Innovations from the underground : towards a theory of parasitic innovation

Abstract

For almost every complex, proprietary system there is a group of users trying to change, modify, or break it. These users have no regard for the carefully constructed business models that manufacturers use to justify their closed architectures. Instead, driven by utility, curiosity, or, occasionally, anger, these user communities innovate within the manufacturers' systems, bypassing both legal and technical safeguards. These communities exist in many diverse markets, most often as a hunted underground, but occasionally as valued partners of legitimate industry. In the computer industry, for example, they are called "hackers," while in the world of telephony they are referred to as "phreakers." Sometimes undermining systems and sometimes expanding them, these parasitic innovation communities have a deep and complex relationship with the companies whose systems they modify. This thesis presents an examination of the phenomenon of parasitic innovation, developing explanations for how and why parasitic communities operate. It demonstrates that parasitic innovation is an ongoing phenomenon that has developed significant innovations over the last forty years. The paper then presents a model for how parasitic communities and firms interact, and offers a new strategic approach for how industry can better develop the positive effects of parasitic innovators while reducing negative impacts.