Governance structure represents a system of rights available to members of a social entity, their modes of representation, and the structure and processes that conduct power resources (Davis, 2005 in O'Mahony & Bechky, 2008). However formal allocation of decision rights ignites the notion of selective empowerment. This view can become problematic in situations where concerned social entity is made up of nodes that value democratic practices. A well-known instance is open source model of software development and distribution (referred from hereon as OSS). Under OSS, volunteers used to provide resources towards the development of freely available software (von Krogh & von Hippel, 2003; Lerner & Tirole, 2002), that too at a significant opportunity cost (Herter et.al, 2003; Lakhani & Wolf, 2005). However, as OSS is being extended as an instance of open innovation for developing commercial products (software or otherwise), the dormant paradox is becoming clearer (West & Gallagher, 2005): organizations are trying to employ an democratic approach to generate economic rent for themselves. As O’Mahony & Bechky (2008) term it, this indeed calls for managing divergent interests. In this dichotomous scenario, governance structure is critical. One cannot have completely democratic governance as it goes against the commercial motives of the organization. On the other hand, completely autocratic governance would inhibit the democratic practices required for open innovation to be successful. Clearly, the challenge is to balance the need for formal authority inline with the democratic practices (O'Mahony & Bechky, 2008). The question is goes beyond whether to have such a dichotomous governance structure in place or not. The dynamics of software industry have long answered that query. With increasing costs of software development and shorter product life-cycles, software product organizations are required to merge open source and proprietary approaches of software business (Campbell-Kelley & Garcia-Swartz, 2010). The question is how to develop and sustain such a governance structure. In this paper, we address this question to a certain extent
