Free Innovation and Related Research “Lenses”

Again recall from chapter 1 that I define a free innovation as one that (1) is developed by consumers at private cost during their unpaid discretionary time, and (2) is not protected by its developers, and so is potentially acquirable by anyone for free. This definition of free innovation is intentionally very restrictive. It dictates that free innovation models and samples must contain no compensated transactions of any kind, and that innovation development work be entirely self-rewarded. The purpose of creating this very precise and tight lens is that it excludes many potentially interfering variables, and so enables researchers to more clearly analyze phenomena central to free innovation. Illustrative examples of such phenomena discussed earlier are innovation pioneering by free innovators, and the likely dearth among free innovators of incentives to diffuse.

Of course, much of the world is hybrid, and so will diverge from our definition of free innovation to a smaller or larger extent. This is an opportunity rather than a problem for researchers. One can first isolate and analyze interesting phenomena within the precise lens of free innovation, and then progressively relax constraints in order to draw hybrid cases into consideration. Via progressive relaxations, one can learn whether and to what extent behaviors characteristic of free innovation endure in hybrids—and whether new behaviors emerge. For example, in some open source software and hardware projects today, contributors are exclusively free household sector innovators. In other projects, some or many contributors are paid by producers to participate. We may use this source of variation to explore the extent to which the addition of paid employees and related producer incentives changes the nature of open source projects and their outputs, with related gains or losses in social welfare.

Other research lenses that bring different aspects of the phenomenon of "non-producer innovation” into clear focus include commons- based peer production, user innovation, and open innovation. Researchers will wish to choose among these concepts and others—or to develop their own—as a function of the study question they address and the focus they prefer.

Commons-based peer production is term coined and brought to research prominence by Benkler (2002, 2006). It describes distributed "production” networks in which large numbers of contributors bring their own resources to an activity. They then work cooperatively, often via the Internet, to generate valuable outputs and reveal them to the commons.

Commons-based peer production shares many elements with free innovation. The most important distinction lies in the parsimony vs. inclusiveness of the two concepts. As I mentioned above, the free innovation lens is tightly constrained. In contrast, the commons- based peer production framework incorporates much more richness and complexity. Thus, while free innovators must be self-rewarding, participants in commons-based peer production need not be: contributors to peer production projects may be either self-rewarding or paid for their work. Similarly, free innovators must not engage in compensated transactions during the course of innovation development and diffusion. In contrast, participants in peer production projects may engage in social and/or monetary transactions, and so incur related transaction costs. As a consequence of its inclusiveness, the commons- based peer production lens can be especially useful for richly descriptive studies of complex real-world situations. For the same reason, application of this lens can make quantitative analysis and modeling more difficult.

User innovation is sharply focused on the functional relationship that innovators have to an innovation they develop. If the innovator develops an innovation for personal or in-house use, he, she, or it is a user innovator. If the innovator develops the innovation to sell, he, she, or it is a producer innovator (von Hippel 1976, 1988, 2005). The presence or absence of self-rewards and compensated transactions does not play a role in this simple definition. As a consequence, the user innovation lens can include both free innovators and profit-seeking individuals and firms as user innovators. A user innovator firm, for example, would be one that develops a novel process machine for in-house use rather than sale. The firm is indeed a user—but, unlike free innovators, it is also seeking profit from using that machine in its operations.

The user innovation research lens is useful to distinguish between innovators who have first-hand vs. second-hand information regarding needs for a given innovation. Users, whether free innovators or firms, are the generators of need information. In contrast, producers must acquire it, with greater or lesser loss of fidelity, from users. This clear distinction, along with the concept of sticky information (von Hippel 1994), then allows us to understand why users and producers will have different local stocks of sticky information, and so will tend to develop different types of innovations. As a second matter, users, whether individual free innovators or user firms, are likely to care only about their own needs for an innovation, while producers, motivated by sales, must care about broader markets. This distinction can encourage innovation pioneering among all user innovators, as was documented in chapter 4 in the case of free household sector innovators.

Open innovation (Chesbrough 2003) falls squarely within the producer innovation paradigm. This lens is useful to explore and explain why and when a corporate strategy of both acquiring and selling innovative content and intellectual property can increase profits relative to a strategy of relying only on internally developed intellectual property. The term "open” refers to an organizationally open producer innovation process rather than to one involving an information commons. In that way open innovation is closely akin to the concept of technology marketplaces (Arora, Fosfori, and Gambardella 2001; Rivette and Kline 1999). With respect to research questions related to free innovation, the open innovation lens can be useful for exploring producer strategies for profitably linking to that phenomenon.