The Dynamics of Openness and the Role of User Communities: A Case Study in the Ecosystem of Open Source Gaming Handhelds

To remain competitive, it is critical for firms to integrate external sources of knowledge. However, finding the right degree of openness is challenging, especially in complex open innovation ecosystems. The interdependencies and dynamics related to the choice of openness are not well-understood. This paper investigates the role of openness as a competitive mechanism. Specifically, we research how openness affects firms' interactions with user communities and how it changes the preference structure of customers. We build a longitudinal case study in the open source gaming handheld industry and trace the evolution and the dynamics of firms, user communities, and their interactions. We find that a suboptimal level of openness can pose a threat to a firm's very existence. Further, we identify repeated patterns characterizing the dynamics in the ecosystem. Based on these patterns, we propose a framework of the dynamics of openness. Our paper contributes to the literature on open innovation. We illuminate the relevance and the dynamics of openness as a dimension for competition. This paper also contributes to the literature on user innovation by showing a shift from manufacturer-based to user-based innovation over the course of the product lifecycle.