6. Innovation in the Open Data Ecosystem: Exploring the Role of Real Options Thinking and Multi-sided Platforms for Sustainable Value Generation through Open Data

While open data as a phenomenon is rapidly growing up, innovation through open data is still less than expected. Research has shown that in spite of emerging new businesses models, private sector stakeholders are struggling to generate monetary income from open data. This is worrying as open data initiatives might not be sustained if there no evidence of value generation through external use of the data. We suggest that insights from two established theories, real options theory and theory of two-sided markets, might help us create a more coherent picture of the complex relationships between innovation and value generation in the open data ecosystem, and even resolve what we call the open data value paradox. We propose that governments, which openly publish data, are providing private sector stakeholders with the equivalent of a real option. By conceptualizing the uncertain or serendipitous value of open government data as option value, we might be able to stimulate activity and investment in the open data ecosystem. Moreover, we propose that by utilizing two-sided markets type of business models, private companies can use the data as a resource to provide free information and by capitalizing on the resulting positive network externalities, generate monetary income as well. Finally, we propose that governments should provide the necessary nourishment to this ecosystem in order to stimulate the generation of sustainable value.