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Community-based business models Insights from an emerging maker economy

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Community-based business models are an emerging phenomenon in business reality, particularly in new economic developments such as making. They are a form of commons-based peer production. This paper contributes to advancing research through a multiple case study of eleven community-based maker businesses. The study elaborates on altruism and hedonism as emerging design themes, it addresses aspects of fairness and reciprocity in the interactions with the community, it looks into what values are created, and it reflects on the maker context where businesses strive not purely for profit maximization.
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Community-based business models
Insights from an emerging maker economy
Patricia Wolf1, Peter Troxler2
1 Future Laboratory CreaLab, Lucerne University of Applied Sciences and Arts,
CH-6002 Lucerne, Switzerland, patricia.wolf@hslu.ch
2 Rotterdam University of Applied Sciences, Research Centre Creating 010, Wijnhaven 103,
P.O. Box 25035, 3001 HA Rotterdam, The Netherlands, p.troxler@hr.nl
Abstract. Community-based business models are an emerging phenomenon in
business reality, particularly in new economic developments such as making.
They are a form of commons-based peer production. This paper contributes to
advancing research through a multiple case study of eleven community-based
maker businesses. The study elaborates on altruism and hedonism as emerging
design themes, it addresses aspects of fairness and reciprocity in the interactions
with the community, it looks into what values are created, and it reflects on the
maker context where businesses strive not purely for profit maximization.
Keywords: making, community-based business models, business model
portfolio, activity system, commons-based peer production
1 Introduction
The maker movement is one of the recent approaches that strive for democratizing
access to knowledge and production devices ([1], [2]). Participants in the maker
movement form open design communities of digital makers ([1]) who engage in
commons-based peer-production ([1], [3]). Similar to open source software
communities, maker communities strive to use open design principles to make project
details like design blueprints freely online available to everybody.1 One of the best
known examples of an online maker community is Thingiverse
(http://www.thingiverse.com/): The Thingiverse community forms around a website
dedicated to the sharing of user-created digital design files for physical objects,
providing primarily open source hardware designs. It is widely used in the DIY and
maker communities and by 3D Printer operators as a repository for sharing innovation
and dissemination of designs to the public. Thingiverse was started in November 2008
as a companion site to MakerBot Industries, a 3D printer manufacturer, now part of
1 It is worthwhile to note that the term “community” (and community-basedin consequence)
has been used in a broad variety of contexts with significant decrepancy of significations. In
this article we use the term “community” in the sense of Internet communities as [1], [3]. [6]
and [36] use it; this use is thus different from the conceptions of “community” (and
“community-based”) in anthropology or critical studies.
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
Stratasys. The repository currently contains to over 500.000 designs and connects
over 130.000 community members.
Opennesssuch as the sharing of digital designs on Thingiverse becomes a key
governing principle that promises to create new business models based on peer-
production principles such as co-creation, open knowledge sharing, altruism,
collaboration, and common ownership of the resources for and the results of
production ([3]; [4]; [5]; [6]; [7]). Opennes is supposed to benefit all participants in
the value creation system by contributing to a commons. This paper aimes to
contribute to the understanding of how openness plays a role for makers to establish
their business model. From their extensive literature review, [8] define a business
model as a unit of analysis, offering a systemic perspective on how to ‘do business’,
encompassing boundary-spanning activities (performed by a focal firm or others), and
focusing on value creation as well as value capture” (ibid; 1038; accentuation in the
original paper). With [9], we think that “unrealized value in the business model idea
lies in what it can capture outside of the traditional business profit equation, where
money is not the primary currency, and the customer and the firm are not the only
primary players” (395). In response to [9], [10] confirm “a shift in the locus of
competitive advantage from the firm and its internal stakeholders (e.g. management,
shareholders, and employees) to its activity system, which encompasses external
stakeholders such as partners, vendors and customers” (404) and indeed the whole
community.
2 Open Business Model Research
Over the past decade openness has started to attracted attention in strategy research.
Such research mostly focuses on the issues of established strategy development
interfacing with a wider audience ([9]). [11] discussed the dilemmas of transparency
and inclusion in the development of strategy and the role of the strategy profession;
they conclude that the “evolution towards greater openness is exposing its members to
significant strain.” [12] studied the implications of Web 2.0 tools and communities on
how companies create value on the internet and how they strategically developed their
business models. They found that "the firm's customers are becoming an increasingly
important source of information about these changes, as evidenced by the growing
relevance of user-added value and interaction orientation identified in our study"
(287). [13] suggested a taxonomy for community-focused firm strategies based on the
congruence of firm-community values and power of the firm over the identities of the
target community.
The increased attention of strategists on openness as a strategic dimension in
business model development has created a broad echo in business model research. In
general, we can differentiate between two streams of scholarly work: First, there is a
large, comprehensive and substantial stream that investigates community-oriented
strategies and business models of which the focus is to extend a central firm’s
business model with the firm’s interaction with a community of user-client-
stakeholders. Second, there is a rather marginal stream that studies community-based
strategies and business models of firms that emerge from the community by making
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
use of shared community resources, work with members of the community as peers
and contibute back to the shared resources.
2.1 Community-oriented business models
Value creation in the context of community-oriented business models implies that
focal firms strive “to find an appropriate revenue model (…) that would be both
acceptable to their (…) clients and allow them to maximize their profits.” ([14] 218).
Particularly value creation with communities of customers and end-users has attracted
high interest as a strategy for business model innovation (for a summary, see [15]).
The appearance of the Internet in combination with virtual rapid prototyping
technologies, web 2.0 applications ([15] 344) and social software ([16]) “changed the
traditional balance between customer and supplier” ([17] 172) and thereby incumbent
ways of doing business ( [17]; [18]; [[8]]).
The transition towards community-oriented business models is thus challenging
because of the relation of the focal firm with users and user communities. Literature
revealed tensions between the profit maximization logic of the open, user centric
business models and the values in open user communities. From the perspective of
large firms, these communities are difficult to be governed because they often do not
accept traditional mechanisms of power, control and expropriation and “tend to
favour self-organization, informal relationships and transactions based on reciprocity
and fairness. (…) those attributes encourage information sharing and aggregation, but
are less effective for offering formal protections” ([19] 74). [20] therefore suggest
investigating “the role of incentives and values in large-scale, multiparty
collaboration” (746). [16] confirm these potential frictions between the concepts of
strategically maximizing profits and open knowledge sharing and altruism. Research
is needed on the interaction between communities and firms on firm strategies for
accessing communities and for defining the properties, management approaches and
leadership issues of firm-community interaction, on influence and community
sponsorship by firms and whether these are seen as beneficial or obtrusive. Such
research might find “generic patterns in business models that take advantage of assets
co-created with consumers and users ([16] 307) and create value for firms and
customers,
2.2 Community-based business models
Community-based business models, however, do not start from the focal firm aiming
to create a community surrounding it ([7], [16], [20], [22], [45]). Rather, they are
concerned with a (focal) firm that emerges from the context of some collaborative
often online user community. Thus, community-based business models are
inextricably linked to a co-creation process that tends to include elements of altruism,
open knowledge sharing, and common ownership of production resources and results.
[21] finds that traditional business modelling instruments such as the Business Model
Canvas [69] fail to adequately capture the business model of collaborative
communities because “often Open Source and P2P distributed systems have fuzzier
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
boundaries and more units” (207). Yet, scholarly analysis of community-based
business models and their design parameters is sparse. Such business models would
theoretically not be driven by profit maximization and have probably therefore not
grasped the attention of management scholars. There are however some insights that
resulted as by-product from three different streams of research that might inform the
analysis:
First, in the context of large scale inter-firm collaboration, [22] use the concept of
collaborative entrepreneurship to describe a potential business model at the heart of
which lies “the creation of something of economic value based on new jointly
generated ideas that emerge from the sharing of information and knowledge” (2). [20]
studied cases of multiparty collaboration within large distributed organisations
(Network Centric Operations in the US military and within Accenture) and across
organisational boundaries (Linux open software community, Balde.org as
collaborative community of more than 70 firms). They offer suggestions for
organizational designs based on “(1) actors who have the capabilities and values to
self-organize; (2) commons where the actors accumulate and share resources; and (3)
protocols, processes, and infrastructures that enable multi-actor collaboration” (734).
These suggestions build on earlier contributions on peer-production by self-
organizing actors ([23]), on the concept of common resources ([24]), and on the
prevention of free riding ([25]; [26]). Governing principles are transparency, shared
values, reciprocity, trust, and altruism ([24]; [27]; [28]), and lateral decision making
mechanisms instead of hierarchic control ([20]). [20] however do not draw the
ultimate consequence to a collaborative managerial philosophy built on values that
include a concern for the welfare of collaborating partners and the equitable
distribution of rewards ([29]).
Second, research on business models often addresses community and network
aspects in e-business. [30] distinguishes between eleven generic e-business models.
[31] discusses communities of loyal users as an element of value proposition and a
mode of generating revenue for firms.
Third, online communities of volunteers are known to contribute to value creation
through supporting societal development. The Open Source Software movement is
frequently cited as example of networked social capital ([32]; [33]). The motivations
of programmers to contribute to open source projects were a matter of research and
were found to be extremely multidimensional. Intrinsic, hedonistic motives such as
enjoyment, amusement, fulfilment, satisfaction, sense of scientific discovery and
creativity, and challenge exist next to extrinsic (reputation, signalling incentives),
political-ideological (anticommercialism, hacker culture) and social motives like
sense of belonging, altruism, contribution to public good and generalized reciprocity
(e.g. [33]; [34]; [35]).
Investigating projects in consumer electronics and ICT hardware, [36] found that
many of them attracted high numbers of contributors to sustain the project
development flow and were structured and governed similar to open source software
projects. The global Fab Lab network and the maker movement offers open access to
a range of low-cost fabricators and platforms to share design blueprints and project
details, realizing a commons-based peer production ecosystem ([7]; [37]; [38]; [39];
[40]; [41]; [42]). [43] highlight that hackerspaces adopt hybrid modes of governance
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
to realise aspects of peer-production project principles. These communities practice
open, reciprocal knowledge sharing and understand knowledge as a commons ([24]).
[44] who investigated entrepreneurial dynamics originating from communities find
that “unprecedented opportunities arise for a creative recombination of so far
unrelated elements of practices” (9). Similar motivational structures were found in
open design communities ([2]).
2.3 Open research questions
Literature on openness in business models acknowledges that community-based
business models may become important for strategy development in the future (e.g.
[20]; [22]). At the same time, scholars underline that there are many open issues that
should be investigated to gain a better understanding of such business models (e.g.
[7]; [16]; [45]).
Literature suggests identifying business models that practice multi-dimensional
value creation and include altruistic activities as well as governance mechanisms that
enable open knowledge sharing, peer production and commons development. Most
recently, [9] sketched six areas for business model research among which two
immediately appear pertinent to the research focus on online peer-production
governed community-based business models:
“the study of business models involving outside parties, especially in
nontraditional ways (e.g. not paying users to create content that others
see at the cost of being exposed to advertising)” (395); and
“the unintended and unforeseen effects that occur within the
organization when new business models especially those involving the
delegation of operations and control to a network residing mostly
outside of the focal organization are adopted” (394).
[9] further suggests that regarding the social context there is a lack of theory of
how to trade “various forms of stuff (…) (money, knowledge, improvements in living
conditions, and so on)” (398). The open design movement is said to create value in
multiple dimensions, but little is so far known about how these values as well as the
community principles of openness, collaboration, sharing and common ownership are
in practice translated and reflected in the design parameters of community-based
business models. [46] (93-94) noted that “commons-based peer production has found
ways to generate monetary returns”, but that there are no clear examples how peer
production would tap into other dimensions of value creation, such as hedonic
rewards or income generation under non-market conditions. It is unclear how
commons-based peer production activities which have strong relations to craftivism
and hactivism sustain a livelihood or create a viable enterprise ([47]; [48]).
The explorative study presented in this paper was therefore aimed at shedding light
on the research question "What are the design parameters of commons-based business
models of companies that are originate from and are active in the context of maker
communities?” The paper is thus aimed as a contribution on understanding how
making is brought to a business model. To do so, we looked into the business models
of start-ups that emerged from and operate within the context of collaborative, peer-
production governed online user communities.
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
3 Methods
Given the limited empirical theoretical foundations on community-based business
models as our “phenomenon of interest” ([49]; [50]), we decided to use a multiple
case studies approach as overall research design. Qualitative research helps to study
complex phenomena when there is no previous research available ([51]; [52]).
We used the concept to view business models as activity systems proposed by [14]
for the analysis of our data.
The business model is described as
the system of activities performed by the focal firm as well as by
third parties (partners, suppliers, customers)
with two sets of design parameters:
design elements (content, structure and governance) that describe
an activity system’s architecture, and
design themes (novelty, lock-in, complementarities and efficiency)
that describe the sources of its value creation.” ([14] 217).
Our main motivation was that the activity system perspective on business models
seemed particularly appropriate for an exploratory multiple case study because it
theoretically offers to study “what goes on within the ‘black box of activities, and
suggests possibilities for probing deeper and gaining a better understanding of the
micro-mechanisms of business models” ([14] 224).
3.1 Sampling
The core sample of a multiple case study must include the so-called “pivotal target
group” ([51] 143), i.e. informants able to provide essential insights to answer a
research question. The objective of our study was to understand community-based
business models that are used by companies that originate from and are active in open
design communities, for the purpose of this study specifically the Thingiverse
community. For the sake of simplicity and readability, we will call this group further
“digital maker CEOs”.
We purposively sampled cases from which we expected a maximal variation in
business models ([53]) “to disclose the range of variation and differentiation in the
field.” ([52] 122).
We applied a 5-step-approach to arrive at a manageable sample size:
(1) To start with, we used the public statistics of the open design platform
“Thingiverse” ([54]) to identify users who actively engage in co-creation,
i.e. whose design blueprints were revised by many other users.
(2) From an initial list of about 60 Thingiverse users, we filtered 25 users
who were additionally (co-)founders and CEOs of their own company
related to their activities in the open design community.
(3) We then analysed the information from the company websites and the
Thingiverse user profiles to understand the salient design parameters of
their business models that resulted in five categories: participation in
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online brokerage and sales platforms, direct sale of object via web shops,
3D printer retail, customized prototyping, and research and education. All
of them exposed some variation in their business models that made it
necessary to hold at least two interviews per category.
(4) In order to balance the sample, we broadly decided to approach three
digital maker CEOs per category, fifteen in total, and we were allowed to
interview eight of them.
(5) To enlarge the sample purposefully, we asked interview partners to
recommend others who ran companies with the design principles we were
still looking for. The method of snowball sampling is used “to obtain a
sample when there is no adequate list to use as a sampling frame” ([70]
63). Through this sampling approach, we identified three additional
interviewees.
In the end we conducted qualitative in-depth expert interviews with eleven digital
maker CEOs (table 1).
Table 1: Sample
Case
No.
Experiences of informants with business
model category
Offerings of companies
1.
Direct sale of object via web shops;
online brokerage and sales platforms
Custom 3D printed smartphone
cases
2.
Direct sale of object via web shops;
online brokerage and sales platforms
3D printed open source design
based objects
3.
Direct sale of object via web shops
3D printed design based objects /
fan ware
4
Customized prototyping; 3D printer retail
Personalized merchandize and
arts performance, 3D printers
5.
Customized prototyping; online
brokerage and sales platforms, research
and education
Industrial prototypes and fan
ware, courses
6.
Direct sale of object via web shops;
research and education; online brokerage
and sales platforms
Technical parts of 3D printer
(nozzles), courses
7.
Customized prototyping; online
brokerage and sales platforms; research
and education
Neurobiological devices, 3D
objects for educational purposes
8.
Research and education; customized
prototyping
Open Worm project, 3D objects
for educational purposes, courses
9.
3D printer retail
3D printer and services (training
and tech support)
10
Customized prototyping
Product prototypes for industry
11.
Customized prototyping; online
brokerage and sales platforms s
3D design objects and design
exhibitions
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3.2 Data collection and analysis
Data collection happened in a two-stage approach: First, we run a document analysis
([55]) of the Thingiverse user profiles and the company websites to achieve an
overview on types of business models that arose from activities in open design
communities. Second, we held expert interviews with narrative parts ([56]) that used a
chronological approach ([57]; [58]).
Interviewees were first asked to tell the process from the idea to the business, and
were then invited to present and reflect upon their business model and its underlying
design parameters according to the framework provided by [14]. The interview
guideline was therefore designed to retrieve information regarding all of their three
activity system design parameters. These are (220) content (what activities are
performed by the company), structure (how are the activities linked and sequenced),
and governance (who should perform activities, and where).
As the value drivers seemed particularly important to understand the basis of
community-based business models, we included questions that asked for the design
themes according to [14] (222), novelty (innovative content, structure or governance),
lock-in (elements to retain business model stakeholders), complementarities (bundling
of activities to generate more value), efficiency (organisation of activities reduces
transaction costs).
Interviews lasted between 24 and 79 minutes. They were tape recorded and
transcribed verbatim. The transcripts constituted a body of 146 pages of data.
The data analysis process consisted of several steps of classifying, comparing,
weighing and combining the material in order to extract meaning, implications,
patterns or descriptions to come up with coherent findings ([56]; 201). Following [59]
(5) the transcripts were coded using the theoretical background of design elements
and design themes as proposed by [14]. To these categories, we added an “open
theme” category that allowed to gather emerging themes ([56]; 207).
Two professors and one student-researcher participated in the data analysis. First,
the two professors and the student-researcher coded the data individually. The codes
obtained were then discussed and refined into a common interpretation, i.e. a list of
codes and related text passages. In the next step, a code map was set up to gain an
overview on the topics identified. The code map was the basis for a a cross-case
analysis and to deepen the understanding and explanation of the question at hand
([50]; [60]).
4 Findings
The case analysis produced two major types of results. On the one hand, we were able
to describe the five salient categories of business models we identified during the case
selection process in more detail (see 4.1 to 4.5 below). On the other hand, we found
that with the exception of one case all companies operated a portfolio of simultaneous
business models as building blocks, and only the combination of these building blocks
resulted in a description of how the overall business operated (see 4.6 below). The
way in which the different building blocks were combined seems to be unique for
online communities that operate based upon peer-production principles the business
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models exhibiting multi-dimensional value creation and including altruistic activities
as well as governance mechanisms that enabled open knowledge sharing and
commons development.
From the multiple case analysis we were able to describe the activity systems of
the five salient business models we specified earlier:
1. (Participation in) online brokerage and sales platforms
2. Direct sale of objects via web shops
3. 3D printer retail
4. Customized prototyping for industry or private clients
5. Research and education activities
These five business models are described in more detail below.
4.1 Participation in online brokerage and sales platforms
Four interviewees (1, 2, 5, 11) were using online platforms as part of their business
model. The activity system of online brokerage and sales platforms consisted of an
internet-based infrastructure that allowed suppliers to expose themselves to a potential
clientele and helped customers to find services and products from a range of
suppliers. Platforms typically facilitated activities such as information exchange
between the parties and support transactions such as ordering, payment, escrow and
order fulfilment. Sharing did not appear to be part of the activities of the platforms we
found.
The business model of platforms was mainly built around the design themes of
novelty and efficiency. In the case of makexyz the novelty aspect was easy access to
local 3D printing suppliers that could manufacture an object from a digital file.
Makexyz included complementarity design themes in their platform as they also had a
web shop where designers offered their creations, and they also offered CNC
machining. Possibly, their lock-in strategy was based on providing customers with
access to local suppliers. Both platforms offered web portfolios for the participating
designers which as a hedonistic reward served as a lock-in design theme aspect. In the
case of etsy, access to a wide range of handcrafted design objects was a novelty
design theme aspect. etsy also realised a certain lock-in design theme aspect: “etsy
was the first place we tried to sell online because it is a huge pre-existing market
(…and) infrastructure for selling.” (interviewee 2). Both platforms needed to operate
efficiently to keep operations smooth and overheads low.
4.2 Direct sale of objects via web shops
Five interviewees (1, 2, 3, 5, 6) were selling their designs directly via a web shop of
their own. The designs were either delineated by the web shop owners or by other
designers. Objects sold were often fan articles related to games.
The activity system of the web shops were built around the main business of
selling products. Activities thus included displaying objects, ordering, payment and
order fulfilment. We found two distinct groups of web shop business models: One
group (interviewees 1, 2, 6) explicitly included revenue sharing in their activities for
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design that they did not create themselves (interviewee 1 and 2). The other group
(interviewee 3 and partly interviewee 5) was not considering this.
In terms of activity system structure, interviewees did not build their web shop
from scratch but used readily available technology. The governance of the web shop
was under the control of the web shop owner, both in terms of creating the offer and
in terms of accepting and fulfilling orders. The business models of web shop owners
we spoke to were built around offering cool and cheap design objects, fan gear and
paraphernalia. This played particularly on the novelty design theme, while some lock-
in aspects might be supposed as well.
4.3 3D printer retail
The business models of interviewees 4 and 9 were focused on 3D printer retail. Both
interviewees included activities such as stocking and selling 3D printers and supplies
to a mainly hobbyist clientele in their business models. While the activities of
interviewee 4 appeared to stop at this, interviewee 9 also sold support services to
clients. None of them actually includeed any sharing element in their activities. The
activity system of this business model was structured and governed as a traditional
retail operation with a physical shop.
The business models revolved mainly around the novelty design theme and the
hype around 3D printers. Interviewee 9 furthermore seeked some complementarity
when offering support and additional services.
4.4 Customized prototyping
Six interviewees reported to develop and 3D print customized prototypes for industry
(interviewees 7, 8, 10 and 11) or private clients (interviewees 5, 7 and 8, specifically
in order to repair broken objects or to create personal things). Interviewees 4 and 11
were also scanning people and printing miniatures of them as part of events at art
galleries.
Activities in this business model were creating a 3D model either by drawing
them on a computer or by scanning physical originals (people) and printing them.
The business models appeared to work on the lock-in and novelty design themes
the design skills for developing and creating 3D printed prototypes, replacement parts
and figurines were scarce in the market, and there was some demand for items
produced with the somewhat overhyped 3D printing technology. Altruism as a theme
(free work and support) emerged which could also be read as a lock-in design theme
aspect, particularly in the interaction with private clients. Neither efficiency nor
complementarity seemed to play a prominent role here.
4.5 Research and education
The activities of business models in research and education consisted either in
providing 3D printing courses (interviewees 5, 6 and 8), creating physical objects for
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educational purposes (interviewees 7 and 8), or improving 3D printing technology
(interviewees 6, 8, 9 and 11). These activity systems explicitly included sharing of
knowledge.
The structure of the course model reflected structures found with conventional
training providers. The other models showed much more ad-hoc structures,
additionally they explicitly included a community element, and the community had a
more governing or self-organizing role in determining the directions of work.
The research and education business models mainly built on two design themes:
novelty and lock-in. Novelty, once more, was drawing on the current state of 3D
printing technology. A supposed lock-in was built on creating a community around
the main activities of the business model this contribution was not financially
remunerated but probably based on altruism or hedonic rewards. There was also a
complementarity design theme aspect when people from various backgrounds worked
together online on solving problems and developing solutions: “it’s people like myself
(…) getting together to do this really interesting and amazing things and kind of push
the technology forward” (interviewee 6).
4.6 Business models as business model portfolios
Table 2 shows that except for interviewees 3 and 10 all interviewees reported using
more than one business model in their practice. We therefore argue that the
interviewees used the business models that we identified based on the framework of
[14] rather as building blocks than as stand-alone business models. We posit that the
overall business models appear only in the combination of these building blocks.
Table 2: Business model building blocks used by the interviewees
Interview
Sharing
3D printer
retail
Customized
prototypes
for
industry or
private
clients
Research
and
education
1
S
2
S
3
4
x
x
5
S
x
x
6
S
x
7
S
x
x
8
S
x
x
9
S
x
x
10
x
11
S
x
x
Legend for “Sharing”: S = practiced sharing; = no sharing
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The relatively small sample appears to suggest that there are three main clusters of
business models that are combined in online community-based open design business
models: (1) the sale of open design objects via platforms and web shops, (2) the sale
of 3D printers combined with other activities in prototyping or research and
education, and (3) the production of customized prototypes in combination with
research and education. Interviewees 5 and 11 even reported a broader range of
building blocks in their business models, combining prototyping, research and
education and sales through platforms and web shops. Interviewee 6 is an interesting
case as they combined research and education with a direct sales model.
From the interviews we understood that the design theme of complementarity of
building blocks in individual business model activity systems was essential to sustain
a business. This can be an indicator that sufficient volumes and margins in individual
building blocks are only emerging. Interviewees confirmed this view particularly
when indicating that they experienced little or no competition from big companies in
the market and that they felt well positioned as early adopters of open design business
models in face of an incumbent industry that was literally “sitting on its hands”
(interviewee 6).
Furthermore, and this seems to be unique to online community-based peer
production business models, building blocks exhibiting altruism were combined with
building blocks focused on covering basic costs instead of maximising profits.
Particularly research activities are commonly carried out in communities to which
participants contribute for free out of interest “lovers who have extensive
experience in 3D printing and (…) they give us a lot of feedback” (interviewee 9) or
because they believe that only by collaborating in a community more value can be
generated: “most of my ideas were derived at least partially from other’s work, and I
always love to see more designs derived from mine” (interviewee 11).
5 Discussion
From the multiple case study, several topics emerged that contribute to advancing
research on open business models as a strategic issue and that will be discussed
below: First, we compare the nature of the community-based business models we
found with traditional and community-oriented business models. Second, we
elaborated altruism and hedonism as emerging design themes. Third, we addressed
aspects of fairness and reciprocity in the interactions with the community which
clearly differentiate community-based from community-oriented business models.
Fourth, we looked into what values were created by the businesses we studied as we
expected to find multi-dimensional value creation. Fifth, we reflected on the
applicability of the theoretical framework for describing business models as activity
systems in terms of design parameters developed by [14] to a context where
businesses strive not only for profit maximization.
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
5.1 Traditional parameters in community-based business models
Most of the business models that we identified from our exploratory multiple case
study contained traditional design parameters. As we had expected business models
based upon altruism, we were surprised to see that most of them differed little from
business models that we already knew from e-business ([30]; [31]; [61]; [62]; [62;
[45]) and traditional business models ([17]). Even the integration of the community
into the development of 3D printing technology that was reported in interview 9 could
be read as part of the Freemium model that has been described many times as
underlying business model of companies cooperating with open software
communities like Linux (e.g. [17] 179; [20] 741-742; [63] 21-22).
However, it is remarkable that nine out of eleven of our interviewees reported
using more than one business model they combined several models into a business
portfolio. Only the identification of the combination revealed the complete business
models.
This combination of building blocks could possibly create difficulties for large
companies that wish to cooperate commercially with small firms that also operate
community-based building blocks. As knowledge flows from the community-based
model into the commercial model, this could create tensions within the community.
Inversely, when the small firms start to share experience gained in a commercial
model with the community in the community-based model, this could make it difficult
for the large firm to sustain the commercial relationship, depending on the type of
experience shared.
5.2 Altruism and hedonism as emerging parameters of design themes
Apart from traditional business model parameters, we also found that most business
models free education activities, prototype production for private clients without
charge and gratuitous participation into research activities included activities driven
by altruism and/or hedonism. This clearly distinguishes community-based from
community-oriented business models where such activities are expected to be carried
out by private contributors but don’t form part of the (mostly large) companies’
business models.
We furthermore discovered in eight out of our eleven cases an idiosyncratic and
unique combination of capitalistic and peer-production building blocks in online
community-based business models. For example, interviewees 5, 7 and 8 both
produced prototypes that they sold to industrial clients for a usual market price and
offered a combination of free education and repair services to private clients. Another
altruistic building block were free tutorials and education courses for community
members offered by interviewees 6, 7, 8, 9, and 11. All of them however covered
their costs by including one or more building blocks that provided them with revenues
based on traditional principles to their business models. A further example is
interviewee 9 who sold 3D printers and participated in open hardware research
projects. Their motivations were curiosity, sense of belonging to a community, the
aim to push the boundaries of knowledge and technology, and hedonism. Here we
confirm earlier findings ([2]) suggesting that motivational structures to participate in
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
open design communities resemble those found in open software communities (e.g.
[34]; [35]; [33]).
Altruism and hedonism emerged as parameters that allowed such combined
business models to realize design themes like lock-in due to personal relationships,
novelty from the development of 3D printing technology and complementarity in the
knowledge community users would share in their collaboration. Maximising profits
and not just covering basic costs was at the same time not a main theme in the
interviews. Particularly research and education activities or prototyping services for
private clients were commonly carried out for free because they believed that only by
collaborating in a community more value can be generated. Contrarily to what
literature on traditional capitalistic business models suggests (e.g. [14] 218; [17] 173;
[8] 1034), earning a living instead of maximizing profits was the predominant topic in
all interviews.
5.3 Reciprocity and fairness as governance principles
From the perspective of the digital maker CEOs, community-based innovation
emerged not from leveraging the knowledge of community members like this was
described by like in the literature on community-oriented business models (e.g. [14];
[63]). We found more symbiotic business models and revenue sharing in the building
blocks. Interviewees 1, 2 and 6 who run a web shop understood the designers in the
community as their co-creators and paid them back when they sold their designs. For
these building blocks we can confirm that when peer production values are lived,
transactions in the value chain are “based on reciprocity and fairness” ([19];74) and
this makes revenue sharing a must.
Patenting and trying to control the user community was not an issue in the
interviews as opposed to the views of large companies expressed in the community-
oriented literature (for a summary, see [16] 297). Instead, interviewee 9 considered
the community to be “a free R&D department” but he shared amendments in
designs and technology back for the benefit of others. Companies that close down
innovation processes face the risk of losing such a community something that
happened to the 3D printing company MakerBot when they sold their business to
Stratasys as interviewee 4 reported. Of the interviewees, only one hobbyist (interview
3) reported a business model building block that resembled free riding: He capitalized
on the designs of others that he modified and sold in his web shop without sharing
design amendments and revenues back. Interestingly, such behaviour was not
sanctioned by the community, most probably because he did not make big money
with the small amount of cheap fan ware.
5.4 Multiple value dimensions
From the literature review, we expected to find community-based business models to
create value in multiple dimensions ([64]). From our findings, we can confirm that the
value created in online open design communities was not just commercial/financial
value. The web shop owners rather highlighted the social value ([64]) of providing
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
customers with more choices, particularly of handcrafted objects and supporting
craftsmanship instead of mass production. The opportunity to gain access to local 3D
printer suppliers was in line with values of saving the natural environment ([65]) and
the social value of neighbourhood community building ([64]).
Education and research activities contributed to the development of human
capabilities as [66] suggests and to the development of knowledge and technology in
the society ([64]). Social entrepreneurship was reflected in community-based business
models not as value creation mechanism in contexts of deep poverty (e.g. [67]; [68])
but as an expression of self-empowerment of a community of users that openly shared
access to production technology and knowledge ([2]).
5.5 Testing the activity systems framework
The theoretical framework proposed by [14] (224) worked well as a guiding
framework for our analysis. Particularly the orientation provided by the design
parameters allowed developing a thick description of “what is going on in the black
box of activities”, thereby paving the way for “a better understanding of the micro-
mechanisms of business models.” ([14]; 224) We found that this framework is
applicable as analytical framework also to a context where businesses partly do not
strive for profit maximization.
The insight that the digital maker CEOs in our sample used more than one business
model as building blocks for their overall, composite business model implies an
important specification on how the activity system framework should be used by
researchers studying community-based but also in general start-up business models.
Instead of assuming single business models like [14], researchers should expect
composite business models in these contexts. In our context, this finding confirms and
explains research by [21] who found that applying traditional business modelling
instruments such as the Business Model Canvas [69] failed to adequately capture the
business model of collaborative communities because “often Open Source and P2P
distributed systems have fuzzier boundaries and more units” ([21]; 207).
6 Conclusions
Scholars agree that the maker movement holds the potential to come up with a new
economic model that is not based on mass production [8, 9]. This paper was aimed to
contribute to understanding how making is brought to business models.With this
research, we aimed at contributing to theoretical and empirical work on business
models in three ways: First, we aimed at advancing theory informing research on
making and strategic organization by conceptualizing and refining the distinction
between community-oriented and community-based business models. We did so both
at theoretical and empirical level: From our literature review, we identified
differences in the governance philosophy of company-community-interaction. While
literature shows that the so-called user centric or open innovation community-oriented
business models solely focus on creating company value, maximizing profits from
leveraged user knowledge and on protecting it, community-based business models are
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
said to be based on peer-production principles like open knowledge sharing,
reciprocity and commons development ([2]; [7]; [24]; [40]; [41]; [42]; [43]). As
expected, we could identify these community-based governance mechanisms in the
business models of our sample and could thereby confirm theory in a under-
researched area.
The findings bring about important insights that answer open questions on the
relationship between firms and communities. Our findings indicate that corporate
strategists could take maker community values open knowledge sharing, altruism,
collaboration, and common ownership of resources and results of production ([3]; [4];
[6]) and think about symbiotic ways of practicing business models where revenues,
access to technology or knowledge are shared back with the contributors and the
community. This would help them to avoid potential frictions that emerge from the
conflicting concepts of strategically maximizing profits and open knowledge sharing
and altruism ([16] 307; [19] 74).
Second, with our empirical data, we strived for revealing design parameters that
constitute the activity systems of community-based business models using the
example of the maker community Thingiverse. Based on extant literature, we
expected finding business models that practice multi-dimensional value creation
([64]) and include altruistic and hedonistic activities. Our data provide some first and
rather anecdotal evidence for a novel phenomenon, i.e. the existence and operating
modes of community-based business models involving nonmonetary exchanges ([9]).
The identification of community-based business models is therefore a major
contribution of this article.
Third, we sought for testing the applicability of the theoretical framework for
describing business models as activity systems in terms of design parameters
developed by [14] to a context where businesses probably not strive only for profit
maximization. The framework was helpful as an analytical grid for identifying and
describing business models, but we also found that the community-based business
models emerge from the combination of market and peer-production business models
that were used by the digital maker CEOs as building blocks.
This might be an indicator that sufficient volumes and margins in single business
models are only emerging. It might however also be a specific phenomenon that
emerges from the open knowledge sharing values in peer production communities. A
longitudinal study of these developments is strongly recommended to future research
because issues like maturation of community-based business models over time or
success factors in managing and sustaining such composite business models remain
beyond the focus of this study.
Overall, our research contributes to the understanding of business models and
strategies in non-traditional contexts [9] called for here: maker communities
governed by peer production principles. Such studies help to understand challenges
for existing companies to deal in their business strategies with “the increasingly
powerful and important position that individuals outside the firm hold, particularly
when organized in communities” ([16] 298). This is also important because maker
communities can be understood as early indication of a societal transformation that
requires new, more community-based types of business models and forms of value
creation to sustain commercial activities. From our findings, we therefore agree with
[16] that a “logic of co-creating strategy may (…) create opportunities for strategists
Interaction Design and Architecture(s) Journal - IxD&A, N.30, 2016, pp. 75-94
who understand and internalize the two perspectives of inside and outside the
company.” (310-311)
Being a multiple case study, the research presented here is not without limitations.
The latter particularly concern the fact that the main perspective of our research was
the one of the digital maker CEOs and not the community members. Furthermore, the
experiences of our interviewees certainly do not include the whole range of business
models. Future research based upon large scale surveys is needed for testing and
complementing our findings that give first empirical insights into community-based
business models.
Acknowledgements
Authors are indepted to the work of Laura Guggiari who collected the empirical data
for their BA thesisOpen knowledge sharing and co-creation: Earning a living from a
co-created idea”.
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DESIS-Design for Social Innovation and Sustainability is a network of design-led research labs based in universities around the world created to trigger and support social change towards sustainability. The network started in 2009, in the wave of social innovation that characterized that period: innovations emerging mainly from grassroots initiatives aiming to solve, in a collaborative way, problems that people had to face in mature industrial societies. It is not rhetorical to say that the context we were in when we started, seems a century ago. The tragedy of Covid-19 is, in fact, one of those events that force us to push on the reset button. Where, in this case, “resetting” means the need to adjust what we are doing, and how and why we do it, considering what the Covid19 crisis has taught us and could still teach us. The double special issue of SDRJ we are presenting here goes in this direction.
... Oteman et al. (2017) identify the reason for these difficulties in a lack of institutionalisation that makes grassroots initiatives unable to learn from each other within the niche and is incommensurable with mainstream regime actors at the niche-regime interface. Grassroots initiatives strive for cooperation 'through social mechanisms other than price signals or managerial directions' (Benkler, 2004(Benkler, : 1110 and are more interested in experimentation than in growth (Wolf et al., 2014;Wolf & Troxler, 2016). This brings about distrust towards institutions enclosing knowledge through legal restrictions or privatisation and engenders a refusal of hierarchical structures (Hargreaves et al., 2013;Seyfang & Longhurst, 2016;Wolf et al., 2020). ...
... The reason for not offering communication services to the grassroots initiatives lies in the characteristics of the plastic revaluation community, where grassroots actors are technically highly knowledgeable, in that they use modern communication technology and share design blueprints on online platforms (Wolf et al., 2014;Wolf & Troxler, 2016). These initiatives do not need-and would probably not ...
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... Thus, makers can be considered a subset of free innovators because they develop their own innovations for their own use, they are self-rewarded by their development [32,34,38]. They experiment, learn and have fun with their development, they are not guided by economic incentives and they try to meet particular social needs or to have a positive impact in society with their unpaid work [19,[39][40][41][42][43]. ...
... You might get in touch with investors and maybe get in touch with someone interested in your project …" (Maker) Economic incentives are not important for a majority of makers involved in the pilots echoing the findings of previous research [1,19,43]. The interviews showed how only a small part of the makers have desires to pursue a sustainable professional activity based on skills and competences developed in maker communities, as also shown by previous studies [39,40]. It should, however, be noted that the majority of the makers involved in the pilots have incomes apart from the maker activities thus giving them the economic "freedom" instead of pressure to innovate. ...
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... Open Design is hardly dissociable from a renaissance of Do-It-Yourself (DIY) and from its recent reincarnation in the so-called 'maker movement' (see e.g., Panori et al. 2020). While not all openly designed products are meant for DIY production and not all DIY products are open source, both the open source and maker movement share a common ideal of citizen empowerment through technical proficiency and a certain form of criticism against established value creation chains (Wolf & Troxler 2016). Participation of laypeople in product creation as a means of distributed manufacturing implies a limited access to means of production and calls for the use of low-tech, a concept that has been put forward as a basis for a resilient and sustainable society (Bihouix 2020). ...
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... • project-driven processes (Grabher, 2002;Kovách & Kučerova, 2009) and thereby temporary institutional frameworks for work favouring temporary and situational organisations as well as temporary forms of organising (Bakker, DeFillippi, Schwab, & Sydow, 2016;Lundin & Söderholm, 1995) that disappear when short-term projects end. • an increasing temporal and spatial fragmentation of work (e.g., gig-economy, Friedman, 2014, coworking economy), • a seemingly new wave of social and collaborative entrepreneurship (Coulson, 2012;Fabbri & Charue-Duboc, 2013), cultural entrepreneurship (Lange, 2005), and gender sensitive entrepreneurship (Kruker, Schier, & von Streit, 2002) with respectively different social communities and less intersecting communities of practice, and • a wide range of further actors appearing within "the" system, for example, freelancers, urban manufacturers, makers, micro-enterprises, policy makers, money lenders, venture capitalists as well as knowledge brokers that fosters economic development in urban environments (Brinks & Ibert, 2015;de Bruin et al., 2017;Florida & King, 2016;Montessori, 2016;Shah & Tripsas, 2007;Wolf & Troxler, 2016;Wolf-Powers et al., 2017). ...
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