The popular “open is good” theme of the open source movement should be considered in light of realities in the software and technology industries.

New research by Professor Kevin Boudreau at MIT Sloan considers whether more innovation occurs with increasing “openness” of platform technologies. Does Opening a Platform Generate More Innovation? An Empirical Study, (June 2006). MIT Sloan Research Paper No. 4611- 06. He concludes that no, more innovation does not necssary occur, is likely to decrease with the openning of platforms. Notably, the paper gives an “explanation of why we observe so few perfectly open strategies in practice<", thereby lending support to the argument I have made that various open source licenses impose inflexible, and impractical restraints on business and technological strategies. 25.

The article's main findings is that “as regards innovation… some measure of monopoly control and some measure of foreclosure or discriminatory access may in fact lead to greatest innovation.” 26. More specifically: “united technical leadership allow[s] within-the-firm firm coordination... yield[ing] a better coordination mechanism than one cutting across selling firms”, leading to “integration and coordination benefits” from closed organization. The most extreme cases of “systemic” innovations in this industry were carried-out in a single, integrated organization.” 22.

The paper provides several reasons why open technologies are often not as innovative as their closed counterparts. These include that "open" systems: 1) might be less able to benefit from the coordinating hand of a “sponsoring” firm, 2) reduce strategic investments made across time, subsidies to “internalize externalities” across system elements, 3) reduce the ability to implement system-wide coordinated changes, 4) suppliers’ strategic incentives to make investments in innovation might also be affected” with the opening of a system. 2. The paper more generally concludes:

1. Rather than fully devolving property rights and allowing free entry, systems were opened as a matter of degree. Control over the development of system elements was devolved in part; access was sometimes restricted and other times promoted through the provision of development tools, instructions and technical support, through the liberalness of licensing and other means.
2. The particular level of openness implemented accounted for at least as much variation in innovation outcomes as did the discrete decision to open to outside suppliers, at all.
3. Hardware design innovations responded rather more sharply to greater openness than did platform design innovations.
4. While the concentration of control and closed strategies were absolutely critical in early system development, the relationship between devolving control and rates of innovation was weak in the on-going innovation that followed initial system development.
5. The effect of … more favorable entry conditions… was the same across each of the measures of hardware design innovations. Generally, intermediate levels of access maximized the rate of hardware design innovations.
6. The relationship between granting access and platform design innovations was irregular and flatter than with hardware design innovations.

Measures of innovation resulted from: “[a] comprehensive list of product releases for each device supplier in each system was collected, including product name, device supplier name, platform/system name, release date. Each product was coded in relation to 63 measures of performance and characteristics.… (the) approach resulted in 12 measures of technical advance in each system…” 8. Levels of openness, where platform developers decided “whether to open a system- giving up control and allowing outside suppliers to enter into the development, supply and use of the technology”, were considered along a spectrum of factors:

1) the wideness of licensing;
2) the facilitation of entry through the provision of information and other support;
3) the facilitation of differentiation through the design of the system, itself; and
4) an indication of the rationing of licenses in relation to how they were priced… “ 10.

posted by Noel Le @ 4:31 PM | Free Culture Movement, Software

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