The Role of Entrepreneurs in Sustaining OSS Communities

The Role of Entrepreneurs in Sustaining OSS Communities----

Tentative findings from studies ofvirtual worlds to Bitcoin to CMS

Professor Robin [email protected]

robinteiglandStockholm School of Economics, Sweden

Zeynep [email protected]

Stockholm School of EconomicsSweden

Elia [email protected]

Stockholm UniversitySwedenMay 2016

Claire [email protected]

Stockholm School of EconomicsSweden

mailto:[email protected]

mailto:[email protected]

Stockholm – a unicorn breeding ground

Unicorns: Private companies valued at more than USD 1 bln

To be released

June 2016

Introduction & Background

Some Research Findings

Discussion

Motivation

Entrepreneurship Q&A

Thank You!

The Role of Entrepreneurs in Sustaining OSS Communities

The Firm

The Communityvs

~ Created by employees within firm

boundaries for profit

~ Created by volunteers and distributed freely regardless of organizational affiliation

Models of knowledge creation

OSS Communities:PC model of knowledge creation

LinuxApache

MySQL

GNOME

Private-collective model (von Hippel & Von Krogh, 2003) 1) Private model focusing on distribution of returns and delegation of

value creation solely to organization2) Collective model focusing on openness and free distribution of

intellectual ideas for common or public good

* Firms increasingly becoming part of distributed knowledge creation, e.g. IBM, Oracle, Intel, e.g., Bonaccorsi et al., 2006

* Community seen as complementary asset to be leveraged and combined with firm’s internal assets to deliver competitive

solution, e.g., Dahlander & Wallin, 2006

* However, resources of community that firm wants to leverage are outside firm boundaries and embedded in community with

competing logic

• Firms try to influence the communities in different ways, e.g., Dahlander & Wallin, 2006; Dahlander &Magnusson, 2008;

Jarvenpaa & Lang, 2011; West & O’Mahony, 2008

Involvement of firms in OSS communities

• Entrepreneurs involved in OSS communities, e.g., Bonaccorsi et al, 2012; Fitzgerald, 2006, Feller et al. 2008; Thistoll 2011; Stam 2009

• But limited research on their role and influence

Entrepreneurs in OSS communities

As many of the entrepreneurs

noted, “If the community

fails, I fail.”

• Entrepreneurship seeks to understand "how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and exploited” (Shane and Venkataraman 2000) and

how entrepreneurial activities, processes, and outcomes are influenced by certain contexts (Zahra et

al. 2014)

• Increasing use of digital technologies by entrepreneurs (Kiss et al. 2012; Mainela et al. 2014;

Shepherd et al. 2014)

• But limited understanding of the novel usage of digital technologies by entrepreneurs (Kiss et al. 2012;

Mainela et al. 2014; Shepherd et al. 2014).

Digital Entrepreneurs ISJ CFP (Shen, Lindsay, & Xu 2015)

http://www.flickr.com/photos/paulyp13/2600200854/sizes/l/in/photostream/

How do entrepreneurs influence the sustainability of OSS communities?

Overarching research question

Entrepreneurial activity

OSSsustainability

But there’s an inherent tension...

Private modelDistribution of returns

and delegation of value creation solely to

organization

Collective modelOpenness and free

distribution of intellectual ideas for common or

public good

VS

Teigland, Di Gangi, & Yetis 2012

MotivationIntroduction & Background


Discussion

Entrepreneurship Q&A

Thank You!


How do entrepreneurs develop their opportunities?

How do entrepreneurs realize their opportunities and grow?How do entrepreneurs survive external changes?

OpenSim

OpenSim

Bitcoin

Some fundamental questionsin the Entrepreneurship field

How do entrepreneurs continuously innovate? eZ Systems

Research Question Study

Zeynep Yetis-LarssonStockholm School of Economics

Claire IngramStockholm School of Economics

Elia GiovacchiniStockholm University

Dr. Paul Di GangiUniversity of Alabama Birmingham

Marcel MorisseUniversity of Hamburg

Dr. Nicole RosenkranzETH Zurich

OpenSimulator

Bitcoin

eZ Systems

PhD students

Their co-authors

OSSstudy


Founds an organization for the purpose of obtaining economic benefits through the sale or use of his/her product and/or service (Shane & Venkataraman, 2000), to conduct business

What is an entrepreneur?

Assembles resources under uncertainty, i.e., prevailing sense of not having sufficient information about what is happening and how to transform new technologies into ventures and markets

von Schantz 2015

Where do entrepreneurial opportunities come from?

Industry in “crisis”

Weak competitive situation

Industry imperfection

New technologies

Changing consumer behavior

Discovered or created?von Schantz 2015

OpenSimulator Project

• An OSS community comprising different individuals and organizations developing a multi-platform, multi-user 3D

application enabling creation of customized virtual worlds

URL: http://opensimulator.org/wiki/Main_Page

• More than 700 not-for-profit and commercial organizations hosting virtual worlds based on OpenSimulator software, December 2014

•

http://opensimulator.org/wiki/Main_Page



Two kinds of opportunity identification by OSS entrepreneurs

Accidentalentrepreneur

Deliberateentrepreneur

Yetis, et al., 2015, American Behavioral Scientist

Entrepreneur M Entrepreneur J

Effectuation theory (Sarasvathy 2004)

• Based on assumption that the market is unknown and needs to be created by bringing together stakeholders supporting new venture idea

• Intense interaction and negotiation among stakeholders to operationalize their aspirations into concrete products

• In this manner uncertainty and need to predict are reduced

OSS entrepreneurs enable market creation through

effectuationPeriod One2007-2009

Collapsed Node Structure of OpenSimulator Developer Mailing List

A central feature in effectual processes is the method by which

entrepreneurs pull together and

coordinate a network of stakeholders to

create opportunity

Yetis et al., In progress

OSS entrepreneurs play a mediating role and have political

skills

Political skills: “The ability to effectively understand others at work, and to use such knowledge to influence others to act in ways that enhance one’s personal and/or organizational objectives” (Ferris et al., 2005: 127).

A lot of the users tend to get frustrated with the developers and they end up storming off a lot and feeling like developers are just ignoring them, not understanding what they are trying to say. So I try to get in between them a lot and tell everybody to

come to me instead of going to the developers. I have been pretty good at being that middle guy—and that is pretty much one of the things that I do most of time in the OpenSimulator

project.

Yetis, et al., 2015, American Behavioral Scientist

OSS entrepreneurs conduct sensemaking across boundaries

What is happening out there?

Picture adapted from von Schantz 2015 Yetis et al., In progress

Sensemaking

Espoused business model

Sensegiving

Business model

Sensebreaking

Business model

Opportunities

Uncertainties

Opportunities Uncertainties Opportunities

Developing business models is a collective endeavor

Hanna von Schantz, PhD Student Stockholm University, 2016

Alvarez et al. (2013: 307) specifically stress “the firm formation decision is based on the enactment of an opportunity through an explicit or implicit business model”.



OpenSim

OpenSim

Bitcoin

Some fundamental questions



How do entrepreneurs realize their opportunities and grow?

• Entrepreneurs suffer from liabilities of smallness and newness (Aldrich & Ruef,

2006; Baker & Nelson, 2005)

• Entrepreneurs have considerable difficulties in

attracting necessary human, financial, and

other resources due to uncertainties of their new

venture and small size

My company size of full time employees is 1—but in any given month I work

with 5 to 10 individuals scattered all around the world. Last month I paid individuals from South

Africa, Brazil, China, Vietnam, Serbia, UK, and

USA.

Social capital

Social capital, or the ability to access and/or mobilize resources embedded in a social structure (Lin, 2001),

is important for entrepreneurial success

e.g., Stam & Elfring, 2008

Structural Capital

Ability to access and exchange resources

through network position

Relational Capital

Ability to foster trust, build common norms, develop expectations and obligations, and

identification

Cognitive Capital

Ability to develop shared language, codes, narratives,

and boundary spanning objects

fostering collaboration

Social capitalNahapiet & Ghoshal, 1998

Wasko & Faraj, 2005

Position Actor bonds Go extra mile

Data collection

2007 – 2015• Developer mailing list• User mailing list• Open Hub commit list• OpenSimulator wiki • SNS, blogs, homepages, etc.• Interviews

Social capitalCorrespondance to

concepts in social capital literature

Hypothesis Operationalizationp-values of

Wilcoxon Rank Sum test

Sign.

StructuralNetwork ties to obtain

information and influenceEntrepreneurs have higher out-degree centrality in the

emailing network than non-entrepreneursOut-degree centrality of the developers'

mailing list network 0,0578 p < 0.1

Network ties to access diverse sources of

informationEntrepreneurs have higher betweenness centrality in the

emailing network than non-entrepreneursBetweenness centrality of the developers'

mailing list network 0,0755 p < 0.1

Relational Fostering trustEntrepreneurs are more welcoming to the newcomers to

the community than non-entrepreneurs

Replies to first messages sent to the community by new developers entering

the community 0,0201 p < 0.05

Building normsEntrepreneurs are more likely than non-entrepreneurs to

use terms that indicate expression of opinion in their mailing list emails

The degree to which a focal developer uses opinionated language in his or her emails 0,0657 p < 0.1

Taking on obligations and expectations

Entrepreneurs make more commits than non-entrepreneurs to contribute to the open source code base

Number of commit files contributed by the developers 0,0258 p < 0.05

Cognitive Rated expertiseEntrepreneurs receive a higher number of kudos than non-

entrepreneursKudos given to a focal developer by other

developers 0,0391 p < 0.05Development of shared

language and codesEntrepreneurs have higher degree centrality in the shared

modules network than other developersDegree centrality of the developers'

commit network 0,0435 p < 0.05Recombination of shared

language and codesEntrepreneurs have higher betweenness centrality in the

shared modules network than other developersBetweenness centrality of the developers'

commit network 0,0440 p < 0.05

How do entrepreneurs build social capital?

- Eight hypotheses

Yetis, et al., In progress

Preliminary

Rela

tiona

l cap

ital

Entrepreneurs act as “Greeters” for new members in terms of recruitment, information guidance, and training.


Structural CapitalPosition

themselves as core and

bridges across community

(weak support)

Cognitive Capital

Ensure focus of community on

real world applications and

relevance

Relational Capital

Create social glue across community

members with diverse interests

and goals

Summary of findingsHow do entrepreneurs build the OSS community’s

social capital as a means to influence the community?


OSS entrepreneurs contribute to building OSS Community’s Intellectual Capital

1) Access to parties for combining/exchanging intellectual capitalAs entrepreneurs serve as bridges across disparate groups, they facilitate information diffusion and

combination and exchange of dispersed elements and experiences

2) Anticipation of value through combining/exchanging intellectual capitalAs entrepreneurs are clearly visible within community in building social capital, their participation leads

to expectancy by others that community will create something of value.

3) Motivation to combine/exchange intellectual capitalThrough building cognitive and relational capital entrepreneurs enable higher levels of trust, decreasing propensity for opportunism and/or free-riding by others, thus encouraging others to contribute as well.

4) Combinative capability At individual level entrepreneurs maintain diverse networks to gain access to diverse information for

idea generation, and they collaborate with other entrepreneurs to realize these opportunities through exchanging resources, thereby supporting development of community’s combinative capability.

Additionally…


Rivalry over time…

Increasing collective action involving both

private and public contributions

Increasing rivalry over time

Kuk et al., In progress

Preliminary

OSS entrepreneurs contribute to community’s creation of

intellectual capital, a factor necessary for community’s

sustainability

Summary of findings

OSS community provides OSS

entrepreneurs access to diverse

resources, enabling them to enact

and realize opportunities


Entrepreneurs who conduct their business by identifying, enacting, and realizing opportunities

through the collective resources in OSS communities

“Open entrepreneurs”

Adapted from Yetis, et al., 2015, American Behavioral Scientist



OpenSim

OpenSim

Bitcoin




How do entrepreneurs survive external changes?

• External shocks require firms to rely on knowledge and organizational learning, resource acquisition, efficient monitoring, and stewardship to survive crisis (Vogus & Sutcliffe, 2007; Wynn et al., 2008; Lee, 2006; Davis et al., 2010)

• Large firms and family firms often able to survive due to possessing necessary resources, e.g., deep pockets, or ability to access necessary resources through social capital

• What about entrepreneurs in a fast-paced, uncertain environment?

https://bitcoin.org/bitcoin.pdf

“…an electronic payment system based on cryptographic proof instead of trust, allowing any

two willing parties to transact directly with each other without the need for a trusted third party.”

The beginnings of Bitcoin on the internet in 2008-2009

Self-organizing, global community of strangers

• Libertarian• Efficiency• Profit• Challenge• Community

On May 30, 2016• 1 BTC = USD 542 (highest

since Aug 2014)• 15.6 mln bitcoins in

circulation• Market capitalization of

≈USD 8.45 bln• ≈200,000 daily transactions

http://www.coindesk.com/price/, https://blockchain.info/charts

Continued growth of Bitcoin

Extreme shock:Filed for bankruptcy

February 2014

Ingram & Morisse, In progress

Some Bitcoin entrepreneurs


Summary of forum analysis (LDA)

>1 million posts on Bitcoin forum

clustered within 6 time periods


Digital-local interactions and resource access during external

crisisExtreme

event


Open entrepreneurs span multiple communities,

enabling OSS community resilience


OSS Community Local Community



OpenSim

OpenSim

Bitcoin




How do entrepreneurs continuously innovate?

• Innovations form significant backbone to organization’s ability to secure competitive advantage

• As part of open innovation strategy, firms increasingly treating OSS communities as complementary asset to be

leveraged and combined with firm’s own internal assets to deliver competitive solutions (e.g., Dahlander &

Magnusson, 2005; Dahlander & Wallin, 2006; West & Gallagher, 2006; West & O’Mahony, 2008)

• Business model innovation (BMI) is central function in origin of new business ideas, revolution of existing

industries and creation of new ones (Chesbrough, 2007; Markides & Sosa, 2013, Teece, 2010)

105 emp350+

Partners

42,000+Communitymembers

15,000+Customers in 130 countries

eZ Ecosystem

• Founded 1999• Content management software, #1 in media industry

• 250,000 sites in 170 countries• Customers: UN, FT, WSJ, Vogue, Hitachi, 3M, BMW

• 105 employees in 9 countries (US, Europe & Asia)

eZ Systems wants to create a “killer” OSS community

“As a community... if you give them the little finger, they take the whole hand – they want more when you give them something, and

if they don't get something, then they get irritated. We are a company and not a charity, so we have to make money – but this is a challenge and you have to differentiate between what you give

away for free and what you sell." - eZ senior manager

Research methodology

• Case study of eZ Systems and its firm-sponsored OSS community (over 14 years)

• 60 semi-structured interviews– eZ employees, affiliated partners, entrepreneurs, and

OSS hobbyists• >81,000 eZ community forum posts• Non-participatory observations• Secondary material, e.g., websites• Literature-driven thematic (study 1) & inductive

coding and analysis (study 2) 52

Findings of study 4a – Open innovation

Teigland et al., I&O, 2014

eZ’s boundary management of eZ community plays crucial role in

community’s innovation capacity, with Power having most importance eZ Community’s innovation

capacity directly impacts eZ’s absorptive capacity

12

Integrative IT platform supports development of community innovation capacity and firm

absorptive capacity

3


What is a business model?

Content, structure, and governance of transactions designed so as to create value … through a system of interdependent activities that transcends focal firm and spans its boundaries – drawing from Amit & Zott (2001: 511; 2010: 216)

Business model innovation – Study 4b

Giovacchini & Rosenkranz, In progress

Evolution of business model at eZ

Giovacchini & Rosenkranz, In progress

Collective Private Private-collective

eZ’s distinct choice of hybrid identity (i.e., multiple, possibly conflicting organizational claims) drove design

and subsequent innovation of 3 different business models over 14 years

Crowding out of other identity

“Harmony”



OpenSim

OpenSim

Bitcoin




•OSS literature–Entrepreneurs facilitate ability of OSS communities to sustain themselves through creating markets, facilitating continuous development and replenishment of resources (e.g., social capital, combinative capability, intellectual capital), and enabling resilience to external shocks

•Entrepreneurship literature–Importance of OSS communities to entrepreneurs as arenas for identifying, creating, and realizing opportunities as well as resource access to enable growth, survival, and continuous innovation–Dialectical view of entrepreneurs as individuals who pursue both self and collective interests (Van de ven et al., 2007)

•Other literature – Social capital, theory of the firm, organization theory, innovation, strategy

Summary

Q&A

Introduction & Background


Discussion

Motivation

Entrepreneurship

Thank You!


Questions?

Thank you for your criticisms and comments!

Some sources• Giovacchini, E., Rosenkranz, N. A., Teigland R. 2015. When birds of diverse feathers, flock together: Multiple identity spheres and

their impact on organizational change. Frontiers in Managerial and Organizational Cognition Conference, Roskilde University, Denmark.

• Giovacchini, E., Teigland, R. & Di Gangi, P. 2013. The mechanisms behind an Ecosystem Logic in a Firm sponsored Open Source Software Ecosystem. XXXIII International Sunbelt Social Network Conference.

• Ingram, C., Morisse, M., & Teigland, R. 2015. A Bad Apple Went Away”: Exploring Resilience Among Bitcoin Entrepreneurs. In Proceedings of European Conference of Information Systems (ECIS), May 26-29, 2015 Muenster, Germany.

• Kuk, G. & Teigland, R, 2014b. The roles of private-public tension in open source models of innovation. European Group for Organizational Studies (EGOS), July, Rotterdam.

• Kuk, G., Teigland, R., Yetis, Z., and Dovbysh, O. 2014. The fragility of collective action in private-public pursuits: The case of OpenSimulator and virtual worlds. 5th LAEMOS Colloquium. La Havana, Cuba.

• Teigland, R., Di Gangi, P., Flåten, B-T., Giovacchini, E., Pastorino, N. (2014). Balancing on a tightrope: Managing the boundaries of a firm-sponsored OSS community and its impact on innovation and absorptive capacity. Information & Organization, 24, 25–47.

• Teigland, R., Di Gangi, P. & Yetis, Z. 2012. Setting the Stage: Exploring Actor Roles for Private-collective Community Sustainability. XXXII International Sunbelt Social Network Conference (INSNA).

• Teigland, R., Di Gangi, P. & Yetis, Z. 2012. Setting the Stage: Exploring Actor Roles for Private-collective Community Sustainability. Academy of Management Conference.

• Teigland, R & Kuk, G, 2014. The Fragility of Collective Action in Private-public Pursuits: The Case of OpenSimulator and Open Source Virtual Worlds. In Proceedings of the European Conference on Information Systems (ECIS), June, Tel Aviv.

• Teigland, R., Yetis, Z., & Larsson, T. Breaking Out of the Bank: Exploring Emergent Institutional Entrepreneurship through Bitcoin. 15th Swedish Network for European Studies in Economics and Business (SNEE) Conference, Grand Hotel. Mölle, Sweden.

• von Schantz, H., From opportunities to business models – an effectual approach, Paper presented at the• Nordic Academy of Management (NFF) meeting in Stockholm 22-24 August 2011, Stockholm Business School at Stockholm University• von Schantz, H., Business models – as roles and outcome of entrepreneurial sensemaking, Paper presented at the ESU 2014

Conference and Doctoral programme, Sten K. Johnson Centre for Entrepreneurship Lund• Yetis, Z., Teigland, R., Di Gangi, P. 2013. Exploring Stakeholders of Open Source Virtual Worlds through a Multi-method Approach. In

Plesner, U. & Philips, L. (Eds.) Researching Virtual Worlds: Methodologies for Studying Emergent Practices, New York: Routledge.• Yetis, Z., Teigland, R., & Dovbysh, O. 2015. Networked Entrepreneurs: How Entrepreneurs Leverage Open Source Software

Communities. American Behavioral Scientist, Special Issue on Networked Work and Networked Research. • Yetis, Z., Teigland, R., Larsson, T., Kuk, G., 2014. Breaking out of the Bank: How Entrepreneurs Enable Collective Emergent

Institutional Entrepreneurship through Bitcoin. Babson College Entrepreneurship Research Conference (BCERC), Ivey Business School, University of Western Ontario. London, Ontario, Canada.