Companies, user innovation, and the governance of online communities

The Journal Industry & Innovation, (Volume 15 Issue 2 2008), seems to have published a timely special issue on a theme dear to our heart: Online Communities and Open Innovation: Governance and Symbolic Value Creation.

Only the introduction is in free access and we quote from it:

Online communities, therefore, can constitute an important external source of innovation for those firms able to implement a constructive relationship with them (Dahlander and Magnusson, 2005). Individuals in these communities may not only be able to develop innovations that can be integrated into the firm, but also may come up with new perspectives on and ways of framing problems. The community may develop a shared and mutual understanding of what it is about, what in the new product design or features is valuable; it may create product/firm loyalty and establish among community participants a sense of belonging and meaning (Rindova and Petkova, 2007).

Despite these benefits, there is also a range of challenges for firms that adopt the open innovation approach (Chesbrough, 2006). This is particularly evident when managing online communities as individuals participating in these communities are beyond the firms’ hierarchical realms. Individuals can decide where to work, who to work with and what to work on, making it difficult for firms to steer the direction of development (Dahlander and Wallin, 2006). Moreover, in online communities the social processes behind members’ participation are intrinsically dissipative because in such self-organized processes, many individuals have to be mobilized to make the most productive ones emerge (David and Rullani, forthcoming). This greatly increases the resources firms have to pour into these communities, and increases the risk of such investments. A large number of involved parties with misaligned goals, different capabilities and diverse degrees of involvement, raise the issue of governance of online communities.

In order to advance our understanding of the open and distributed nature of the innovation process taking place through online communities, this Special Issue revolves around the two themes identified above as crucial:

(1) the importance of conceptually including the symbolic value of the artefacts in the innovation process, as online communities can be fundamental tools by which firms can innovate in this sphere thickening the symbolic value of their product; and

(2) the issue of governance and how it is associated with the way in which firms try to harness these communities. Both themes have been relatively unattended by earlier research. The papers in this issue were selected precisely on the basis of the questions and answers they might generate with respect to these overall themes.”

As examples of the special issue, I’m selecting two significant contributions to the study of the governance of online communities:

The paper by Langlois and Garzarelli, “Of Hackers and Hairdressers: Modularity and the Organizational Economics of Open-Source Collaboration”, is the first paper in this Special Issue and sets the stage for a discussion on governance in online communities, allowing us to tease out what are the important dimensions. In this mainly conceptual paper, the authors employ the empirical illustration of an open source online community to explore the generic question in organizational economics of how the division of intellectual labour is based on a trade-off between modularity (i.e. specialization) and the opportunity to integrate various individually developed components of knowledge. The paper claims that the trade-off allows the individuals populating the open source community to exchange efforts rather than products, under a regime in which the providers of code self-identify themselves as suppliers of products in a market, rather than employees in a firm. Through their discussion, Langlois and Garzarelli build a useful two-by-two matrix of product vs. efforts on one axis and self-identification of contributors vs. no self-identification on the other. In this matrix the firm, the market, outsourcing and voluntary production as it occurs in open source communities are situated and, hence, presented as different modes of innovation production.

This provokes a series of questions on how communities can be managed when the connection between incentives—that is, the voluntary basis upon which the community is built—and the particular dynamics of the organization of labour in an open community—exchanging effort and not product—is taken into account. Firms and communities have diverse and sometimes incommensurable goals (O’Mahony, 2003), and it is a challenge for firms to derive benefits from working with communities.

The West and O’Mahony paper, “The Role of Participation Architecture in Growing Sponsored Open Source Communities”, offers an answer to the previous implicit question about governance structures and the contradictions of a series of open source communities classified according to the typologies of firms’ participation in these communities. Based on a qualitative study the paper shows that firm-sponsored online communities or open source online communities initiated by a firm, differ from organically grown open source communities. To demonstrate the differences between these two archetypical forms of open source online communities West and O’Mahony develop the concept of “participation architecture”. The concept is created by the joining together of three important design dimensions for the coordination of tasks and communication in an online community: management of intellectual property rights, development approach and model of community governance. The study makes it explicit that various participation architectures exist in the two kinds of open source communities.

The authors find that corporate sponsorship in open source communities influences the design and evolution of them and that this affects:

(1) the degree of transparency of community participants to follow the community’s collective process of development; and

(2) accessibility for participants, to contribute to code development.

Despite oftentimes trying to imitate the organization and design of organic open source communities, firm-sponsored communities face the classic tension between control and growth. This is because firms that are sponsoring an open source community struggle to maintain an open structure supportive of growth in the community in parallel with managing and maintaining control over the direction of and the activities taking place in the open source online community. For example, a firm sponsoring a community may define and potentially limit the opportunity structure for others to enter the community, as well as deciding who has access to the code/core of the community. The final contribution of this paper to the debate invoked in this Special Issue demonstrates that it is rarely the technical architecture and set-up of online communities that single-handedly determines participation frequency and structure. To better understand the differences in the character and quality of participation in different types of online communities, and thus be better informed about how innovation through these communities is managed and incentivized, we need to note that the organizational structure hinges upon the community sponsor’s decisions regarding the design of governance mechanisms.”

Leave A Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.