Governance Rights Typology

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This typology applies in particular to Gated Source Communities, i.e. hybrid forms of open source software developments under the control of a firm.

See also the extensive typology of participation in the entry on Participation Architecture


Article: Motivation, Governance, and the Viability of Hybrid Forms in Open Source Software Development. MANAGEMENT SCIENCE, Vol. 52, No. 7, July 2006, pp. 1000–1014. By Sonali K. Shah, University of Illinois at Urbana–Champaign, [email protected]


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"For firms, community development offers the possibility to gain developmental assistance in noncritical areas and increase adoption (West 2003). Value appropriation requires the firm to define and control property rights. Unfortunately, activities that permit value appropriation by the firm are sometimes detrimental to value creation within the community."

Typology of Governance Rights in Gated Source Communities

Decision Rights

"Code Control. In the gated source community, only the corporate sponsor is allowed to alter the source code. This strict control over the code affects both need-driven and hobbyist participants. Need-driven participants worry that their voices will be drowned out by the needs of the firm and its customers when software-related decisions are made. Such control limits the ability of hobbyists to work and contribute in self-defined ways. In addition, the volume of feedback and overall activity is likely to decline due to both decreased participation and tighter control over what is committed to the source code and, therefore, used by others.

Domination of Mailing List Interaction. Firms may inadvertently dominate mailing lists through a desire to influence the direction of the project or because firm employees represent a substantial portion of the participant pool, as might be the case when a firmsponsored community is newly created. This may act to inhibit developers from voicing heterogeneous views, resulting in decreased volunteer participation. This relationship was not directly observed in this study, however developers’ distaste of tightly controlled open source projects was observed.

Property Rights

"Private Ownership of Source Code. Private ownership of the code acts to dismantle the collective development process in a variety of ways. Most noticeably, ownership by the firm creates the possibility that the developer will not have access to the code at a later date. Participants value the results of their efforts and expect to continue using the software well into the future. The open source project gave them this right, but the gated source project did not make this guarantee.

Private ownership also appears to inhibit reciprocity: if the firm is not donating the code to the community, why should the developer take additional time and effort to donate code to the firm?

Restrictions on Use, Modification, and Distribution.

The restrictions placed on the gated code with respect to commercial use, modification, and distribution all act to reduce the degrees of freedom that an individual can exercise when using and creating the code, particularly when compared to open source licensing arrangements. These restrictions can be thought of as limiting the value available to the individual developer, i.e., the developer can only use the code for certain purposes, modifications made and deployed must meet community standards (rather than his own preferences), and the code may only be shared with others willing to abide by the community’s governance arrangements, thereby decreasing the volume of subsequent improvements and feedback that many developers relish. On the other hand, these restrictions might create value for the company.

Restrictions on commercial use in the gated source community created additional problems because licensing terms were negotiated with the firm on an individual basis. This decreased trust dramatically by creating the possibility of ex post hold-up problems. Restrictions on commercial use with terms set in advance and applicable to everyone may be less problematic.

Proprietary Modifications. A large part of the longstanding debate between free and open source software advocates concerns proprietary modifications. Software derived from free software cannot be made proprietary."


Modularity and Decision Rights

Langlois and Garzarelli:

“The rights assignment problem (determining who should exercise a decision right), and the control or agency problem (how to ensure that self-interested decision agents exercise their rights in a way that contributes to the organizational objective).” All other things equal, efficiency demands that the appropriate knowledge find its way into the hands of those making decisions. There are basically two ways to ensure such a “collocation” of knowledge and decision-making: “One is by moving the knowledge to those with the decision rights; the other is by moving the decision rights to those with the knowledge” (Jensen and Meckling 1992, p. 253). These two choices – as well as possible variants and hybrids – are “constitutions” that set out the assignment of decision rights. Such assignments can take place within firms or within wider networks of independent collaborators.

In what follows, we distinguish three models: corporate, hybrid, and spontaneous. In the case of the Prony Project, and of fordist production generally, decision rights remain centralized. This is because there is very little knowledge that needs to be transmitted; tasks have been made exceedingly simple, and the important knowledge – that involving design – is already at the center. The agency problem can be addressed either through investments in monitoring or by aligning incentives using a suitable piece rate. Even when the subdivided tasks are far more complicated – and require far more skill and creativity – it is still possible to organize the intellectual division of labor in more-or-less the same way, what we will call the corporate model. In this model, the ultimate decision rights remain centralized, even as many de facto decision rights are parceled out to employees at various levels of the hierarchy. Clearly, such an arrangement complicates the agency problem, since keeping everyone on the same page is no longer a simple matter of monitoring or incentive alignment in a narrow pecuniary sense.

Many would argue that, even within the corporate context, effective management of high-human-capital projects requires recourse to more “participatory” or collaborative models (Minkler 1993). Does this mean that there is really no difference between the corporate model and the hybrid or voluntary ones? The answer is no, for two reasons. First, as we have seen, even a large organization is bounded in the capabilities on which it can draw, and this limitation may be important in many cases. Second, the location of the ultimate decision right matters. For any division of intellectual labor we choose, behavior and performance will be different if we assign decision rights to some central authority rather than to the individual collaborators.

The opposite of a corporate model would a fully decentralized one in which the collaborators retain the ultimate decision rights. But just as the central holder of decision rights in a corporation must in practice cede de facto decision rights to others, so in a decentralized system the collaborators must give up some pieces of their rights in order to collaborate.” (