Based on the notion of heterogeneity and skill differentiation among users, we develop a typology of interactions between user communities and firms producing a product or service around which the community is centered. Hybrid innovation models are described as stable arrangements in which part of the innovation function is relegated to the user community, but the commercially oriented firm is capable of systematically and repeatedly appropriating monetary returns to the community-generated innovations.

This is distinct from pure need-voicing and user-help communities (where little innovative problem-solving is undertaken by the community) and from open-source communities where direct commercialization does not occur. We argue that highly sophisticated users will tend to solve their problems in an open-source or hybrid mode, while many less sophisticated users will not innovate, but may still deliver important need information to the firm. We also propose that there will be important behavioral differences between these communities. In our analysis of the hybrid innovation mode, we focus in particular on the question why the combination of a community and a commercially oriented firm can maintain stability over an extended period of time. We derive implications for firm conduct and user community management, as well as for public policies and further theoretical and empirical research.