Neither market or hierarchy or network: The emerging bazaar governance

Despite the growing body of literature describing the open-source phenomenon, few contributions have been theoretically grounded and research has largely focused on the software industry. Drawing on transaction cost economics, we go beyond these limitations and advance that open source constitutes a new generic governance structure?which we label bazaar governance? based on a specific contract. We characterize this structure in terms of its strengths and weaknesses and in comparison with market, firm and network structures. We consider how bazaar governance is actualized within an industry and the institutional entrepreneur?s crucial role in this process. Finally, we propose that bazaar governance has a profound impact on the structure of the industry in which it is introduced.