Relationships between Open Source Software Companies and Communities

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Research paper: Relationships between open source software companies and communities: Observations from Nordic firms. By Linus Dahlander, Mats G. Magnusson. Research Policy 34 (2005) 481–493




"This paper deals with the relationships between firms and communities in Open Source Software (OSS). A particular feature of OSS is that important resources are not directly controlled by firms, but partly reside within communities that co-exist with the firms. Despite this, firms explicitly try to utilize the resources within these communities in order to create and appropriate value. Consequently, the relationships that firms have to these communities influence their way of doing business. Based on case studies of Nordic OSS firms, a typology consisting of symbiotic, commensalistic, and parasitic approaches to handling the firm-community relationship is developed. Depending on the chosen approach, firms encounter different managerial issues and also use different operational means of subtle control. While firms relying on a symbiotic approach have greater possibility to influence the community through subtle means of control, they are also confronted with more challenging managerial issues."

Research Questions

Linus Dahlander, Mats G. Magnusson:

"In firms, the relationships between developers and their employers are regulated by contracts. Consequently, these developers employed by firms receive salary and other types of financial compensation. In OSS projects, anyone is free to join and the relations are informal. Whereas firm-based software creation is normally restricted to relations within the firm, OSS developers are not bound to firms but are dispersed in all parts of the world.

The use of communities created or induced by management appears to be a balancing act, where the influence from the firm’s side, in terms of the degree of control and the strategic direction that is imposed, is a key issue. With too much control it is questionable whether it will be possible to generate the energy, interest and creativity that is at the core of “naturally” emerged communities.With too little control and direction, however, the effects for the firm may be small, or even counterproductive, in case the community’s goals work against the organization. This ought to be even more pronounced in the case of OSS, as management of the firm has no formal influence over the community based on their standing in the firm, and the overall value of openness and sharing prevalent within OSS is apparently conflicting with the firms’ ambitions to generate profit.

This apparent management challenge has directed our study to a number of research questions focusing on the inter-relationship between the firms and the communities, the first one of which is as follows:

Research question 1: What different approaches exist to handle OSS firm–community relationships?

The inter-relationship between OSS firms and communities seems to comprise a set of tensions and inconsistencies in terms of goals, norms and values, potentially leading to different managerial issues. This leads us to the second research question.

Research question 2: What managerial challenges do OSS firms encounter in their community-related activities?"

Finally,we address theway that OSS firms deal with their communities, at an operational level.

Thus, we pose the third research question.

Research question 3: What operational means do OSS firms use in order to handle their relationships to communities?

Typology of community - firm relationships

Linus Dahlander, Mats G. Magnusson:

"We propose a typology of three different basic approaches used by firms to inter-relate to their communities:

(1) symbiotic;

(2) commensalistic; and

(3) parasitic.

The different approaches should, however, not be seen as distinctive categories, but rather as steps on a continuum regarding the benefits for the communities deliberately searched by the OSS firms. The parasitic approach implies that the firm only focuses on its own benefits, without taking into account that its actions might harm the community. This is a possible approach that might occur, even though we did not observe it in our cases. An obvious risk related to the commensalistic approach is that, over time, it turns into a parasitic relationship, where the firm comes to be perceived as a negative influence by the community, either in terms of its violation of basic norms, values and principles, or that it is simply perceived as a free rider.

It is clear that no OSS firm would deliberately choose a parasitic approach, as causing harm to the community that the firm is feeding upon does not appear to be a sustainable business model. However, given the fundamental differences between different actors’ rationales to participate in OSS development, the line between what constitutes a commensalistic and a parasitic approach may be fine, and not always clear.

Three of the observed firms – MySQL, Roxen and SOT – have actively attempted to create a community in relation to their product, but only MySQL has been successful in reaching a large number of users.

The Symbiotic Approach

"The symbiotic approach implies that the firm tries to co-develop itself and the community. In the development of both the firm and the community, the effects on the other party are considered when decisions are taken. In order for this to work, it is necessary for firm management to be directly involved in community development, as legitimacy to influence the community can hardly be gained from having a formal role in a firm, but on the status gained in the community, based on its norms and values. One way of viewing this is to consider the community as an extended part of the knowledge base of the OSS firm, however outside of its formal span of control. This approach is similar to the present practice to develop and manage communities of practice within firms (Wenger and Snyder, 2000), presenting a paradox to managers in terms of handling the diametrically opposed needs for openness and control.

However, in the case of OSS, this tension is probably even stronger as community members do not necessarily have any formal connection to the firms, but can disregard their goals and strategies completely in case they are not in line with those of the community. Of the firms studied here, only MySQL can today be regarded as having a clearly symbiotic approach, even though Roxen and SOT initially revealed similar patterns of activities. Over time, the focus on the community at Roxen and SOT decreased, as the firms had problems in appropriating adequate returns. Using the symbiotic approach implies that the firm is focusing on the realization of mutual benefits for both the firm and its community. While the firms’ ambition to manage their communities in this case is significantly lower, the norms and values of OSS are respected and taken into consideration by the OSS firms. Some minor influence on the development direction takes place by active participation in various projects, but there is no strategic co-alignment between the firms and the communities. Firms adopting this approach try to benefit from the work not only performed in their related communities but also go to great lengths in their attempts to reciprocate these benefits. One way of doing so is to give internally developed codes to the communities.

Another way for the firm to be perceived as useful by the OSS developers is to provide a well-functioning infrastructure that facilitates the performance of different development tasks and allows for stimulating interaction. The background of key individuals within OSS activities has been an important factor for the firms to be perceived as something positive from the perspective of the communities, even though the relationships between these firms and their communities to some extent have deteriorated over time as the firms have become more commercially oriented."

The Commensalistic Approach

"An intermediate way to inter-relate to the community is to use a commensalistic approach, i.e. to benefit from the co-existence with another entity while leaving it without harm. The basic idea in this specific context is to thrive on communal resources that are continually replenished, while keeping the direct involvement in the development of these communal resources to a minimum.

Cendio is predominantly using a commensalistic approach, even though there are some components that more resemble symbiosis, primarily the giving away of codes that from a business perspective is not absolutely necessary to retain. In this case, as we are dealing with social systems paying much attention to the diffusion and use of knowledge, one aspect that appears to be important to attend to is the legal mechanisms that govern the software which commensalistic OSS firms use, and how these mechanisms relate to the norms and values of their communities."

Governance Issues

Managerial challenges in community-related activities

From the case studies, we distinguish seven managerial issues that are critical to attend to in relation to the community:

(1) respecting the norms and values of the OSS communities;

(2) using licenses in a fruitful manner;

(3) attracting developers and users;

(4) handling the resource consumption related to community development;

(5) aligning different interests about the nature of work;

(6) resolving ambiguity about control and ownership;

(7) getting acceptance for using the community-developed software in commercial applications and avoiding direct conflicts.

First, from the case studies it is clear that a critical challenge is the norms and values that defend the communal resource from being depleted by firms. Beside the legal mechanisms (primarily licenses), the joint effort is protected through the social norms and values that are diffused across users and developers. Despite the difficulties to influence the norms and values of communities, some attempts to do so were noted in the case studies. Key individuals within projects have a greater possibility in doing so. In the case of MySQL, the firm emerged as the result of a fewpeople jointly developing a database. These individuals appear, at least to some extent, to have the capacity to influence the community, as they are well-known and respected by it.

The firms that have established a community have also been active in creating social events—such as fairs and workshops for users and developers. In a related line of argument, O’Mahony and Ferraro (2004) find that face-to-face interactions are crucial in managing the boundaries of open projects. Apparently, social events are another means of proactively shaping social norms and values, and creating acceptance for the commercial use of knowledge created by the community.

Second, a substantial challenge when shaping the relationships with the OSS movement is to handle the different licenses that govern how the software resulting from OSS projects can be used, as the ownership of a project is a central theme in OSS (Raymond, 1999a).

Licensing schemes are, therefore, of great importance as they influence how the software ought to be used, and also have a significant symbolic value (Lerner and Tirole, 2005). Hardly surprisingly, licenses are considered to be extremely important for all firms, and they are influenced by existing ones. They have to cope with the problem of using existing software modules developed by communities. When communities develop their software they protect it from being depleted by firms through reversed copyright schemes. This in turn limits the possibility for firms to use it in conjunction with internally developed source codes.

Third, an obvious challenge for the observed OSS firms is to attract not only customers, but also developers that can contribute to the development of new software. Even though numerous studies have emphasized the benefits of OSS in terms of taming complexity (Raymond, 1999a), satisfying heterogeneous user needs (Franke and von Hippel, 2003), and enabling the possibility of bug reporting and development of new codes (Lakhani et al., 2002), the use of OSS does not imply that developers and users automatically get interested in the project and contribute to the software development. Apparently, a vast number of projects compete for the attention and interest of the developers and users. As many developers are motivated by social factors (Raymond, 1999a; Himanen, 2001), firms have to provide stimulating challenges and fun projects for developers and at the same time create products that are simple enough to attract users. At the very same time, firms have to be able to sell customization and other services to their customers.

Fourth, the firms face the issue of resource consumption related to community development. In order to create and maintain relations with the community, the firms had to devote considerable resources (time and money). The three firms building communities – MySQL, Roxen and SOT – all made considerable investments in creating their product. For example, the MySQL community was founded after the release of the database, and the firm has since then been active in releasing newimprovements and functionalities, devoting resources to building infrastructure and organizing social events for people working in the community.

Fifth, working tightly with the community implies that the firm needs to be able to align different interests about the nature of work. The intellectual challenges for community members noted above vis-`a-vis the firms carrying through routinized tasks were, for example, noted in the case of Roxen. As the product developed by the firm matured and the primary focus changed from developing the product together with the community to selling it to customers, the firm found it increasingly difficult to work closely with the community.

Sixth, firms that are active in creating new projects need to resolve ambiguity about control and ownership.

Earlier studies have shown that ownership of projects is critical within OSS (Raymond, 1999a; O’Mahony, 2002; O’Mahony, 2003; West and O’Mahony, 2004).

Consequently, firm involvement to some extent obstructs the possibility for a community to have the desired ownership.

Two out of four firms – Roxen and SOT – had experienced problems as the interests of firms and the communities were conflicting in terms of ownership. The developers and users of the Roxen web server went to other projects after the firm released its proprietary add-on. As the firm consciously moved away from the OSS concept, conflicts arose with the users and developers. Cendio is also a type of firm that the OSS movement consciously attempts to hinder from using community-developed codes in other ways than regulated in the licenses. Firms that release a new project – represented in the cases by MySQL, Roxen and SOT – have the possibility of making a choice of which license to use. MySQL over time changed to a dual strategy—using both the most commonly used license (GPL) and a firm specific license in order to make a clear distinction between those users that have to pay and those who can use the product for free. Roxen used the GPL-license for its product, but later on decided to sell commercial licenses for an add-on, implying a deliberate step away from the active use of the community. SOT had an interest in getting their product widely diffused and consequently used a GPL-license.

Seventh, firms that use community-established software need to get acceptance for using the community developed software in commercial applications and avoid direct conflicts. The communities largely depend on innovations being improved and shared with others.

Firms like Cendio that use existing modules and combine them in a framework, need to get acceptance from the community that as long as they obey licenses, they are not sharing everything they develop."

Operational means for handling the relationship to communities

Firms do not rely on direct control over the developers and users in the OSS movement, as there is no formal relationship between them. Instead, subtle means of control that aim at influencing the community in a certain direction are used.

From the case studies, we distinguish five mechanisms through which this can be achieved:

(1) devoting personnel to work in or with communities; (2) creating and maintaining reputation;

(3) fringe benefits;

(4) the use of ‘interaction tools’; and

(5) ‘selling’ development tasks.

First, devoting personnel to work in or with communities was observed as a means of subtle control, e.g., in the case of Cendio. By working as peers in projects, firm representatives can keep track of the progress and sometimes even influence decisions. Skilled personnel may also gain a good reputation in the eyes of community peers, which in turn gives attention to the firm.

Second, creating and maintaining reputation is an important mechanism of subtle control (Raymond, 1999a; Lerner and Tirole, 2002), which serves as a signalling incentive (Holmstrom, 1999). A consequence of this is that firm representatives within OSS who are well-known and respected in the communities, have a higher ability to influence the development activities performed in the community compared to less wellconnected ones, something which was especially obvious in the case of MySQL. Reputation is also important from another angle, namely in terms of recognition of skilled individuals, something, which constitutes a motivating factor for individuals to take part. The firms seem to be aware that giving credit to people that help out with bug-hunting, new pieces of code and translations are of vital importance. Consequently, all the observed firms with their own communities made use of this specific control mechanism.

Third, different kinds of fringe benefits are used to encourage a certain type of behavior. Again, these are only used when firms have a community-established in close relation to the firms’ products. Sometimes the companies devote CDs or computer equipment for a given task. SOT, for example, used this strategy when attracting bug-hunters for their new release. Another kind of fringe benefit is to get access to new versions earlier than others. However, it should be noted that the firms perceived it as extremely hard to create sustained interest by using fringe benefits.

Fourth, the use of ‘interaction tools’, when developing software, can serve as a means of subtle control. These tools are services that developers and users might be willing to use (such as on-line forums, mailing-lists, etc.). This is partly related to the notion of innovation tool-kits (von Hippel and Katz, 2002), but does not necessarily have to do with outsourcing need-related innovations to users, but rather in governing the infrastructure in the intersection between the firm and the community.

Also, if the interaction tools are well designed, they may form a social function in that they allowfor interaction between different developers or between personnel and developers. As mentioned above, the interaction is not necessarily limited to virtual spaces, but can also take the form of organized meetings in the real world. Also at these gatherings, the OSS firms have the opportunity to more or less directly influence the development direction.

Fifth, ‘selling’ development tasks is a possible way of influencing a community. Many developers who work in the community are motivated by intellectual challenges (Raymond, 1999a; Hertel et al., 2003; Lakhani et al., 2002). From the perspective of the firms, this implies that the tasks they provide have to be perceived as interesting. MySQL managed to do so by offering an interesting product and constantly improving the product at a rapid pace.SOTand Roxen, on the other hand, experienced difficulties in coming up with challenging tasks. When SOT first released its distribution and office suite it had functionalities and translations that the main competitor in that segment did not have, and, therefore, attracted developers and users. However, as the development tasks over time came to be of a more incremental nature, activity in the community dropped.

Conclusions and policy implications

The above suggests that OSS firms can use symbiotic, commensalistic, or parasitic approaches for inter-relating to their communities. By using a more symbiotic approach, firms have more possibilities to influence the community. However, a symbiotic approach implies the acceptance of dual roles, and the key issue becomes how to balance a distributed knowledge system incorporating both the firm and its community, also acknowledging that the modes of control available differ widely within this system. These firms have much larger possibilities to use various operational means of enforcing subtle control.

Yet, this is not an easy task, as several managerial issues emerge: (1) respecting the norms and values of the OSS communities; (2) using licenses in a suitable way; (3) attracting developers and users; (4) dealing with the resource consumption involved in community development; (5) aligning different interests about the nature of work; and (6) resolving ambiguity about control and ownership.

The commensalistic approach, principally trying to utilize existing communities without inflicting any harm, may at a first glance appear to be easier to handle, but nevertheless holds a number of potential problems. Firms that are not involved to the same extent mainly face the problem of getting acceptance for using the community-developed software in their business activities and avoiding direct conflicts, but have very limited possibilities of influencing the community. Consequently, firms choosing a commensalistic approach will have to develop a capacity to adapt their strategies not only to provide what the customerswant, but also to a significant extent to the development taking place in the communities outside the firm. By not being actively involved in community development, it may be significantly harder to get acceptance for the firms’ commercial use of the communal resources. Hence, there is a greater risk of being perceived as parasitic, leading to the possible deterioration of the relationship.

This typology of approaches to relationships and the underlying managerial issues and operational means of subtle control also have the possibility of explaining the change from one approach to another. It shows that a greater possibility of influencing might result in several benefits, but it also results in a number of managerial issues that we have outlined.

The relationships between firms and communities voluntarily sharing their innovations also have policy implications. The communities analyzed here have evolved due to firm initiation and organizing among peers. People working within the communities voluntarily share their innovations with others, and their achievements are not protected by intellectual property rights (Waguespack and Fleming, 2004). Our observations indicate that firms may also benefit from this, through creating and maintaining relationships with these communities.

The ‘truth’ of intellectual property rights as the answer for spurring economic growth should be taken with great care. The debate in recent years to patent algorithms and business methods related to software has resulted in a heavy debate within Europe, as they discuss the benefits and drawbacks of increasing the possibility to use software patents. It has been noted that strong appropriability regimes may benefit individual firms, but slow the general cumulative advance (Levin et al., 1987). Our paper illustrates that through creating relations with communities firms can create economic impact, which illustrates that firms may benefit from the general advance in communities evolving at a rapid pace. An example of this is the case of MySQL. The firm has in a few years grown to become a major alternative to great software incumbents with millions of installations worldwide. The entire system of activities also includes actors with radically different goals and rationales for existing, and the inherent tensions in this set-up call for new ways of thinking about what a firm should do."