understand the impact of OSIP and its repercussions on the firm, by providing a seven themes framework summarising advantage and disadvantage elements of OSIP from a corporate perspective.
In addition, this research identifies six contingency factors which influence advantage and disadvantage elements in OSIP. These contingency factors have been combined in a model to explain when identified elements will be advantages or disadvantages in a project. This paper also offers seven areas which need further research and might be used to develop future research questions. Those themes, built from the contingency model developed, might allow researchers to gain a deeper understanding of OSIP mechanisms:
Element 1: Openness might have a curvilinear effect on Network, Marketing, Product and Costs advantage and disadvantage elements of OSIP, while increasing advantage elements in Learning experience. The effect is such that when Openness goes from low to medium it increases advantage and decreases or limits disadvantage elements of OSIP at the Network, Marketing, Product and Costs levels. However, when Openness increases from medium to high, these advantages disappear and disadvantage elements are increased.
Element 2: Time of release of OSIP projects in the community might have a curvilinear effect on Network, Marketing, Product and Costs advantage and disadvantage elements of OSIP. The effect is such that early to medium time of
167 Chapter 6: Implications and Conclusions 168 release increases advantage elements, and decreases or limits disadvantage elements of OSIP at the Network, Marketing, Product and Costs levels. Later release has an inverse effect.
Element 3: The use of OSIS in OSIP might increase Network, Product, Costs, Corporate and Learning experience advantages, but OSIS usage might also have a negative impact, increasing Legal disadvantage elements.
Element 4: Project management, which includes project oversight, scope and modularity, might increase advantage elements of OSIP at the Network, Product, Costs, Corporate and Learning experience levels. The effect is such that any increase in the project management components enhances OSIP at the identified levels.
Element 5: Value to the community might increase advantage elements at the Network, Marketing, and Corporate levels. The effect is such that increasing the project value to the community will enhance OSIP advantages at the identified levels.
Element 6: Firm CSR values might increase advantage elements at the Network, Marketing and Product levels. The effect is such that higher CSR value in firms enhances OSIP at the identified levels.
Element 7: Network, Marketing, Product, Legal, Cost Corporate and Learning experience advantage and disadvantage elements might influence an OSIP projects‟ sustainability. The effect is such that when advantage elements at these levels increase so does a project‟s sustainability. Conversely, when disadvantage elements increase, sustainability tends to decrease. In addition, any increases in identified contingency factors seem to have a direct impact by increasing project sustainability.
168 Chapter 6: Implications and Conclusions 169
This paper responds to a trend in academic literature that seeks to look beyond the transferability of OSIS strategies and principles from the virtual to the physical world. The research shows that OSIP is a concept which should be studied on its own. While OSIP is much more complex than OSIS and possesses its own characteristics, both concepts are complementary innovation processes and can create particular synergies. In fact, the use of OSIS in OSIP can globally enhance the latter. While Raasch et al. (2009) and Von Hippel (in Thompson, 2008) were already pointing out that physical product are becoming more data centric and thus physical aspect plays an important role only at the end of the supply chain. OSIP and OSIS have different characteristics which set them apart and make them happening at different stages in product development.
In this research, some particular discrepancies and inconsistencies with the current literature on OSI have been highlighted. Firstly, the costs associated with the OSIP projects studied seem to be higher than what could have been expected from the literature. Allarakia (2009), Learner and Tirole (2005) and even Chesbrough (2004, 2006, 2007) do not speak about costs associated with OSIP. In fact, one of the pointed-out advantages of OSIP in early research was its low-cost structure and cost- saving in product development due to the community providing free IP (Allarakhia, 2009; Raasch et al. 2009). While it is true OSIP is based on a low-cost structure, additional costs are required to ensure a successful outcome from OSIP projects. Then, while openness and time of release are not new concepts in the OSI literature (Learner and Tirole, 2002), these concepts seem to have an increased impact in OSIP. Ultimately, social motivation in OSIP described in the study goes against what has been demonstrated in OSIS. Bonaccorsi and Rossi (2004) highlight the difference between individuals and firms‟ motivation opposing individual altruism and firm profit orientation. In fact, when looking at firms involved in OSIP in our study and at large, the traditional resource-based view of the firm does not stack-up. Indeed, firms willingly, and often without benefits, service the community and incur costs without generating advantages. It has already been reported that the Costs element in OSIP is one of the big differences with OSIS (Raasch et al., 2009). In fact, from the research, it appears that firms engaged in OSIP do not benefit financially from this strategy, as the costs associated with running physical projects
169 Chapter 6: Implications and Conclusions 170 are higher due to limits to what the community can provide for free. In addition, monetary gains are at best indirect, reflected by lower overheads or market effects involving early adopters.
Finally, the overall research sets up, develops and builds an in-depth knowledge of the OSIP concept. This in turn answers to the increasing demand for a better understanding of the overall OSI principles applied to physical products development.
This research also provides managers with recommendations about the alternative offered by OSIP, if seriously considered as an innovation process, with particular focus on the fact that OSIP is a strategy which does not fit all.
6.2 IMPLICATION FOR MANAGEMENT
The main practical contribution of this research is to provide managers with a framework to better understand the advantages and disadvantages of OSIP, as well as providing a model which identifies contingency factors which increase advantages and decrease disadvantages, thus making OSIP a viable proposition. Overall, the research allows managers to make decisions about when they can use OSIP, and how they can develop strategies to enhance its outcome. In addition, the research demonstrates that not every advantage identified in OSIS can be transferred to OSIP, thus OSIP decisions should not be based upon OSIS knowledge. This builds on the work from Raash et al. (2009) but set apart both innovation models while they were deemed to be similar in that research.
There is a practical benefit in knowing that the main advantage elements of OSIP appear at the network level and flow from community involvement and participation. Thus, attracting community members with the right skill-set and developing a common platform of exchange must be two of a manager‟s primary
170 Chapter 6: Implications and Conclusions 171 goals. This not only builds on Bonnaccorsi and Rossi (2006) identification of the reason behind individual participation but also points out the need for a strong framework to leverage it in OSIP. In addition, these two intertwined elements seem to have a particular impact on predicting when advantages will at least equal disadvantages in OSIP. On the one hand, when the community‟s participation in an OSIP project is high, it overall increases the advantages linked with the strategy. On the other hand, when a strong platform of development and collaboration is built, this increases the advantages of OSIP at every level. Both the community and the platform of development can then be re-used to develop any further OSIP projects.
OSIP is not an income generator or cost reducer, as extra costs appear to ensure viability of the projects. This seems to show that OSIP might not be best used as a cash flow strategy, but can provide the firm with other valuable outputs. In addition, the major advantages of OSIP are developed in the long term, when a firm has built an OSIP platform type of ongoing development. Thus, OSIP should not be a one-off project decision but should be integrated in the firm‟s overall strategy. This might indirectly relates to the fact that only some industries seem to benefit from OSIS.
Due to the type of contingency factors identified, OSIP is a corporate strategy level decision. OSIP seems to be a strategy which is resource-consuming and should be run only if it is in-line with the overall strategy of the firm or if it offers competitive advantages which will be leveraged by the firm.
I also identified risks associated with running an OSIP strategy. More importantly, a tendency from project managers to ignore or under-estimate the risks associated with OSIP was observed. Managers should be aware of this common error as well as the specific following:
From an IP perspective, OSIP projects seem more risky for the firm than closed projects. In fact, public disclosure of IP means that in case of project failure, the firm cannot even capitalise on the IP created. In addition, OSIP
171 Chapter 6: Implications and Conclusions 172
projects have specific licensing environments; nevertheless they are also ruled by patent laws. Thus, managers should scan the patent environment to avoid any patent infringements. On the other hand, managers should not be afraid to enforce their licensing rights when other organisations use their work.
There is a strong concern with OSIP strategies, as traditional business models do not seem to be sustainable and compatible with identified disadvantages. In fact, when combined, free release of IP back to the community, issues related to existing IP and risks of product commoditisation render traditional business models obsolete whichever projects were reviewed. Managers should be able to develop/find the right business model or to ensure that the current company business model is flexible enough to get value out of OSI.
Lastly, OSIP and OSIS are two different innovation processes and models. Even if they follow the same ethos, I identified enough different elements so that OSIP decisions should not be based upon OSIS knowledge.
OSIP exists in a complex and changeable environment. The research shows the positive role played by network and community management, the strategic impact of OSIP, and the limitations imposed on OSIP when looking at resources available, IP issues and firm‟s organisation. In addition, managers should be aware that, though there are no limitations to what the community can think about, there are limits to what the community can do. Therefore, it is in the hands of managers to make OSIP a good value proposition.
172 Chapter 6: Implications and Conclusions 173
6.3 LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCH
The researcher is conscious of the limitations of this study, which appear at two levels: sample; and method.
The qualitative aspect of the study limits the results to an exploratory analysis which makes further generalisation difficult to support. In addition, linked to these settings, is the fact that projects studied do take place in small structures and especially start-ups. This further limits generalisation of the findings, as I cannot be certain that similar trends in OSIP exist outside of the sample. However, considering the limited knowledge at hand, exploratory research was necessary to better understand OSIP and demonstrate that there is a need for further studies with a more focused scope to analyse the different elements raised above. In addition, it seems that the sampling population is representative of the OSIP landscape.
The sample would have benefited from having more respondents and projects, as the low numbers limits the study to its exploratory function. Based on only fifteen interviews and 12 informants, it is not possible to establish reliable and solid relationship between the elements studied. At best, research propositions and avenues for future research can be presented. In fact, results could be an artefact of the small sample used or an artefact of the sampling strategy. Indeed, there is also a certain bias of the sample toward Open Source, which is difficult to measure and control for. Identified advantages by far outnumber disadvantages of OSIP, by almost four to one. This might be linked to a positively biased attitude toward OSIP from interviewees, who are all active advocates of this innovation strategy. Moreover, the philosophy behind Open Source means that a lot of projects are run on a small-scale and without exploitation of the IP, which makes them difficult to find and include in a sampling strategy. On the other hand, to defend the reliability and quality of the research, settings and sampling strategy seem to have captured the specific population which uses OSIP.
173 Chapter 6: Implications and Conclusions 174
Overall, I particularly acknowledge the possibility that other contingencies not discussed in the thesis might have influenced the results discussed previously. Particularly when looking at innovation projects, new products usually involve bundles of hardware and software with both tangible and intangible elements. The balance between hard and soft component in the bundle might influence the advantages or disadvantages associated with OSIP. Intuitively, bundles with large hard component might benefit more from OSIP that those with a small component. This would need some more testing. Other issues including but not limited to whether the innovation is conducted in a Business to Consumer set-up or Business to Business model might have an impact on the study. The ability for the Open Source Product to be integrated in another product or end product may also influence outcomes. Those possible contingency not discussed previously highlight the opportunity for further research in this area and confirm the exploratory character of this paper.
Ultimately, this qualitative and exploratory research develops a framework and propositions that need empirical testing. Further studies are required, in particular, when looking at causal relationship. For example, while there is no doubt that OSIP offers advantages and disadvantages in certain circumstances, those outcomes have to be quantified and interaction between the elements measured. In that regard, King, Keohane & Verba (1994) recommend studying these phenomena over time to minimize reverse causality and spuriousness. The researcher acknowledges that a longitudinal study would be necessary to understand these phenomena completely. However, this paper is an exploratory journey which successfully achieved its principal aim: identifying advantages and disadvantages of OSIP for firms. In addition, the time-frame of a Master by research does not allow for this longitudinal process to be completed.
174 Chapter 6: Implications and Conclusions 175
6.4 CONCLUSION AND RECOMMENDATIONS
This research increases overall understanding of OSIP advantage and disadvantage elements. Furthermore, it offers a contingency model of OSIP, which can help managers to develop the right strategies to enhance OSIP. The findings are principally based on the analysis of thirteen interviews with managers of OSIP projects. Results indicate that firms using OSIP strategies develop both advantage and disadvantage elements. In addition, the impacts of OSIP are highly contextual in nature. Hence it is important for managers to understand which factors will positively or negatively impact the firm and when OSIP is enhanced.
The findings show that OSIP has the potential to develop advantages for organisations, providing that managers create the right conditions. In addition, the importance of community contribution and foundation of the right platform of development for OSIP to be a viable option has been highlighted. It is expected that the framework developed will help managers to make educated decisions regarding the application of OSI in physical products. Indeed OSIP, contrary to OSIS, is resource consuming and needs specific conditions to be a viable option.
Recognising the exploratory nature of this research, and its limits, is of utmost importance. The phenomenon studied would benefit from a bigger sample and a longer period of study. A direct and logical follow-up on this study would be to adopt a quantitative longitudinal approach to further validate the propositions.
175 Chapter 6: Implications and Conclusions
177
Glossary
Community: In the open source sense, Community defines as any stakeholder involve in an open source project, being participants, contributors or users.
Creative Common: One of the licensing frameworks aimed at protecting open source while offering an alternative to traditional copyrights.
Open Source: Originally defines the source code shared freely by early programmers.
Open Source Innovation: By reference to Open Source code, the application of Open Source principles in sharing IP across the community allowing individuals to use that IP with few legal limitations.
Physical products: Often referred to as hardware, physical product in this thesis defines tangible goods in general. The term physical as been preferred to hardware as the latest is often associated with the software industry by opposition to software. Physical products in the broad sense of the terms might contain chipsets or other electronic elements and thus might also need software or code embedded to be run. However, the thesis focuses only on the physical component.
Glossary 177 178
178 Glossary 179
Bibliography
Abdelkafi, N., Blecker, T., & Raash, C. (2009). From open source in the digital to the physical world: a smooth transfer? Management Decision, 47(10), 1610-32. Agerfalk, P. J., & Fitzgerald, B. (2008). Outsourcing to an Unknown Workforce: Exploring Opensourcing as a Global Sourcing Strategy. MIS Quarterly, 32(1), 385-409. Allarakhia, M. (2009). Open Source Biopharmaceutical Innovation-A Mode of Entry for Firms in Emerging Markets. Journal of Business Chemistry, 6(1), 11-30. Arduino. (2010). Accessed September 2010 from: http://www.arduino.cc/ Asklund, U., & Bendix, L.(2002). A Study of Configuration Management in Open Source Software. IEE Proceedings - Software 149(1), 40-46. Banbury, C., & Mitchell, W. (1995). The effect of introducing important incremental innovations on market share and business survival. Strategic Management Journal, 13(1), 161-82. Barney , B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. Battey, J. (2001). It was 20 years ago today. InfoWorld 23(32), 28-30. Bonaccorsi, A., C. Rossi. (2003a). Why open source software can succeed? Research Policy, 32(1), 1243-58. Bonaccorsi, A., C. Rossi. (2003b), Licensing Schemes in the Production and Distribution of Open Source Software: An Empirical Investigation. Working paper Available at SSRN: http://ssrn.com/abstract=432641 or doi:10.2139/ssrn.432641 Bonaccorsi, A., & Rossi, C. (2004). Altruistic individuals, selfish firms? The structure of motivation in open source software. First Monday, Peer Reviewed Journal on the internet, 9(1). Retrieved from: http://www.uic.edu/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/1113/1033 Bonaccorsi, A., C. Rossi. (2006). Comparing Motivations of Individual Programmers and Firms to Take Part in the Open Source Movement: From Community to Business. Knowledge, Technology, & Policy, 18(4), 40-64. Bonaccorsi, A., Giannangeli, S., & Rossi, C. (2006.) Entry Strategies Under Competing Standards: Hybrid Business Models in the Open Source Software Industry. Management Science, 52(7), 1085-98. Boyatzis, R. E. (1998). Transforming Qualitative Information: Thematic analysis and code development. Thousand Oaks, CA. Sage Publication, Inc.
Bibliography 179 180
Brown, S. L., & Eisenhardt, K. M. (1995), Product Development: Past Research, Present Findings, and Future Directions. The Academy of Management Review, 20(2), 343-78. Brown, S. L., & Eisenhardt, K. M. (1997). The art of continuous change: Linking complexity theory and time-paced evolution in relentlessly shifting organizations. Administrative Science Quarterly, 42(1), 1-35.
Brown, W. B., & Karagozoglu, N. (1993).Leading the way to faster new product development. Academy of Management Executive, 7(1), 36-47.
Burges, R. G. (1984). In the field: An Introduction to Field Research. London: Allen and Unwin.
Cassadeus-Masanell, R., & Ghemawat, P. (2006). Dynamic mixed duopoly: A model motivated by Linux vs.Windows. Management Science, 52(7), 1072- 1084. Cassadesus-Masanell, R., & Llanes, G. (2009). Mixed source. Working Paper, Harvard Business School. Retrieved from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1474994 Cavana, R. Y., Delahaye, B. L., & Sekaran, U. (2001). Applied Business Research: Qualitative and Quantitative Methods. Sydney: John Wiley & Son. Chamaz, K. (1983). The Grounded Theory Method – an Explication and Interpretation in Contemporary Field Research. Boston, MA: Little, Brown & Co. Chesbrough, H.W., & Rosenbloom, R. S. (2002).The role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin‐off organisations. Industrial and Corporate Change, 11(3), 529-55. Chesbrough, H.W. (2003). Open Innovation. The New Imperative for Creating and Profiting From Technology. Boston, MA: Harvard Business School Press. Chesbrough, H.W. (2004). Managing Open Innovation. Research-Technology Management, 47(4), 23-26. Chesbrough, H.W. (2006). Beyond high tech: early adopters of open innovation in other industries. R&D Management, 36(3), 229-36. Chesbrough, H. W., Vanhaverbeke, W., & West, J.(2006). Open Innovation Research a New Paradigm. New York, NY: Oxford university press. Chesbrough, H.W. (2007). Why organisations should have open business models. MIT Sloan Management Review, 48(2), 22-28. Chesbrough, H. W. & Appleyard, M. M. (2007). Open innovation and strategy. California Management Review, 50(1), 57-76. Chesbrough, H., & Schwartz, K. (2007). Innovating business models with co- development partnerships. Research Technology Management, 50(1), 55-59. Chesbrough, H., & Garman, A. R. (2009). How Open Innovation Can Help You Cope in Lean Times. Harvard Business Review, 87(1), 68-76.
180 Bibliography 181
Clark, K., & McNeilly, M. (2004). Case study: IBM Think strategy – melding strategy and branding. Strategy & Leadership, 32(2), 44-47. Curtis, S., Gesler, W., Smith, G., & Washburn, S. (2000). Approaches to sampling and case selection in qualitative research: Examples in the geography of health. Social Science and Medicine, 50(1), 1001-14. Dahlander, L. (2004). Appropriation and Appropriability in Open Source Software. International Journal of Innovation Management, 9(3), 259-285. Dahlander, L., & Magnusson, M. G. (2005). Relationships between open source software organisations and communities: Observations from Nordic firms. Research Policy, 34(4), 481-93. Dasgupta, P., & David, P. (1994). Toward a new economics of science. Research Policy, 23(1), 487–521.
Demsetz, H. (1967). Toward a Theory of Property Rights. American Economic Review Papers and Proceedings, 57(1), 377-59. Denzin, N. K., & Lincoln, Y. S. (1994). Introduction: Entering the field of qualitative research. In N. K. Denzin & Y. W. Lincoln (Eds.), Handbook of qualitative research. Thousand Oaks, CA: Sage. Denzin, N. K.,& Lincoln, Y. S. (2002). The qualitative inquiry reader. Thousand Oaks, CA: Sage Publication Inc. De Jong, J. P. J., & von Hippel, E. (2009). Transfers of user process innovations to process equipment producers: A study of Dutch high-tech firms. Research Policy, 38(7), 1181-91. DeMonaco, H.J., Ayfer, A., & Von Hippel, E. (2006). The Major Role of Clinicians in the Discovery of Off-Label Drug Therapies. Pharmacotherapy, 26(1), 323- 32. Dibona, C., Ockman, S., & Stone, M. (1999). Open Sources: Voices from the Open Source Revolution. Sebastopol, CA: Oreilly & associates. Dodd, J. C., & Martin, B. (2000). Building a Cathedral Over the Bazaar: A Preliminary View of Certain Licensing Practices in the Open Source and Free Software Communities, working paper, in Mayor, Day, Caldwell & Keeton. Eggert, A. & Ulaga, W. (2002). Customer perceived value: a substitute for satisfaction in business markets, Journal of Business & Industrial Marketing, 17(2/3), 107-118. Eisenhardt, K. M. (1989). Building theories from case study research. Academy of Management Review, 14(44), 532-50. Eisner, E. W. (1991). The enlightened eye: Qualitative inquiry and the enhancement of educational practice. New York, NY: Macmillan Publishing Company. Franke, N., & Poetz, M. K. (2008). The Analogous Market Effect: How Users from Analogous Markets can Contribute to the Process of Idea Generation. Working Paper, Vienna University of Economics and Business.
Bibliography 181 182
Gallini, N. T. (1984). Deterrence by Market Sharing: A Strategic Incentive for Licensing. American Economic Review, 74(1), 931-941. Gallini, N. T., & Wright, B. D. (1990). Technology Transfer Under Asymmetric Information. Rand Journal of Economics, 21(1), 147-160. Garud, R., Jain, S., & Kumaraswamy, A. (2002). Institutional Entrepreneurship in the Sponsorship of Common Technological Standards: The Case of Sun Microsystems and Java. The Academy of Management Journal, 45(1), 196-214. Gillham, B. 2000. Case Study Research Methods. London: Bill Gillham. Goodman, L. A. (1961).The Annals of Mathematical Statistics. Institute of Mathematical Statistics, 32(1), 148-170. Guba, E. (1990). The paradigm dialog. Beverly Hills, CA: Sage. Grand, S., von Krogh, G., & Swap, W. (2004). Resource allocation beyond firm boundaries: A multi-level model for Open Source innovation. Long Range Planning, 37(6), 591-610. Hars, A., & Ou, S. (2001, January). Working for Free? – Motivations of Participating in Open Source Projects. Proceedings of the 34th Hawaii International Conference on System Sciences. (pp.1-9).Hawaii, USA: Honolulu. Harris, F., & De Chernatony, L. (2001). Corporate branding and corporate brand performance. European Journal of Marketing, 35(3/4), 441-456. Hartley, J. F. (1994). Case studies in organizational research. In C. Cassell and G. Symon (Eds), Qualitative methods in organizational research: A practical guide. London: Sage Publication Inc. Hawkins, D., Neal, C, Quester, P., & Best, R. (1994). Consumer behaviour: Implications for marketing strategy. Sydney, NSW: Irwin. Hedgebeth, D. (2007). Gaining competitive advantage in a Knowledge-based economy through the utilization of open source software. The Journal of Information and Knowledge Management Systems, 37(3), 280-94. Henkel, J. (2003).Software development in embedded Linux: Informal collaboration of competing firms. W.Uhr, W., Esswein, W., & Schoop, W. (Eds). Proc. 6 Internat. Tagung Wirtschaftsinformatik Physica. Verlag, Heidelberg, Germany. Henkel, J. (2004). Open Source Software from Commercial Firms – Tools, Complements, and Collective Invention. ZfB-Ergänzungsheft, 74(4). Henkel, J. (2006). Selective revealing in open innovation processes: The case of embedded Linux. Research Policy, 35(7), 953-69. Henkel, J., & Jung, S. (2010). Identifying Technology Applications Using an Adaptation of the Lead-User Approach. Working Paper, Technical University of Munich and Vienna University of Economics and Business. Retrieved from: http://www.econbiz.de/archiv1/2010/106892_technology_lead_user.pdf
182 Bibliography 183
Hertel, G., Niedner, S., & Hermann, S. (2003). Motivation of software developers in open source projects: An internet-based survey of contributors to the Linux kernel. Research Policy, 32(1), 1159-77. Hope, J. E. (2004). Open Source Biotechnology. Thesis from the Australian National University. Retrieved from: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.113.7640&rep=rep1& type=pdf Hurley, R. F., & Hult, G. T. M. (1998). Innovation, Market Orientation, and Organizational Learning: An Integration and Empirical Examination. Journal of Marketing, 62(3), 42-54. Jones, C. (1985). Strategic Issues in New-Product Introductions. Journal of Advertising Research, 25(1), 11-13. Kahn, R. L., & Cannell, C. F. (1957). The dynamics of interviewing. Theory, technique, and cases. New York, NY: Wiley. Katz, M. L., & Shapiro, C. (1986a). How to License Intangible Property, 101 Quarterly Journal of Economics, 567–589. Katz, M. L., & Shapiro, C. (1986b). Technology Adoption in the Presence of Network Externalities. Journal of Political Economy, 94(4), 822-841. Keinz, P., & Prügl, R. (2010). A User Community-Based Approach to Leveraging Technological Competencies: An Exploratory Case Study of a Technology Start-Up from MIT. Creativity and Innovation Management, 19(3), 269-89. Keller, K. L. (1993). Conceptualizing, measuring and managing customer-based brand equity. Journal of Marketing, 57(1), 1-22. King, G., Keohane, R. O., & Verba, S. (1994). Designing social inquiry: Scientific inference in qualitative research. Princeton, NJ: Princeton University Press. Kleinschmidt, E.J. and Cooper, R.G. (1991). The Impact of Product Innovativeness on Performance. Journal of Product Innovation Management, 8(1), 240-51. Koenig, J. (2004). Seven Open Source Business Strategies for Competitive Advantage. IT Manager’s Journal. Retrieved from: http://dcc.puc.cl/cursos/file.php/4/Lecturas/koenig2004strategies.pdf sid=04/05/10/2052216&tid=85&tid=4). Kotler, P. (2003). Marketing Management eleventh edition. Uppersaddle River NJ: prentice hall. Kogut, B., & Metiu, A. (2001). Open-source software development and distributed innovation. Oxford Review of Economic Policy, 17(2), 248-64. Lakhani, K. R., & von Hippel, E. (2003). How open source software works: “Free” user-to-user assistance. Research Policy, 32(6), 923-43. Lakhani K. R., Jeppesen, L. B., Lohse, P. A., & Panetta, J. A. (2007). The Value of Openness in Scientific Problem Solving. Working paper. Retrieved from: http://www.hbs.edu/research/pdf/07-050.pdf
Bibliography 183 184
Lakhani, K. R., & von Hippel, E. (2009). No Managers Required: A case study of collaborative innovation using managerial toolkits. MIT Sloan School of Management Working Paper. Lakhani, K. R., & Wolf, B. (2005). Why Hackers Do What They Do: Understanding Motivation and Effort in Free/Open Source Software Projects, in J. Feller, B. Fitzgerald, S. Hissam and K. R. Lakhani (eds), Perspectives on Free and Open Source Software. Cambridge, MA: MIT Press. Lee, S. H. (1999). Open Source Software Licensing. Working paper, Harvard University. Retrieved from: http://eon.law.harvard.edu/openlaw/gpl.pdf Lee, T. W. (1999). Using qualitative method in organisation research. Thousand Oaks, CA: Sage. Lerner, J., & Tirole, J. (2001). The open source movement: key research questions. European Economic Review, 45(1), 819-26. Lerner, J., Tirole, J.(2002). Some simple economics of open source. Journal of Industrial Economics, 50(2), 197–234. Lerner, J., Tirole, J.(2002). The scope of open source licensing. Working paper, Boston, MA: Harvard Business School. Lerner, J., & Tirole, J. (2005). The Economics of Technology Sharing: Open Source and Beyond. The Journal of Economic Perspectives, 19(2), 99-120. Lerner, J., & Tirole, J. (2005). The scope of open source licensing, Journal of Law, Economics and Organization, 21(1), 20–56. Lincoln, Y., & Guba, E. (1985). Naturalistic Inquiry. New York, NY: Sage. Lichtenthaler, U. (2010). Open innovation: potential risks and managerial countermeasures. Retrieved from: http://www.radma.ltd.uk/conference2010/papers_abstracts/Lichtenthaler_17.pdf Lofland, J., & Lofland, L. H. (1984). Analysing Social Setting. Belmont, CA: Wadsworth. Marshall C., & Rossman, G. B. (1995). Designing Qualitative Research. London: Sage Publications. Mason, J. (2002). Qualitative Researching 2nd Edition. London: Sage Publication. Maurer, S., & Scotchmer, S. (2006). Open-source software: the new intellectual property paradigm. In Handbook on Information Systems, T Hendershott (Ed), pp 285–322. Amsterdam, the Netherlands: Elsevier. McGowan, D. (2001). Legal Implications of Open-Source Software. University of Illinois Law Review, 241–304. McWilliam, A., & Siegel, D. (2001). Corporate Social Responsibility: A Theory of the Firm Perspective. The Academy of Management Review, 26 (1), 117-27. Miles, M. B., & Huberman, A. M. (1984). Qualitative Data Analysis: A Sourcebook of New Methods. Beverly Hills, CA: Sage Publications.
184 Bibliography 185
Miles, M. B., & Huberman, A. M. (1994).Qualitative data analysis: an expanded sourcebook. Beverly Hills, CA: Sage Publications. Mintzberg, H., & Waters, J. A. (1985). Of strategies, deliberate and emergent. Strategic Management Journal, 6(3), 257-72. Morse, J. (1995). Qualitative research methods for health professionals in Norman, K. D., & Lincoln, Y. (2005). The Sage Handbook of Qualitative Research (3rd Edition). Thousand Oaks, CA: Sage publication, Inc. Müller-Seitz, G. (2009). The open source software phenomenon as a role model for networked innovations in biotechnology: an exploratory study. International Journal of Web Based Communities, 5(2), 212-37. Müller-Seitz, G., & Reger, G. (2009). Is open source software living up to its promises? Insights for open innovation management from two open source software-inspired projects. R&D Management, 39(4), 372-81. Müeller-Seitz, G., & Reger, G. (2010). Wikipedia. The Free Encyclopedia as a Role Model? Lessons for Open Innovation from an Exploratory Examination of the Alleged Democratic-anarchic Nature of Wikipedia, in: International Journal of Technology Management, 52(3/4), 457-76. Müeller-Seitz, G., & Reger, G. (2010). Networking beyond the software code? An explorative examination of the development of an open source car project. Technovation, 30, 627-34. Mustonen M. (2002). Why do firms support the development of substitute copyleft programs? Discussion paper 529, Department of Economics,University of Helsinki. Mustonen, M. (2003). Copyleft: The economics of Linux and other open source software. Discussion Paper 493, Department of Economics, University of Helsinki, Helsinki, Finland. Mustonen, M. (2005). When does a firm support substitute open source programming? Journal of Economic & Management Strategy, 14(1), 121-139. Nambisan, S., & Sawhney, M. (2007). A Buyer's Guide to the Innovation Bazaar. Harvard Business Review, 6(1), 109-18. Nohria, N., & Gulati, R. (1996). Is Slack Good or Bad for Innovation? The Academy of Management Journal, 39(5), 1245-64.
Norman, K. D., & Lincoln, Y. (2005). The Sage Handbook of Qualitative Research 3rd Edition. Thousand Oaks, CA: Sage publication, Inc.
Nuvolari, A., & Rullani, F. (2007). Curious exceptions? Open source software and „open‟ technology, in St. Amant, K., & Still, B. (Eds). Handbook of research on open source software: Technological, economic, and social perspectives. Hershey, PA.: Information Science Reference, 227–236. Open Innovation Project. (2010). Retrieved from: http://open-innovation- projects.org/
Bibliography 185 186
Open Motor. (2010). Retrieved from: http://www.local-motors.com Open Source Initiative. (2010). Open Source Definition. Retrieved from: http://www.opensource.org/osd.html. OpenSPARC. (2010). Open SPARC processor from Sun Microsystems. Retrieved from: http://www.opensparc.net/ Ord, B., Shaw, G., & Green, T. (2004). Investigative interviewing explained. Chatswood, N.S.W. Lexis Nexis. Osterloh, M., Rota, S. (2007). Open source software development- just another case of collective invention? Research policy, 36(2), 157-71. Osterwalder, A. (2004). The Business Model Ontology - a proposition in a design science approach. Dissertation, University of Lausanne, Switzerland: 173. P2P foundation. (2010). Retrieved from: http://p2pfoundation.net/Open%20hardware Patton, M. Q. (1990). Qualitative Evaluation and Research Methods (2nd ed.). Newbury Park, CA: Sage Publications, Inc. Pearson, H. E. (2000). Open Source Licences: Open Source- The death of proprietary system? Computer Law & Security Review, 16(3), 151-56. Peddibhotla, N. B., & Subramani, M. R. (2007). Contribution to Public Document Repositories: A critical Mass Theory Perspective. Organisation studies, 28(3), 327-46. Perens, B.(1999). The Open Source Definition, in Open Sources: Voices from the Open Source Revolution, Sebastopol, CA: O'Reilly & Associates. Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York, NY: The Free Press. Porter, M. E. (1990). The competitive advantage of nations. New York, NY: Free Press. Preece, R. (1994). Starting research: An introduction to academic research and dissertation writing. London: Continuum. Prügl, R., & Schreier, M. (2006). Learning from Leading-Edge Customers at The Sims: Opening Up the Innovation Process Using Toolkits. R&D Management, 36(1), 237–50. Raasch, C., Herstatt, C., Blecker, T., & Abdelkafi, N. (2008). Open Source Innovation–Out of software? Proceedings of the EIASM IPDM Conference 2008, Hamburg. Raasch, C., Herstatt, C., & Balka, K. (2009). On the open design of tangible goods. R&D Management, 39(4), 382–93. Raymond, E., (1999). The Cathedral and the Bazaar: Musings on Linux and Open Source from an Accidental Revolutionary. Sebastapol, CA: O‟Reilly and Associates.
186 Bibliography 187
Richins, M. L. (1983). Negative Word-of-Mouth by Dissatisfied Consumers: A Pilot Study. The Journal of Marketing, 47(1), 68-78. Rockett, K. E. (1990). Choosing the Competition and Patent Licensing. Rand Journal of Economics, 21(1), 161-172. Shapiro, C. (2001). Navigating the Patent Thickets: Cross-Licenses, Patent Pools, and Standard-Setting, in A. Jaffe, J. Lerner and S. Stern (eds.), Innovation Policy and the Economy, 2, NBER, MIT Press. Schumpeter, J.A. (1934). The Theory of Economic Development. Cambridge, MA: Harvard University Press. Schumpeter, J.A. (1938). Business cycles. New York, NY: McGraw Hill. Schumpeter, J.A. (1943). Capitalism, Socialism and Democracy. London: Fakenham and Reading. Shepard, A. (1987). Licensing to enhance demand for new technologies. Rand Journal of Economics, 18(3), pp. 360–368. Shilling, M. A. (2008). Strategic Management of Technical Innovation, Second Edition. New York, NY : McGraw-Hill, Irwin. Sieg, J. H., Wallin, M. W., & Von Krogh, G. (2010). Managerial challenges in open innovation: a study of innovation intermediation in the chemical industry. R & D Management, article to be printed. Retrieved from: http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9310.2009.00596.x/full Singleton, R. A., & Straits, B. C. (2005). Approaches to Social Research, 4th Ed. New York, NY: Oxford University Press. Sourceforge (2010). Retrieved from: http://sourceforge.net/ Stallman, R. M. (1998). The GNU project. Retrieved from: http://www.gnu.org/gnu/the-gnu-project.html Stallman, R. M. (1999). The GNU operating system and the free software movement in Dibona, C., Ockman, S., & Stone, M. (Eds), Open Sources: Voices from the Open Source Revolution (53-70). Sebastopol: O‟Reilly. Stake, R. E. (1978). The case study method in social inquiry. Educational Researcher, 7(2), 5-8. Stake, R. E. (1995). The art of case study research. Thousand Oaks, CA: Sage publication inc. Strauss, A. L., & Corbin, J. M. (1990). Basics of Qualitative Research: grounded theory procedures and techniques. Newbury Park, CA: Sage. Timmers, P. (1998). Business Models for Electronic Markets, Journal on Electronic Markets, 8(2), 3-8. Tuomi, L. (2003). Networks of Innovation: Changes and Meaning in the Age of the Internet. Oxford, UK: Oxford University Press.
Bibliography 187 188
Tuomi, L. (2005). The Future of Open Source in How Open is the Future? Economic, Social & Cultural Scenarios inspired by Free & Open-Source Software, Marleen Wynants, M. & Cornelis, J. (Eds). Brussels, Belgium: Brussels University Press. Ulhoi, J. P. (2004). Open Source Development: A Hybrid in Innovation and Management Theory. Management Decision, 49(9), 1085-114. Von Krogh, G. (2002). The communal resource and information systems. The Journal of Strategic Information Systems, 11(2), 85-107. Von Krogh, G., Spaeth, S., & Lakhani, K. R. (2003) Community, Joining, and Specialization in Open Source Software Innovation: A Case Study. Research Policy, 32(1), 1217-41. Von Krogh, G., & von Hippel, E. (2006). The promise of research on open source software. Management Science, 52(7), 975-83. Von Hippel, E. (1982,). Get new products from customers. Harvard Business Review, (2), 117−122. Von Hippel, E. (1994). Sticky Information" and the Locus of Problem Solving: Implications for Innovation. Management Science, 40(4), 429-39. Von Hippel, E. (1998). Economics of product development by users: The impact of sticky local information. Management Science, 44(5), 629-44. Von Hippel, E. (2001). Innovation by user communities: Learning from open source software. MIT Sloan Management Review, 42(4), 82-86. Von Hippel, E., & Von Krogh, G. (2003). Open source software and the “private- collective” innovation model: Issues for organization science. Organization Science, 14(2), 209-223. Von Hippel, E. (2005). Democratizing Innovation. Cambridge, MA: MIT Press. Von Hippel, E., & Von Krogh, G. (2006). Free revealing and the private-collective model for innovation incentives. R&D Management, 33(3), 295-306. Von Hippel, E. (2007), Horizontal innovation networks by and for users. Industrial and Corporate Change, 16(2), 293-315. Von Hippel, E. (2008). In Thompson, C. Build it. Share it. Profit. Can open source hardware work? Wired Magazine, 16(11). Von Hippel, E., Franke, N., & Prüg, R. (2009). Pyramiding: Efficient search for rare subjects. Research Policy, 38(9), 1397-406. Von Hippel, E. (2010). In Groen, A. J., & Linton, J. D. Is open innovation a field of study or a communication barrier to theory development? Technovation, 30(11/12), 554. Vujovic, S., & Ulhøi, J. P. (2008). Online innovation: the case of open source software development. European Journal of Innovation Management, 11(1), 142-56.
188 Bibliography 189
Watson, R., T., Bourdreau, M-C., York, P. T., Greiner, M. E., & Wyn, D. (2008). The business of Open Source. Tracking the changing competitive conditions of the software industry. Communication of the ACM 51(4) 41-46. West, J., & Gallagher, S. (2004). Key Challenges of Open Innovation: Lessons from Open Source Software. Working paper, May 2004. Retrieved from: http://www.cob.sjsu.edu/west_j/Papers/WestGallagher2004.pdf
Womack, J. P., Jones, D. T., & Roos, D. (1990). The machine that changed the world. Ney York, NY: Rawson Associates.
Yin, R. K. (2003). Case Study Research: Design and Methods. Thousand Oaks, CA: Sage. The 451 group. (2008). Commercial Adoption of Open Source: Open Source is not a Business Model. New York, NY: Tier1Research.
Bibliography 189
191
Appendices
APPENDIX 1: INTERVIEW PROTOCOL
Thanks very much for your time and your help with this study. Date: Starting time: Medium of communication: Company: Contact: Email: Before starting the interview, some housekeeping: As you are already aware, this project is being undertaken as part of my Masters by research at Queensland University of Technology Brisbane Australia. All data is strictly confidential and the only people to have access to the data obtained during the project are myself and my supervisors (Assoc/Pr Roxanne Zolin and Dr Henri Burgers).
The purpose of this project is to explore the advantages and disadvantages gained by firms engaged in Open Source Innovation (OSI) for physical products. By OSI we mean Open Source applied in the Design, Development and Delivery of a new product.
The literature suggests that OSI in software generates specific advantages and disadvantages for firms. However, little is known when OSI is applied to physical products. It is important that we understand what you, as a manager of such project, think advantages and disadvantages are for your company in using OSI. Your interview will require you to think of the OS projects for physical products you managed or are managing and their impact at the firm level.
Your participation in this project is voluntary. If you do agree to participate, you can withdraw from participation at any time during the project without comment or penalty. Your decision to participate will in no way impact upon your current or future relationship with QUT.
Your participation will be in the form of an interview, and will take approximately 40 minutes to complete (No more than 60 minutes). Questions will include project management and innovation topics. Risks and benefits:
There are no risks beyond normal day-to-day living associated with your participation in this project. It is expected that this project will benefit you. Hopefully this research will help managers to better use OSI and mitigate potential disadvantages.
All comments and responses are anonymous and will be treated confidentially. The names of individual persons are not required in any of the responses. If you have any concern or questions, feel free to ask them at any time or to contact the ethic committee (details provided in my first email).
Are you happy to pursue this interview? Yes No Would you mind if this interview is Yes recorded? No Your interview will be recorded and transcribed for research purpose. The transcription will then be de-identified and recording destroyed. It is possible to participate in the project
Appendices 191 192 without being recorded. Transcripts will be returned to you after the interview for approval and review By default interview data will be de- identified. Would you like to have your company identified in the research? Yes No Just a couple of questions before starting to help me organise the data What is your Name? What is the name of your company? Position in the company? When did the company started? Number of people employed? If you were to qualify your company It is a start up its a mature company would you say? Are you involved in any other projects at the moment? Interview Question (See appendix 2 below)
192 Appendices 193
APPENDIX 2: INTERVIEW QUESTIONS
This project is being undertaken as part of Masters project for Mickael Blanc. The project is funded by the Queensland University of Technology. The funding body will not have access to the data obtained during the project. The research student and his associated supervisors (Assoc/Pr Roxanne Zolin and Dr Henri Burgers) will have access to the data.
The purpose of this project is to explore the advantages and disadvantages gained by firms engaged in Open Source Innovation (OSI) for physical products. By OSI we mean Open Source applied in the Design, Development and Delivery of a product. I want to attract your attention here to the fact that I am not looking at Open Source Software but at how the community is involved in the creation of an Open physical product without monetary return. (Even if we will talk about Software in our discussion)
The research team requests your assistance because literature suggests that OSI in software generates specific advantages and disadvantages for firms. However, little is known when OSI is applied to physical products. It is important that we understand what you, as a manager of such project, think advantages and disadvantages are for your company in using OSI. Your interview will require you to think of the OS projects for physical products you managed or are managing and their impact at the firm level.
Pre-questions (for sampling purpose):
What is your position in the company? How long has the company been trading for? How many employees do you have? Would you say your company is a start-up or a mature firm?
The first series of questions is about the specifics of the OS project for a physical product you are involved in. So we are talking about your project in regards to OSI in physical products. As discussed previously, OSI is characterised by an involvement of the community without monetary reward in designing developing and delivery a product:
Can you briefly describe the OS project you are involved with? o What is the aim of the project? o How many people are involved and what is their role? o How long has the project been running for? o At which stage of the project are you at the moment?
How was the community involved in this project?
I see innovation as a process that can be managed to execute an invention
Try to think back to the time you had the idea of the product for the first time, what happened next? How did you execute your invention?
Appendices 193 194
Did you use OS in the design stage? How and why? o What part of your project design is Open to the public? . Are the drawings available to the public and if yes under which licence? . What about CAD models? . Are the schematics of the circuit available to the public?
Did you use OS in the development stage? How and why If we compare to OS in software we are talking about the coding process. Try to think back to the time you were trying to make your first product o Were the public involved in the development phase?
Did you use OS in the distribution stage? How If we compare to OS in the software industry, distribution is done through internet by download and Electronic exchange o Are the bills of material available to the public? o Can the public DIY
The next few questions are slightly different and focus on the innovation process as a whole and how your company in particular deals with innovation
Did you personally choose OSI for this project? Are there any specific criteria that influenced your decision? What are those criteria? Can you think about what makes your OS strategy unique? What are the most important characteristics in regards to your project? What advantages and disadvantages does your company/project gain from the use of OSI o During the design of this product? o During the development phase of this product? o During the distribution of this product? What do you perceive as a direct or indirect advantage or disadvantage from OSI in general? What is the overall impact of OSI on the company?
The last series of questions is about Open Source in General
Do you think OS differ from Product to software? Before this project, have you had any contact with OS? If yes what was your experience? Do you use OSI in any other projects in the company? Can you briefly describe them? Do you use any other type of OS? If yes, can you think about how it fits together with what we discussed before? o Open Source content or User generated content (wikis, forums...) o OS software
Thanks for your help.
194 Appendices 195
Notice that you can chose to you can withdraw from participation at any time during the project without comment or penalty. Your decision to participate will in no way impact upon your current or future relationship with QUT (for example your grades). Data gathered are automatically de-identified. Let me know if you want your name as well as your company to appear clearly in my thesis.
Mickael
Appendices 195