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  • 2020
  • Article
  • Strategic Management Review

Why Do User Communities Matter for Strategy?

By: Sonali K. Shah and Frank Nagle
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Abstract

In this essay, we explore how strategic management research and practice could benefit from considering the benefits and challenges obtainable through working with user communities. User communities represent a unique organizing structure for the exchange of ideas and knowledge: they are composed primarily of users working collaboratively, voluntarily, and with minimal oversight to freely and openly develop and exchange knowledge around a common artifact. The prevalence of user communities appears to be on the rise, as evidenced by communities across a variety of fields including software, Legos, sports equipment, and automobiles. The innovation literature has begun to document the power of user communities as a source of open innovation, yet the broader strategic implications of user communities remain underexplored: existing research coupled with examples suggests that user communities can be used to enact both differentiation and low-cost strategies. We discuss the benefits that user communities can provide and the challenges they can create for firms, develop a framework for understanding the differences between how user communities and firms are organized and operate, and theorize the conditions under which user communities will emerge and function, thereby illustrating the relevance and import of user communities to firms and the strategic management literature.

Keywords

User Communities; Innovation; Open Source; Collaboration; Cooperative Strategy; Knowledge Sharing; Strategy; Collaborative Innovation and Invention

Citation

Shah, Sonali K., and Frank Nagle. "Why Do User Communities Matter for Strategy?" Special Issue on Open Innovation. Strategic Management Review 1, no. 2 (2020): 305–353.
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About The Author

Frank Nagle

Strategy
→More Publications

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  • Nexleaf Analytics: Saving the World Using the Internet of Things By: Frank Nagle
  • The Translucent Hand of Managed Ecosystems: Engaging Communities for Value Creation and Capture By: Elizabeth J. Altman, Frank Nagle and Michael Tushman
  • The Digital Economy Runs on Open Source. Here's How to Protect It. By: Hila Lifshitz-Assaf and Frank Nagle
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