Enabling Knowledge Creation through Outsiders: Towards a Push Model of Open Innovation

Enabling Knowledge Creation through Outsiders:Towards a Push Model of Open Innovation

Authors: Sebastian Spaeth, Matthias Stuermer, Georg von KroghETH Zurich, Chair of Strategic Management and Innovation

Academy of Management 2008, Anaheim, California, Aug 13, 2008#1653 Strategy, Technology, and Innovation

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Content

Theory

Research Design

Case description

Methodology

Findings

Conclusion

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Gap in open innovation literature

Definition “open innovation” (Chesbrough et al., 2006):

Inflow is concerned with the exploitation of knowledge

outside the firm's boundary.

What would happen if everyone would be a free rider?

(West and Gallagher, 2006a)

Gap in literature: What is the motivation of firms to freely

reveal knowledge that is of use to other innovators?

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Knowledge flows in open innovation

3 types of knowledge flows(Gassmann and Enkel, 2004)

1. Inside-out: selling intellectual property

2.Outside-in: licensing-in external knowledge, using open source software

3.Coupling of both inside-out and outside-in knowledge flows

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Positioning of the push model

Actor

Firm Outside constituents

Act

ivit

y

Knowledgeexploitation

Outside-in processe.g., technology sourcing,

using open source software

Knowledge spillover to outsiderse.g., reverse engineering

Knowledgecreation

Inside-out Processe.g., licensing out

Push modelunsolicited knowledge creation

through outsiders

Coupled processes

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Licensinginnovationsto other firms

Current concept of open innovation

Exploitation of existing ideas

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Free revealing ofknowledge

Push model of open innovation

Inducing new external innovations useful for the firm

Licensinginnovationsto other firms

Current concept of open innovation

Exploitation of existing ideas

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Research design

Research question: What are the enabling contexts that make the push model of open innovation work?

Empirical evidence: Examination of Eclipse project

Data sources:1. CVS commits external development contributions→

2. Newsgroup messages knowledge in- and out-flows→

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Eclipse history

mid 1990's: started by Object Technology International (OTI)

1996: OTI acquired by IBM

2001: IBM released Eclipse as open source software

2004: Formation of the Eclipse Foundation Technical infrastructure

Development processes, e.g. release management

Intellectual property rights of source code

Promotion of Eclipse and its wider ecosystem

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Why Eclipse?

Founded and sponsored by one dominant firm

Governance underwent significant evolution

Access to 6 years of development data

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Data source 1: CVS commits

Counting added lines of code

Range April 2001 until February 2007

63 million lines of code

Contributed by 605 distinct developers

565 developers identified IBM vs. non-IBM

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Data source 2: Newsgroup messages

Eclipse newsgroups vs. mailing lists

Knowledge seekers vs. knowledge providers

February 2001 until July 2007

371,942 messages in 90 distinct newsgroups

116,973 messages started a new discussion thread, 254,969 messages replied

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Coding of 500 newsgroup messages

Categories: Questions Answers Follow-up

questions Comment Noise

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Inter-rater coding

Data in the cells: “coder A; coder B”

How coherent is categorization? Kappa of 0.816 is well

above 0.7 (Fleiss, 1971; Straub et al, 2004)

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Findings: CVS commits

Active committers per month

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Findings: CVS commits

Lines of code from IBM and non-IBM developers

COCOMO: external contributions of 21.5 million LOC

~ 214,000 man-months ~ 1.7 billion USD

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Findings: Newsgroup messages

Messages per month (non-IBM messages growing)

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Findings: Newsgroup messages

Thread reply over thread start ratio (more or less constant)

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Findings: Newsgroup messages

Net knowledge creation through dialogue

net knowledge creation = answers - questions

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Findings: Newsgroup messages

External knowledge creation ratio is growing

0.7430.998

Today non-IBM contributors provide more knowledge than IBM members

Net knowledge creation non-IBM

Net knowledge creation IBMRatio =

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Contexts enabling the push model of open innovation

1. Preemptive generosity Revealing of initial Eclipse source code by IBM

2. Continuous commitment Constant number of IBM programmers in Eclipse Constant level of participation in newsgroups

3. Adaptive governance structures (giving up control) Non-profit foundation with equal membership of firms

4. Lowering barriers to entry Sub-projects by non-IBM people; modular architecture

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1. Preemptive generosity

Revealing of initial Eclipse source code by IBM (valued at USD 40m)

Attraction of external participants to contribute to the public knowledge pool

Creation of social capital: relationships, trust and norms of knowledge sharing

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2. Continuous commitment

Opening up source code is a required but not sufficient condition

Dedicated 40 developers until 2003, and 80 developers until today, on average

Reciprocity is a established norm in open source communities (Shah 2006)

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3. Adaptive governance structures

IBM ceded control over infrastructure, administration and IPRs on Eclipse source code

IBM is now just one among many in Foundation

Start of Foundation lead to significantly more external code contributors

IBM remains major leader of software evolution due to highest share of code commits

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4. Lowering barriers to entry

Entry barriers = cost of joining and contributing to an open innovation project

Sub-projects run by non-IBM members only (BIRT)

Other barriers: Choice of programming language or design of software architecture

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Discussion