Value Creation & Innovation in Makerspaces: Evaluating the Conditions for Generalized Exchange in a Physical Space

Friday, June 24, 2016: 9:00 AM-10:30 AM
107 South Hall (South Hall)
Andreea Daniela Gorbatai, UC Berkeley, Berkeley, CA
Sonali K. Shah, U of Illinois, Urbana Champaign, IL
The exchange literature has largely focused on the relational basis and consequences of
exchange, such as the emergence of positive emotions and group solidarity. Generalized
exchange theory assumes that people striving to achieve individual or collective goals
reciprocate towards others contingent on others’ behavior and the visibility of their own actions
without regard for the location in which this exchange takes place. In this study we enrich
exchange theory by examining the role of physical space in enabling the mechanisms of
generalized exchange. We use a multiple-case study approach to examine the occurrence of
generalized exchange among a set of individuals belonging to four different makerspaces.
Our research reveals that, under certain conditions, being located in a shared physical
workspace enables generalized exchange, leading to the creation of diffuse economic value
through casual and serendipitous knowledge exchanges. We also observe several new enabling
conditions, including heterogeneous participant expertise, free access to makerspace tools, and
capacity utilization of shared tools. This study has implications for research on exchange theory,
new forms of work and value creation, and innovation.

Extended abstract:

Innovation and entrepreneurship are critical drivers of economic growth. The creation and
commercialization of novel products and services improve the quality of life for consumers.
Historically, the management literature has focused on understanding the role of for-profit firms
in bringing innovative new products to market (e.g., Schumpeter 1934). While firms are an
important and critical component of the innovation landscape, alternative organizational forms
are playing an increasingly important role in stimulating the explorative learning activities that
seed innovation and entrepreneurship (Davis 2013), while new ways to coordinate work and
value creation outside traditional organizational boundaries have emerged from the digital
revolution over the past decade.

The challenge that corporate organizational forms (firms) face in balancing exploration and
exploitation is well documented (March 1996; O Reilly and Tushman 2004). In a corporate
innovation context, exploration implies firm behaviors characterized by search, discovery,
experimentation, risk taking and innovation, while exploitation implies firm behaviors
characterized by refinement, implementation, efficiency, production and selection (Cheng and
Van de Ven 1996, March 1991, He and Wong 2004). March (1991) posits that “tradeoffs
[between exploration and exploitation] are affected by their contexts of distributed costs and
benefits and ecological interaction.” As a result, explorative—that is, innovation-centered—
activities tend to be marginalized in many settings. In this context, the emergence of non-corporate
forms of organization that appear to successfully support both explorative and exploitative
activities raises an interesting theoretical puzzle.

The past decade has brought unprecedented shifts in prototyping, communication,
and production technologies. These changes in technological capabilities and platforms support
the emergence of organizational forms centered on local or virtual collaborative production.
Open source software communities are perhaps the best known example of this fundamentally

different organizational model of innovation and product development—a model referred to as

collective invention (Allen 1983), private-collective innovation (von Hippel and von Krogh
2003), or community-based innovation (Franke and Shah 2003). This model has generated key
innovations across many product domains as diverse as automobiles (Kline and Pinch 1996; Lucsko 2008), industrial
equipment (Allen 1983; Nuvolari 2004), and medical devices (Chatterji and Fabrizio 2012; Winston
Smith and Shah 2013). Innovations developed within communities are diffused within and
beyond the community through a variety of mechanisms, including the sharing of designs and
production instructions, as well as commercial distribution through both established (von Hippel
1988; Winston Smith and Shah 2013) and entrepreneurial (Shah and Tripsas 2007; Shah et al.
2012) ventures. Particularly striking are the many examples of innovative new ventures that have
emerged from innovation communities. Academic and practical interest in such communities
has risen greatly over the past fifteen years, and a great deal about their organizational design
and remains to be understood: “The technology is already here; what are needed are betterdocumented
organizational models of local collaboration” (Davis 2013, p. 304).

Our paper proposes to example one such model of local collaboration—makerspaces.
Makerspaces are innovation communities that provide participants with access to a variety of
tools, materials, and knowledge resources, such as 3D printers, design software, and expert users.
Makerspaces “serve as gathering points where communities of new and experienced makers
connect to work on real and personally meaningful projects, informed by helpful mentors and
expertise, using new technologies and traditional tools” (Maker Media 2013, p. 7). Within these
spaces, makers—hobbyists, tinkerers, amateurs, professionals, and others-gather to invent, build,
replicate, and take things apart. In addition to serving as physical forums for individuals to
“make things”, these spaces also function as social forums and are increasingly being heralded as
natural incubators of entrepreneurial activity (Stangler and Maxwell 2012). The social networking site
Pinterest used HackerDojo—a famed makerspace in Silicon Valley—
as their primary workspace for several years and hired their first two engineers from the Dojo's
membership. Similarly, Square, the credit card reader for mobile phones and tablets, was
designed in the Menlo Park  TechShop makerspace.

We are planning to analyze these new organizational models of local collaboration building on
the rich, largely experiment-based research stream in the sociological literature that focuses on
generalized exchange. Traditionally this research has examined the relational basis and
consequences of generalized exchange, such as engendering group solidarity and fostering
positive emotion. In this study we will work at the intersection of research on generalized
exchange, and the role of physical space in coordinating action and organizing (Kellogg 2009;
Rao and Dutta 2012) to evaluate the role of makerspace settings in enabling the mechanisms of
generalized exchange.

In preliminary analyses based on our ethnographic observation of four makerspaces, and
interviews with over 100 stakeholders in the maker movement—including members of the
makerspaces studied, founders and members of other makerspaces, and other movement
participants – we find that, under certain conditions, being located in a shared physical
workspace enables generalized exchange, leading to the creation of diffuse economic value
through casual and serendipitous knowledge exchanges. In addition to ascertaining the
importance of previously discussed factors that enable generalized exchange, we propose several
new enabling conditions, including heterogeneous participant expertise, free access to
makerspace tools, and capacity utilization of shared tools.

This study will contribute new dimensions to research on generalized exchange by elaborating
on the structural conditions and sharing norms necessary to enable these processes in an
innovation community. We also aim to engage in the academic conversation on new forms of
value creation, and work, and highlight the role of knowledge sharing and generalized exchange
in makerspaces in enabling early stage innovation and entrepreneurship.