Why Do User Communities Matter for Strategy?

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.