The Contradiction between Openness and Profits

From Joel West in the First Monday article, "Seeking Open Infrastructures" at http://www.firstmonday.org/issues/issue12_6/west/index.html

Description

"Simcoe (2006) observes that in standardization, firms face an inherent conflict between value creation and value capture. A completely open standard creates lots of value, none of which can be captured; a completely closed standard captures 100 percent of no value created. So a profit–maximizing firm must seek an intermediate point that partially accomplishes both goals.

Thus to pay the bills, there has to be value capture somewhere: everything has some level of openness and some level of proprietary–ness. Typically, standards that are open in one area are often not open in another."

References

Tim Simcoe, 2006. “Open Standards and Intellectual Property Rights,” In: Henry Chesbrough, Wim Vanhaverbeke, and Joel West (editors). Open Innovation: Researching a New Paradigm. Oxford: Oxford University Press, pp. 161–183.