Mickael Francois Henri Blanc Bsc, MBus, MBA · iii Open Source Innovation in Physical Products: ... A Corporate Perspective iii Table of Contents . Keywords ... joint venturing, pooling

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

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Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective i

Keywords

Innovation, Innovation Management, Open Source, Open Source Hardware,

Open Source Innovation, Open Source Software, Product Development, User

Innovation.

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ii Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective

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.

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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

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iv Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective

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

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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

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vi Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective

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 3-2: 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 4-2: 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

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Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective vii

Table 6-1: Outline of Chapter 6 .......................................................................................................... 165

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viii Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective

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

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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: _________________________

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x Open Source Innovation in Physical Products: Advantages and Disadvantages, A Corporate Perspective

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

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Chapter 1: Introduction 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.

2

2 Chapter 1: Introduction

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.

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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?

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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,

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

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

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)

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

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

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.

11

Chapter 5: Literature Review 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.

12

12 Chapter 5: Literature Review

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

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

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

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/

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).

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.

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;

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

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.

Figure 2-1: OSI in comparison to other models of innovation (adapted from von Hippel & von Krogh,

2003)

Private Investment

Public Investment

Private Return

Public Return Return

Open Source

Private good/ IP

Public Good

Government sponsorship

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)

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.

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

definition

Characteristics Limitations

OSD OS as a collective development model

Development is only one step in the 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 of OS work

This represents only the legal environment of OS without any reference to how it is done

OSB OS as a business model or a set of defined elements to generate value for both the firm and customers

OS has more characteristics of a strategy rather than a business model

OSI OSI as both a collective innovation process and model

It is argued that OS can be more than 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

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.

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

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

Altruism

Community identification

Self determination

Peer recognition

Self marketing

Human capital

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).

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

k

Creates a platform for exchanges

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

with the community

Conflict can arise between community voluntary 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

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.

Figure 2-2: Comparison and contrast of value creation and value capture in OSI (adapted from Casadeus-

Massanell & Ghemawat, 2009)

Value Capture

Value Creation

Open Source

Private good/ IP Public Good

Hybrid models

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

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.

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

Industry (Allarakia, 2009)

Resources (Garud et al. 2002;

Grand et al. 2004)

Experience (Garud et al., (2002)

Type of project and motivation

(von Hipel, 2005)

The community, Team &

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)

Relation between firm and OSI

projects (Henkel, 2003;

Mustonen, 2003)

Advantages &

Disadvantages

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/

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/

http://www.sun.com/software/opensource/

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.

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.

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.

Figure 2-4: Elements of open source innovation and their outputs

Open Source

Innovation

OSIP

OSIK

OSIS

Open Source

Hardware

Open Content Open Source

Software

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.

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.

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

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

Physical good

Perceived

Disadvantages of OSIP

Lifetime Unlimited Limited Limits the scope of the hacking process

Modularity High Low Difficulty for the community to be integrated

Material Supply chain

No Yes Limited availability and increase in costs

Production Computer Manufacturing Limits the feasibility of hacking and adds technical difficulties

Distribution Instantaneous and unlimited

Physical distribution channel

Limits the community access to geographic availability

Inventory Digital Material and component

Need for stocking and supply chain which limits the hacking process as well as availability

Replication Digital copy Production process. Copy needs reversed engineering

Limits the hacking process and availability of the product

Cost structure

Low cost, light structure

Overheads represents an important portion of the total costs

Barrier to incremental innovation, as prototyping needs to be done first

Patenting Ambiguity and limits innovation

One product one patent

Patenting infringement is 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

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.

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.

Innovating Users End User community Innovating users Physical Manufacturing

Wholesale and retail End users

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.

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

http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8691.2010.00570.x/full#b54



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).










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.

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.

47

Chapter 3: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP Methodology 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.


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

48

48 Chapter 5: Research Methodology

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

49

Chapter 3: 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

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

http://scholar.lib.vt.edu/ejournals/JTE/v9n1/hoepfl.html#strauss

http://www.nova.edu/ssss/QR/QR3-1/heath.html#guba

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

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

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

Criteria Company

life cycle

Project life

cycle

Type of

product

Size of the

community

involved

Degree of

openness

Development

Design and

delivery

Integrated

in the

study

No Start-up Nascent

Intangibles products,

Food, Media

1 person Or no sign of online

community

1 of those

Yes Start-up Mature Electronic components

Small 2-50 At least 2

Yes

Mature company

In development

or completed

Do it yourself (DIY),

ready to use

More than 50

All three

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.

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.

http://open-innovation-projects.org/

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

Organisations

Nascent

Telephony, Optical, Entertainment, Knowledge Access, Global Communication, PHD Project, Automation, Telecom, Transportation, Network, 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.

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

interview

Length in

minutes

Interviews

Telephony &

Knowledge

Access

27/07/10 Skype 47min in total8

1

Entertainment 07/08/10 Skype 50min 2 Global

Communication

10/08/10 Skype 44min 3

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

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

interview Skype 10min 13

Optical Follow up interview

Skype 15min 14

Telecom Follow up interview

Skype 12min 15

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

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

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

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

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).

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

Experience

This theme looks at intangible outputs for the firm especially in the 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

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

information on the phenomena

studied

Yes: as it accesses different data and allows for a personal engagement with subjects involved in the project

2. The sample should help the

researcher to generalise the

findings

Yes: a broad range of respondents are selected which does not restrict the researcher.

3. The sample provides believable

description

Yes: Broad range of different projects, 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

from the research question

Yes: Flows from previous research

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).

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.

67

Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP 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.


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

68

68 Chapter 5: Results: Elements of Advantages and Disadvantages in OSIP

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 number Project name Explanation and back ground

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

Access

This project has produced a portable device which 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

Communication

This global project is a portfolio of different projects 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

69

Chapter 4: Results: Elements of Advantage and Disadvantage 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

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.

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Table 4-3: Summary of findings and thematic coding

Sub category Explanations

Net

wo

rk

Advantage Community

Offers a differentiation point compared to competitors. Existing communities can be leveraged, particularly OSS community and other OS communities developed around other products (i.e.: other projects and software)

Advantage Network of Resources Financial resources, Human resources, Moral support, but also other public IP available

Advantage Network of Skill Brain power and skill transfer available to OSIP projects Advantage Network of

Opportunities All side track opportunities leveraged from the OSIP; i.e. career, business…

Advantage Network of Products The output of OSIP process as part of broader community and able to 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

Mark

etin

g Advantage PR:

Brand Recognition, Reputation, Word of Mouth and Good Will

Traditional elements of Public Relations leading to Brand awareness, which can be leveraged by OSIP projects

Advantage Sales Early adopters are part of the OSIP process which speeds up first sales. The network ensures cross selling and an extended market available early on.

Disadvantage Costs There are extra costs identified for OSIP projects

Pro

du

ct

Advantage Compatibility Compatibility embedded in the product design as well as openness to the user to build their own compatibility

Advantage Alternative to Closed Solution Offers flexibility and freedom of choice

Advantage Customer Hacking Adaptability of the product under user innovation Advantage Customer Product

Knowledge The openness allows for customers to know the product inside out.

Advantage Adaptability/ Modularity/Versatility

Integration of the end-user in the OSI processes allows for enhanced needs and wants awareness

Advantage Product Resources Community developed extra resources for the product

Advantage Quality Specs Debugged by the community but also built for their specific needs allowing 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

Disadvantage Compatibility Risk of multiple standards created and difficulty of integration of customers„ hackings in the mainstream production

Disadvantage Development Numerous contributors can increase development lead- time, complexity of the project and implementation of the design

Leg

al

Advantage Easy to Copy Ensure your standard to become leader in the industry OSIP projects become development hubs

Advantage Licence Protection of the IP from closed approaches. Savings on IP costs Also provides a framework to use or exploit this IP

Disadvantage Copy Risk of product commoditisation and loss of revenue. Organisations involved in OSIP are unable to directly recover IP development costs

Disadvantage IP Being open does not protect against other patent infringements. OS has never been defended in court and there is currently no framework available to protect and/or enforce the licensing.

Cost

Advantage Costs Savings on costs as the community supports OS products. Limited overheads

Disadvantage Costs Extra costs resulting from openness

Corp

ora

te

Advantage Employees Happiness A special culture is created which influence employees and their output Advantage Industry Recognition Peer recognition

Advantage platform of Development

Creates an environment which allows and helps people to innovate, cooperate 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

Disadvantage DIY Integration of the end-user in the supply chain is a common strategy in OSIP products

Disadvantage Free Riders Risk of competition by organisations which pillage the OSI without contribution

Lea

rnin

g

exp

erie

nce

Advantage Build up Expertise Learning processes are enhanced as the OSI process allows for employees to work on a lot of different new knowledge areas

Advantage Company‟ Product Knowledge

The company develops a better understanding of its own product as it has to make it available to the community.

Advantage Skill Transfer Two-way exchange of knowledge between participants during OSIP

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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

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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.

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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)

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“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

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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.

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“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.

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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

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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.

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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,

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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.

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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

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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.

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“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.

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“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)

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“ 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

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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).

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“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.

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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)

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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)

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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.

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“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.

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“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.

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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

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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

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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

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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

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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.

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“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

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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.

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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”.

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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

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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)

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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

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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.

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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

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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

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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

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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.

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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.

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Table 4-4: Advantages and disadvantages elements common to OSIP and OSIS

Elements of

advantages &

disadvantages

Summary of the advantages and disadvantages

common to our OSIP research & the literature on

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

&

Corporate

OSI allows for instantaneous skills transfer, better product knowledge, peer recognition & increased expertise

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.

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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)

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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.

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Table 4-5: Advantage and disadvantage elements, differences between OSIS and this research on OSIP

Elements of

advantage &

disadvantage

What was said in the OSIS

literature

Differences between the literature

on OSIS and this research on

OSIP

Network Community leverage is the corner stone of OSIS strategy with the view that the more community members the better

Higher technical difficulties in OSIP highlight that community participation is limited to the extent of specific skills availability

Marketing Direct advantages in selling the product, branding and low pricing

Those advantages are limited by additional costs of building the right communication platform

Products Cheaper and better quality products, high speed of development and instantaneous testing

Advantages are limited by additional costs appearing in building a common development platform

In addition, prototyping and testing appear as hurdles in the development process

Legal Simple protection alternative to copyrights with no or low costs

The patent environment appears as a hurdle to OSIP innovation.

The legal protection offered by OS licensing does not seem to be sufficient in a competitive environment

Costs Costs savings due to community involvement

Extra costs arise in OSIP especially when looking at prototyping, testing and project management

Learning

experience &

Corporate

Instantaneous transfer of skills and knowledge better product knowledge, peer recognition & increased expertise

Advantages are limited by additional costs in maintaining the development platform

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,

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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

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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

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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

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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.

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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.

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Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP 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.


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

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121 Chapter 6: Results: Factors Impacting Elements of Advantage and Disadvantage in OSIP

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

(Table 2-3)

Found in the research on OSIP

Resources Firm‟s life cycle is identified as having an impact on OSIP projects with particular attention to:

Access to resources (skills and finances)

Experience

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

projects

The strategy behind the choice of OSIP seems to have an impact on advantage and disadvantage elements

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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 &

Individuals

Two elements have been identified in our 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

Organisation

Project management seems to have a 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.

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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:

Skills

Finance

“I mean we are working on the [product name,

[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)

“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)

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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.

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Table 5-4: Managers’ comments on manufacturing elements impacting OSIP

Manufacturing issues Managers comments

Prototyping

Lead time

“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)

“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.

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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).

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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

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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

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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

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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.

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“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;

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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

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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

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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)

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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

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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)

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“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

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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.

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“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

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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

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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

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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

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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.

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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:



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.

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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

contingency

factors from low

to high

Advantages and Disadvantages elements

Network Marketing Product Legal Costs Corporate Learning

experience

Degree of

Openness ∩ ∩ ∩ ∩

Time of Release ∩ ∩ ∩ ∩

Use of OSIS

Pro

ject

Mg

mt

Project

oversight ∩

Project

Scope ∩

Project

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

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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

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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

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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

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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

project

Influence on advantage & disadvantage elements

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

project

Only some of the elements above are open. This 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.

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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

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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

Stakeholders involved from the ideation process as well as in building a common platform of development

Better network integration Need to manage the community; Need for project management; Need a 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

Stakeholders involved from the development phase, provided with a development platform

Product can be tailored to better match customer needs Well-defined development space; Project and product marketed by stakeholders.

Need for project management

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After manufacturing

Stakeholders involved in further product developments

Protection from copy Narrow development space; Need to market the project 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.

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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

Release

Openness of the project

LOW HIGH

EARLY

Might not attract the community Might be copied; Lack of direction;

Blank-page syndrome.

LATE

Loses all benefits from OSIP as it becomes similar to traditional

innovation process

Low and slow buy-in from the community;

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

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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

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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

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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.

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Table 5-9: Project Management contingency factors and their relative impact on advantage and

disadvantage elements

Contingency

factors

Impact of Project Management Contingency factors on

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 &

Boundaries of the

project

If the scope is too narrow, there is no space for the community to be built; 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

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difficult for the public to participate. Figure 5-1 summarises these situations and their

impact on advantage and disadvantage elements in OSIP.

Pro

ject

’s

Mod

ula

rity

Project’ Scope

Low High

Low Focus and limited

support

High range of

stakeholders catered for

High Exposition of product

hackings

Idea generation

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.

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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.

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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

external stakeholders Focus on network management with particular

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

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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

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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

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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,

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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.

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Chapter 6: Implications and Conclusions 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.


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

166

166 Chapter 6: Implications and Conclusions

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:



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

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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

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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.

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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

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

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

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.

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.

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.

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.

177

Glossary 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.

178

178 Glossary

179

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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

recorded?

Yes

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

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192 Appendices

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

would you say?

It is a start up its a mature company

Are you involved in any other projects at the moment?

Interview Question (See appendix 2 below)

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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?

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194 Appendices

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.

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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

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Mickael Francois Henri Blanc Bsc, MBus, MBA · iii Open Source Innovation in Physical Products: ... A Corporate Perspective iii Table of Contents . Keywords ... joint venturing, pooling