Von Hippel,E . "Learning from Open Source Software" MIT Sloan management review [1532-9194] 42.4 (2001). 82-.

 

This is one of several pieces of literature providing background on why the open source software movement can be successful at all.  The article generalizes the open source movement to a general class of “user innovation communities” which also includes non-technological fields (such as the sporting equipment example given in the article).

The article acknowledges the prevailing wisdom that user innovation communities “shouldn’t exist,” and that product development has traditionally been the dealing of manufacturers and commercial enterprises in general. These commercial enterprises benefit from the economies of scale that come from developing a product that can be sold to many users and protected from competition, rather than lone users developing products and obtaining marketplace protection for them.

However, the article continues, these communities do exist, and can be even more successful than competing commercial ventures. It outlines three conditions for the existence of successful user innovation communities: a sufficient incentive to innovate, an incentive to reveal any innovations made, and a competitive distribution of such innovations relative to commercial products.

The article’s most salient emphasis, however, was that on the sensitivity to specific user needs available in user-innovated products. While this was repeatedly cast as a positive point – that the users themselves naturally have better and more up-to-date information about their needs and that manufacturers with conflicting goals could create sub-optimal products, thereby costing the users an “agency cost” – this point has its negative aspects as well. This condition is only a positive one when communities are homogenous; that is, they all have the same needs. Given similar communities with slightly different needs, the tendency to create products that conform perfectly to those needs could create a fragmented marketplace of many similar products with essentially superficial differences. With this type of fragmentation, it could hinder the ability of any one product to gain enough momentum to continually fund or stimulate development. Specific to the software case, a fragmented market also decreases compatibility, an issue of paramount importance in today’s networked world.