Online innovation: the case of open source software development

Purpose – The aim of this paper is to investigate the role of online networking during the innovation process, including its role(s) in communication, cooperation and coordination. The paper neither implicitly assumes that online computer‐based networking is a prerequisite for the innovation process nor denies the possibility that innovation can emerge and successfully survive without it. It merely presupposes that, in cases of innovation where information and communication technologies play a substantial role, non‐proprietarity may offer an interesting alternative to innovations based on proprietary knowledge. Design/methodology/approach – The paper borrows from the theory of communities‐of‐practice, which takes into account social relations, contacts, and the transfer and incorporation of knowledge. Open source innovation is not the exclusive preserve of computer nerds, but also has implications for existing software manufacturers. The paper therefore includes the case of IBM, a company which has successfully integrated this new and more open way of collaboration into its business model. Findings – The paper concludes that online computer‐based innovation fundamentally challenges current ways of communicating, cooperating and coordinating during the innovation and product development process. Moreover, it challenges the traditional business model in that it forces the actors involved to shift the focus from the innovation itself to the identification of new supporting services higher up the value chain. Last, but not least, it blurs the boundary between development and use, since the developer remains the key user. Research limitations/implications – The paper addresses the implications for future research in the area. Practical implications – The paper addresses implications for practitioners directly involved in innovation and product development. Originality/value – This paper develops a conceptual framework for understanding product development based on non‐proprietary knowledge, which cannot be adequately accounted for by traditional corporate innovation theory alone.