Recent research into the source of innovation activity has shown that users are one of the most precious external resources in New Product Development (NPD) process, or simply for the improvement of an existing product (Franke, von Hippel and Schreier 2006; Baldwin, Hienerth and von Hippel 2006).
As a matter of fact, users are very helpful when they experience a certain problem (e.g. the invention of the car seat for low birth weight babies by Angel Guard) or simply when they are not satisfied with an existing solution and they want something that fits their needs (e.g. the creation of new extreme sport industries like kite surfing by Bruno and Dominique Legaignoux). Hence, companies recognize that valuable ideas come also from outside the firms’ boundaries, thus they are moving towards a more “Open Approach” (Chesbrough 2003), focussing on new forms of “Collaborative Innovation” (Prandelli, Sawhney and Verona 2008).
However, new studies have shown that users eventually stop sharing their innovations for free, in order to start to commercialize them on their own; subsequently they become entrepreneurs (Hienerth 2005; Shah and Tripsas 2007). This phenomenon has been enhanced by the diffusion of the Internet, in particular with the spreading of online communities (Franke and Shah 2003; Jeppesen and Frederiksen 2006) and the massive presence of toolkits for User Innovators freely available online (Franke and Schreier 2002; Katz and von Hippel 2002), through which users are supported to become entrepreneurs. More importantly, it is the Open Source (OS) model that allows users within a community to increase the pace of innovation by exploiting their entrepreneurial attitudes. This is demonstrable primarily in problem solving situations, where users are more willing to innovate and to find a solution that fits exactly their needs. Even so, there is not a unique solution when it comes to users dealing with a certain problem. In fact, an open approach gives a voice to anyone who wishes to change and modify a certain software for free, which may increase the likelihood and the portfolio of solutions as well as new products and services.
Although the term OS has been initially referred to Open Source Software (OSS) only, in the last five years the change of technology in the open environment has become noticeable, with the increasing phenomenon of Open Source Hardware (OSH). In that case, the information is additionally open in terms of the schematics of the hardware.
Therefore, it is the hardware, a tangible good that has been opened; hence it needs to be physically produced before using it.
Despite the extensive academic research on user innovativeness also related to OSS, its economic implication and the relevance that the phenomenon is achieving, the literature does not contain a parsimonious construct that is valid for analyzing OSH opportunities for innovator users who eventually become entrepreneurs. In fact, most researches on user innovation do not focus on this new OS movement and its relations with User Entrepreneurship, thus this research might help to describe also the alternative model of the classical process of entrepreneurship.
To explain this phenomenon the role played by Arduino (www.arduino.cc) the first OSH platform, will be discussed. Thanks to the OSH concept users have the tools to develop their own products at reasonable costs and commercialize them at low prices, without asking for any permission from Arduino’s owners nor paying any royalties to them (apart from the use of the Arduino brand). Therefore, several companies run by Arduino users made not only products which are not yet commercialized, but also goods embedding existing technology at a lower price. This way, Arduino fosters user entrepreneurship.
The goal of this research is to examine how Open Source Hardware stimulates user entrepreneurship. In order to respond to the research question, multiple case studies were employed. Information was collected through semi-structured interviews with Massimo Banzi (Arduino co-founder) and with sixteen successful users’ entrepreneurs. It was analysed along with data fromOSHcommunities.
This research is also justified by the relevance that the phenomenon is acquiring: in 2010, the top thirteen companies operating in OSH had revenues of more than 50 million dollars collectively; by 2015 it is expected that this industry will grow up to 1 billion dollars. In addition, Arduino moved from selling 200 boards when it started in September 2005 to more than 220.000 pieces up to January 2011. Specialized magazines such as Make and Wired often mention Arduino in their articles. Moreover, newspapers such as the New York Times also discussed Arduino. In particular, “Il Sole 24 Ore” featured Arduino in its list of the ten innovations of the decade, along with Apple, Facebook, Google and Wikipedia, and Wired appointed Massimo Banzi as one of the ten most influential CEOs of the Web. In addition, companies such as Microsoft and Apple use Arduino for prototyping. So do the universities: MIT and NYU, among others.
The thesis is organized as follows.
First, a literature review of the main streams of theories that the analysis includes is presented (User Innovation and Entrepreneurship, Open Source Software and Hardware). Second, the study methods of the research are illustrated, describing the research context –Arduino- and the sixteen ventures object of the analysis. Then, the findings of the empirical analysis are shown, focusing in particular on the main features that support users to establish a new business. Thereafter, a discussion about the results of the research follows, giving a special attention on the theoretical and managerial implications. After that, limitations of the study are presented, encouraging future research in order to cover existing gaps in the research. Lastly, this work is concluded with final remarks.
 Source: “One million dollar baby”, speech of Limor Fried and Phillip Torrone at FOO Camp East 2010.