Neither market nor hierarchy nor network: The emergence of bazaar governance
Abstract
A growing body of literature describes the open source phenomenon in the software industry. Drawing on transaction cost economics, we propose that open source projects illustrate a new generic governance structure — which we label bazaar governance — based on a specific legal contract: the open licence. We characterize this structure in terms of its strengths and weaknesses and compare it to market, firm and network forms. Low levels of control and weak incentives intensity are distinctive features of bazaar, lending a high uncertainty to governed transactions. However, bazaar governance promotes the openness of open source communities, which can generate strong positive network externalities and subsequent efficiency in cumulative transactions. Our theoretical developments offer a potential basis for future research.
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The bazaar mode of governance is defined by open licenses, which allow unrestricted access to the source code and prevent anyone to appropriate and trade on software ownership.
“The bazaar mode of governance is defined by open licenses, which allow unrestricted access to the source code and prevent anyone to appropriate and trade on software ownership.”
From Tribal Governance: The Business of Blockchain Authentication (2018) · cites this paper as [3]
Demil and Lecocq proposed to add a fourth idealtype, named 'bazaar governance', to Powell's tripartite categorization of governance forms.
“Demil and Lecocq's [3] study proposes to add a fourth idealtype, named 'bazaar governance', to Powell's [2] tripartite categorization of governance forms.”
From Tribal Governance: The Business of Blockchain Authentication (2018) · cites this paper as [3]
Demil and Lecocq's work, based on FOSS production, found that Powell's threefold characterization was not satisfactory to explain FOSS and the information economy, so they proposed the bazaar idealtype.
“Their work, based on FOSS production, found that Powell's threefold characterization was not satisfactory to explain the then booming phenomenon of FOSS, and by extension the information economy, so they proposed the bazaar idealtype.”
From Tribal Governance: The Business of Blockchain Authentication (2018) · cites this paper as [3]
OSS governance becomes institutionalized as communities formalize norms and practices into explicit structures like charters and artifacts to manage coordination challenges and sustain development.
“This leads to the institutionalization of OSS governance, where communities formalize norms and practices into explicit structures like charters, and artifacts to manage coordination challenges and sustain development [7, 11, 15].”
From Governance in Practice: How Open Source Projects Define and Document Roles (2026) · cites this paper as [11]
Cites
Comparative Economic Organization: The Analysis of Discrete Structural Alternatives
Williamson, O. E. (1991) · Administrative Science Quarterly · doi:10.2307/2393356 · Cited by 7,151 · see citing works
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The invisible politics of Bitcoin: governance crisis of a decentralised infrastructure
De Filippi, P., & Loveluck, B. (2016) · Internet Policy Review · doi:10.14763/2016.3.427 · Cited by 298 · see citing works
Experimental Study of Informal Rewards in Peer Production
Restivo, M., & van de Rijt, A. (2012) · PLoS ONE · doi:10.1371/journal.pone.0034358 · Cited by 90 · see citing works
Tribal Governance: The Business of Blockchain Authentication
Miscione, G., Ziolkowski, R., Zavolokina, L., & Schwabe, G. (2018) · Proceedings of the Annual Hawaii International Conference on System Sciences · doi:10.24251/hicss.2018.566 · Cited by 38 · see citing works
“2 Further [3]: In neoclassical contracts, hybrid organizations re-”
BackgroundMethodInfluentialRozas, D., & Huckle, S. (2021) · Journal of the Association for Information Science and Technology · doi:10.1002/asi.24393 · Cited by 17 · see citing works
Governance in Practice: How Open Source Projects Define and Document Roles
Oliveira, P., Conte, T., Gerosa, M., & Steinmacher, I. (2026) · Proceedings of the 19th International Conference on Cooperative and Human Aspects of Software Engineering · doi:10.1145/3794860.3794911 · Cited by 2 · see citing works
- Authors
- Demil, B., & Lecocq, X.
- Affiliations
- Université de Lille (FR)
- IAE de Lille, 104 Avenue du Peuple Belge, 59043 Lille Cedex, France;
- Corresponding author
- Demil, Benoît
- Lecocq, Xavier
- Venue
- Organization Studies
- Publisher
- SAGE Publications
- Published
- 2006-10
- Volume
- 27
- Issue
- 10
- Pages
- 1447-1466
- ISSN
- 0170-8406 (ISSN-L)
- 1741-3044
- OpenAlex
- W2091992928
- Cited by
- 273
- References
- 1
- Citations by year
- 2026: 5 · 2025: 5 · 2024: 6 · 2023: 9 · 2022: 11 · 2021: 15 · 2020: 15 · 2019: 13 · 2018: 10 · 2017: 18 · 2016: 10 · 2015: 18 · 2014: 16 · 2013: 34 · 2012: 27
- FWCI
- 20.01
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Organization Studies (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- HAL (submittedVersion)
- Topics
- Physical Sciences › Computer Science › Computer Science Applications › Open Source Software Innovations
- Social Sciences › Business, Management and Accounting › Management Information Systems › Outsourcing and Supply Chain Management
- Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
- Keywords
- open source software, open licences, transaction cost economics, governance structures, market governance, corporate governance, network governance, network effects, open source communities, incentive intensity
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