Introduction:

Several studies investigating the sources of innovation have acknowledged that many
innovations arise from users and not from manufacturers' firms. However, the idea that firms
utilize user communities to reinforce their innovations and product development processes
has not yet been thoroughly investigated.
Previous studies have proved that innovative user communities may yield important value,
namely new product concepts or product features.
Organizations can achieve a competitive advantage by collaboration with such groups as (1)
the new products features are available to all users by user-to-user sharing and, (2) because it
helps the company to take advantage of the successes and benefit by commercializing them.
Few studies have explored the proper relationship between user communities and
businessess, and in particular, how firms can capture the benefits of such innovations.

This paper attempts to show how consumers co-develop products for free through firm-
hosted communities, show the value of firm-community interaction, and what are the most
important features of this interaction.

Learner and Tirole 2002

Lakhani and Von Hippel, 2003
O mahony, 2003
Van krogh and von hippel 2003

User Community

User-innovators may be generally willing to freely reveal their information. However, users
may be widely distributed and each may have only one or a few innovations to offer. The
practical value of the “freely revealed innovation commons” these users collectively offer

Previous research indicates that innovative users often share their innovative ideas with their
peer community and they usually receive significant support from them in the new product
development process (von hippel, 2007). These communities are informal social networks
where members exchange knowledge and information, as well as innovative ideas and
solutions on a specific issue or area of interest. (Wenger, 1999)

The information exchange system, unlike other types of networks, is not based on formal
contracts, but on trust-based contracts where norms and values are shared, and general
reciprocity exists. Also, these communities emerge and focus around a specific topic or area
of shared interest and all members have tacit need and use related knowledge which they gain
when using a certain product. (von Hippel, 1994, 2007).

Evidence has also shown that users’ underlying motives for contributing to the shared
innovation process are very consistent and stable across different communities. The
information is not sold or licensed to the manufactures, instead it is freely revealed to other
users and manufacturers. This is also a central characteristic of open source software
development projects, the contributors here freely reveal the novel software code they
develop to peer innovators (lerner and tirole, 2002). By freely revealing information we
intend that all existing and potential intellectual property rights are voluntarily given up by
that innovator and all the interested parties can access to it.
These motivations follow a combination of intrinsic and extrinsic rewards Harhoff et al.,
2003;

Recently, some firms have acknowledged the value of such communities, and that sources of
innovation related to a given product can be modified or shifted. Therefore, firms interested
in increasing user innovation my offer open system, and free innovation equipment such as
toolkits for user innovation, that open up a solution space to users (vh 2001, thomke and von
2002, kats and von 2002.)

One of the most important strengths (Jeppensen and Molin, 2003) for online communities is
its capacity for interactive broadcasting on a global scale (?)
On the producer perspective side, firms are able to able to acquaint consumers’ sticky
information and save a number of costrly interactions that are usually required when
developing a product or services.

Through this paper I will understand how firms seek ro enhance product develioment by
opening up their

Wenger, E. (1999). Communities of practice: Learning, meaning, and identity. Cambridge university
press.

Jeppesen, L. B., & Frederiksen, L. (2006). Why do users contribute to firm-hosted user communities?
The case of computer-controlled music instruments. Organization science, 17(1), 45-63.

Jeppesen, L. B., & Molin, M. J. (2003). Consumers as co-developers: Learning and innovation outside
the firm. Technology Analysis & Strategic Management, 15(3), 363-383.