Value creation and value capture fro open source software publisher : a new business model based on mutualisation

Key topics: Since the birth of the Open Source movement in the mid-80's, open source software has become more and more widespread. Amongst others, the Linux operating system, the Apache web server and the Firefox internet explorer have taken substantial market shares to their proprietary competitors. Open source software is governed by particular types of licenses. As proprietary licenses only allow the software's use in exchange for a fee, open source licenses grant users more rights like the free use, free copy, free modification and free distribution of the software, as well as free access to the source code. This new phenomenon has raised many managerial questions: organizational issues related to the system of governance that underlie such open source communities (Raymond, 1999a; Lerner and Tirole, 2002; Lee and Cole 2003; Mockus et al. 2000; Tuomi, 2000; Demil and Lecocq, 2006; O'Mahony and Ferraro, 2007;Fleming and Waguespack, 2007), collaborative innovation issues (Von Hippel, 2003; Von Krogh et al., 2003; Von Hippel and Von Krogh, 2003; Dahlander, 2005; Osterloh, 2007; David, 2008), issues related to the nature as well as the motivations of developers (Lerner and Tirole, 2002; Hertel, 2003; Dahlander and McKelvey, 2005; Jeppesen and Frederiksen, 2006), public policy and innovation issues (Jullien and Zimmermann, 2005; Lee, 2006), technological competitions issues related to standard battles between proprietary and open source software (Bonaccorsi and Rossi, 2003; Bonaccorsi et al. 2004, Economides and Katsamakas, 2005; Chen, 2007), intellectual property rights and licensing issues (Laat 2005; Lerner and Tirole, 2005; Gambardella, 2006; Determann et al., 2007). A major unresolved issue concerns open source business models and revenue capture, given that open source licenses imply no fee for users. On this topic, articles show that a commercial activity based on open source software is possible, as they describe different possible ways of doing business around open source (Raymond, 1999; Dahlander, 2004; Daffara, 2007; Bonaccorsi and Merito, 2007). These studies usually look at open source-based companies. Open source-based companies encompass a wide range of firms with different categories of activities: providers of packaged open source solutions, IT Services&Software Engineering firms and open source software publishers. However, business models implications are different for each of these categories: providers of packaged solutions and IT Services&Software Engineering firms' activities are based on software developed outside their boundaries, whereas commercial software publishers sponsor the development of the open source software. This paper focuses on open source software publishers' business models as this issue is even more crucial for this category of firms which take the risk of investing in the development of the software. Literature at last identifies and depicts only two generic types of business models for open source software publishers: the business models of ''bundling'' (Pal and Madanmohan, 2002; Dahlander 2004) and the dual licensing business models (Välimäki, 2003; Comino and Manenti, 2007). Nevertheless, these business models are not applicable in all circumstances. Methodology: The objectives of this paper are: (1) to explore in which contexts the two generic business models described in literature can be implemented successfully and (2) to depict an additional business model for open source software publishers which can be used in a different context. To do so, this paper draws upon an explorative case study of IdealX, a French open source security software publisher. This case study consists in a series of 3 interviews conducted between February 2005 and April 2006 with the co-founder and the business manager. It aims at depicting the process of IdealX's search for the appropriate business model between its creation in 2000 and 2006. This software publisher has tried both generic types of open source software publishers' business models before designing its own. Consequently, through IdealX's trials and errors, I investigate the conditions under which such generic business models can be effective. Moreover, this study describes the business model finally designed and adopted by IdealX: an additional open source software publisher's business model based on the principle of ''mutualisation'', which is applicable in a different context. Results and implications: Finally, this article contributes to ongoing empirical work within entrepreneurship and strategic management on open source software publishers' business models: it provides the characteristics of three generic business models (the business model of bundling, the dual licensing business model and the business model of mutualisation) as well as conditions under which they can be successfully implemented (regarding the type of product developed and the competencies of the firm). This paper also goes further into the traditional concept of business model used by scholars in the open source related literature. In this article, a business model is not only considered as a way of generating incomes (''revenue model'' (Amit and Zott, 2001)), but rather as the necessary conjunction of value creation and value capture, according to the recent literature about business models (Amit and Zott, 2001; Chresbrough and Rosenblum, 2002; Teece, 2007). Consequently, this paper analyses the business models from these two components' point of view.

Towards a rule-based matrix for evaluating distress mechanisms in bridges

The effective management of bridge stock involves making decisions as to when to repair, remedy, or do nothing, taking into account the financial and service life implications. Such decisions require a reliable diagnosis as to the cause of distress and an understanding of the likely future degradation. Such diagnoses are based on a combination of visual inspections, laboratory tests on samples and expert opinions. In addition, the choice of appropriate laboratory tests requires an understanding of the degradation mechanisms involved. Under these circumstances, the use of expert systems or evaluation tools developed from “realtime” case studies provides a promising solution in the absence of expert knowledge. This paper addresses the issues in bridge infrastructure management in Queensland, Australia. Bridges affected by alkali silica reaction and chloride induced corrosion have been investigated and the results presented using a mind mapping tool. The analysis highights that several levels of rules are required to assess the mechanism causing distress. The systematic development of a rule based approach is presented. An example of this application to a case study bridge has been used to demonstrate that preliminary results are satisfactory.

Integrating Creative Practice and Research in the Digital Media Arts

Research is often characterised as the search for new ideas and understanding. The language of this view privileges the cognitive and intellectual aspects of discovery. However, in the research process theoretical claims are usually evaluated in practice and, indeed, the observations and experiences of practical circumstances often lead to new research questions. This feedback loop between speculation and experimentation is fundamental to research in many disciplines, and is also appropriate for research in the creative arts. In this chapter we will examine how our creative desire for artistic expressivity results in interplay between actions and ideas that direct the development of techniques and approaches for our audio/visual live-coding activities.

University-industry partnership for pedagogy : some principles for practice

Industries demand a closer alignment of university learning curriculum to real work tasks to better meet the needs of organizations and learners. Both, industries and learners prefer the learning challenges to be based on the exigencies of work to precisely reflect real work circumstances that overtly add to business outcomes. However, such alignment is often complicated and challenging for academics and workplace managers alike. It demands partnerships between universities and industries, similar to arrangements forged for the vocational education and training sector. Such partnerships should allow active participation by learners, academics, workplaces and university administrators to move beyond a teaching orientation to a demonstrably effective learning arrangement through work integrated learning. This paper draws on a case study that negotiated a partnership between a non-government organization and an Australian university to design and facilitate a boutique curriculum that met the needs of learners and their workplace. Data were collected from interviews with participants, a focus group of the interviewees, and feedback from university staff involved in the course delivery. The paper presents a set of principles for universities and industries for partnership to enhance the alignment of academic curriculum to meet organizational and individual learning needs through work integrated learning.

Incorporating an economic model in the health impact assessment approach

The current policy decision making in Australia regarding non-health public investments (for example, transport/housing/social welfare programmes) does not quantify health benefits and costs systematically. To address this knowledge gap, this study proposes an economic model for quantifying health impacts of public policies in terms of dollar value. The intention is to enable policy-makers in conducting economic evaluation of health effects of non-health policies and in implementing policies those reduce health inequalities as well as enhance positive health gains of the target population. Health Impact Assessment (HIA) provides an appropriate framework for this study since HIA assesses the beneficial and adverse effects of a programme/policy on public health and on health inequalities through the distribution of those effects. However, HIA usually tries to influence the decision making process using its scientific findings, mostly epidemiological and toxicological evidence. In reality, this evidence can not establish causal links between policy and health impacts since it can not explain how an individual or a community reacts to changing circumstances. The proposed economic model addresses this health-policy linkage using a consumer choice approach that can explain changes in group and individual behaviour in a given economic set up. The economic model suggested in this paper links epidemiological findings with economic analysis to estimate the health costs and benefits of public investment policies. That is, estimating dollar impacts when health status of the exposed population group changes by public programmes – for example, transport initiatives to reduce congestion by building new roads/ highways/ tunnels etc. or by imposing congestion taxes. For policy evaluation purposes, the model is incorporated in the HIA framework by establishing association among identified factors, which drive changes in the behaviour of target population group and in turn, in the health outcomes. The economic variables identified to estimate the health inequality and health costs are levels of income, unemployment, education, age groups, disadvantaged population groups, mortality/morbidity etc. However, though the model validation using case studies and/or available database from Australian non-health policy (say, transport) arena is in the future tasks agenda, it is beyond the scope of this current paper.

My place through my eyes : a social constructionist approach to researching the relationships between socioeconomic living contexts and physical activity

There is a growing evidence-base in the epidemiological literature that demonstrates significant associations between people’s living circumstances – including their place of residence – and their health-related practices and outcomes (Leslie, 2005; Karpati, Bassett, & McCord, 2006; Monden, Van Lenthe, & Mackenbach, 2006; Parkes & Kearns, 2006; Cummins, Curtis, Diez-Roux, & Macintyre, 2007; Turrell, Kavanagh, Draper, & Subramanian, 2007). However, these findings raise questions about the ways in which living places, such as households and neighbourhoods, figure in the pathways connecting people and health (Frolich, Potvin, Chabot, & Corin, 2002; Giles-Corti, 2006; Brown et al, 2006; Diez Roux, 2007). This thesis addressed these questions via a mixed methods investigation of the patterns and processes connecting people, place, and their propensity to be physically active. Specifically, the research in this thesis examines a group of lower-socioeconomic residents who had recently relocated from poorer suburbs to a new urban village with a range of health-related resources. Importantly, the study contrasts their historical relationship with physical activity with their reactions to, and everyday practices in, a new urban setting designed to encourage pedestrian mobility and autonomy. The study applies a phenomenological approach to understanding living contexts based on Berger and Luckman’s (1966) conceptual framework in The Social Construction of Reality. This framework enables a questioning of the concept of context itself, and a treatment of it beyond environmental factors to the processes via which experiences and interactions are made meaningful. This approach makes reference to people’s histories, habituations, and dispositions in an exploration between social contexts and human behaviour. This framework for thinking about context is used to generate an empirical focus on the ways in which this residential group interacts with various living contexts over time to create a particular construction of physical activity in their lives. A methodological approach suited to this thinking was found in Charmaz’s (1996; 2001; 2006) adoption of a social constructionist approach to grounded theory. This approach enabled a focus on people’s own constructions and versions of their experiences through a rigorous inductive method, which provided a systematic strategy for identifying patterns in the data. The findings of the study point to factors such as ‘childhood abuse and neglect’, ‘early homelessness’, ‘fear and mistrust’, ‘staying indoors and keeping to yourself’, ‘conflict and violence’, and ‘feeling fat and ugly’ as contributors to an ongoing core category of ‘identity management’, which mediates the relationship between participants’ living contexts and their physical activity levels. It identifies barriers at the individual, neighbourhood, and broader ecological levels that prevent this residential group from being more physically active, and which contribute to the ways in which they think about, or conceptualise, this health-related behaviour in relationship to their identity and sense of place – both geographic and societal. The challenges of living well and staying active in poorer neighbourhoods and in places where poverty is concentrated were highlighted in detail by participants. Participants’ reactions to the new urban neighbourhood, and the depth of their engagement with the resources present, are revealed in the context of their previous life-experiences with both living places and physical activity. Moreover, an understanding of context as participants’ psychological constructions of various social and living situations based on prior experience, attitudes, and beliefs was formulated with implications for how the relationship between socioeconomic contextual effects on health are studied in the future. More detailed findings are presented in three published papers with implications for health promotion, urban design, and health inequalities research. This thesis makes a substantive, conceptual, and methodological contribution to future research efforts interested in how physical activity is conceptualised and constructed within lower socioeconomic living contexts, and why this is. The data that was collected and analysed for this PhD generates knowledge about the psychosocial processes and mechanisms behind the patterns observed in epidemiological research regarding socioeconomic health inequalities. Further, it highlights the ways in which lower socioeconomic living contexts tend to shape dispositions, attitudes, and lifestyles, ultimately resulting in worse health and life chances for those who occupy them.

Measuring and supporting quality of life

It is widely acknowledged that “quality of life” (QoL) is an imprecise concept, which is difficult to define (Arnold, 1991; Ball et al., 2000; Bury & Holme, 1993; Byrne & MacLean, 1997; Guse & Masesar, 1999; McDowell & Newell, 1996). McDowell and Newell (1996) described the term as “intuitively familiar” (p.382), suggesting that everyone believes that they know what it means; while, in reality its meaning differs from person to person. Recent years, have seen steadily increasing interest in the study and measurement of QoL related to human services, which reflects greater importance being attached to accountability in its widest sense. Anecdotally, many care staff will indicate that ensuring good QoL for their clients is important to them, but how can we ascertain whether we are achieving positive QoL outcomes, and given the complexities of the concept and its measurement, how can we best incorporate QoL assessment into everyday practice? This chapter will explore the issues of QoL definition and measurement, particularly as they pertain to aged care. It will consider many measurement tool options, and provide advice on how to choose an appropriate instrument for your circumstances. Issues of quality of care and their relationship to QoL will also be considered, and the chapter will conclude with a discussion on the integration of QoL assessment into practice. Because residential aged care constitutes a living environment as well as a care environment, QoL is considered particularly pertinent in this context, and as such, it will provide much of the focus for the chapter

Fatal motorcycle crashes in north Queensland : characteristics and potential interventions

Aims: The Rural and Remote Road Safety Study (RRRSS) addresses a recognised need for greater research on road trauma in rural and remote Australia, the costs of which are disproportionately high compared with urban areas. The 5-year multi-phase study with whole-of-government support concluded in June 2008. Drawing on RRRSS data, we analysed fatal motorcycle crashes which occurred over 39 months to provide a description of crash characteristics, contributing factors and people involved. The descriptive analysis and discussion may inform development of tailored motorcycle safety interventions. Methods: RRRSS criteria sought vehicle crashes resulting in death or hospitalisation for 24 hours minimum of at least 1 person aged 16 years or over, in the study area defined roughly as the Queensland area north from Bowen in the east and Boulia in the west (excluding Townsville and Cairns urban areas). Fatal motorcycle crashes were selected from the RRRSS dataset. Analysis considered medical data covering injury types and severity, evidence of alcohol, drugs and prior medical conditions, as well as crash descriptions supplied by police to Queensland Transport on contributing circumstances, vehicle types, environmental conditions and people involved. Crash data were plotted in a geographic information system (MapInfo) for spatial analysis. Results: There were 23 deaths from 22 motorcycle crashes on public roads meeting RRRSS criteria. Of these, half were single vehicle crashes and half involved 2 or more vehicles. In contrast to general patterns for driver/rider age distribution in crashes, riders below 25 years of age were represented proportionally within the population. Riders in their thirties comprised 41% of fatalities, with a further 36% accounted for by riders in their fifties. 18 crashes occurred in the Far North Statistical Division (SD), with 2 crashes in both the Northern and North West SDs. Behavioural factors comprised the vast majority of contributing circumstances cited by police, with adverse environmental conditions noted in only 4 cases. Conclusions: Fatal motorcycle crashes were more likely to involve another vehicle and less likely to involve a young rider than non-fatal crashes recorded by the RRRSS. Rider behaviour contributed to the majority of crashes and should be a major focus of research, education and policy development, while other road users’ behaviour and awareness also remains important. With 68% of crashes occurring on major and secondary roads within a 130km radius of Cairns, efforts should focus on this geographic area.

Living walls - a way to green the built environment

Actions Towards Sustainable Outcomes Environmental Issues/Principal Impacts The increasing urbanisation of cities brings with it several detrimental consequences, such as: • Significant energy use for heating and cooling many more buildings has led to urban heat islands and increased greenhouse gas emissions. • Increased amount of hard surfaces, which not only contributes to higher temperatures in cities, but also to increased stormwater runoff. • Degraded air quality and noise. • Health and general well-being of people is frequently compromised, by inadequate indoor air quality. • Reduced urban biodiversity. Basic Strategies In many design situations, boundaries and constraints limit the application of cutting EDGe actions. In these circumstances, designers should at least consider the following: • Living walls are an emerging technology, and many Australian examples function more as internal feature walls. However,as understanding of the benefits and construction of living walls develops this technology could be part of an exterior facade that enhances a building’s thermal performance. • Living walls should be designed to function with an irrigation system using non-potable water. Cutting EDGe Strategies • Living walls can be part of a design strategy that effectively improves the thermal performance of a building, thereby contributing to lower energy use and greenhouse gas emissions. • Including living walls in the initial stages of design would provide greater flexibility to the design, especially of the facade, structural supports, mechanical ventilation and watering systems, thus lowering costs. • Designing a building with an early understanding of living walls can greatly reduce maintenance costs. • Including plant species and planting media that would be able to remove air impurities could contribute to improved indoor air quality, workplace productivity and well-being. Synergies and References • Living walls are a key research topic at the Centre for Subtropical Design, Queensland University of Technology: http://www.subtropicaldesign.bee.qut.edu.au • BEDP Environment Design Guide: DES 53: Roof and Facade Gardens • BEDP Environment Design Guide: GEN 4: Positive Development – Designing for Net Positive Impacts (see green scaffolding and green space frame walls). • Green Roofs Australia: www.greenroofs.wordpress.com • Green Roofs for Healthy Cities USA: www.greenroofs.org

Parents’ choice of early childhood education service in Hong Kong : a pilot study

The introduction of a voucher scheme for early childhood education in Hong Kong has resulted in significant changes in the field. This paper reports data from a pilot study that aimed at gaining a deeper understanding of how parents chose early childhood education service following the introduction of a voucher scheme in Hong Kong. Eight-six Chinese parents with children aged three participated in interviews and focus group discussions. This group of parents had just gone through the process of selecting a kindergarten or nursery for their child for the school year of 2007-2008. Parents from a range of socioeconomic circumstances and educational levels who had selected non-profit kindergartens and nurseries in public and private housing estates participated. Results showed that what parents looked in their choice of service matched closely with how they defined quality. As evidenced in the study, parents’ changing views on quality shared a great deal of resemblance with the specific notion of quality being heavily promoted by recent reform policy. The findings pointed to the complex interactions of policy, choice and practices of early childhood education. The new voucher scheme is intensifying the governing of the self and the field, the impact of which can be worrying.

Practical Transformations and Transformational Practices : Globalization, Postmodernism, and Early Childhood Education : Advances in Early Education and Day Care

Both traditional and progressive curricula are inadequate for the task of responding to the economic, political, social, and cultural changes that have occurred as a result of globalization. This book documents some of the ongoing work occurring in early childhood settings that is aimed at improving, and ultimately transforming, early childhood practice in these changed and changing times. The authors do not simply critique developmental approaches or the increasing standardization of the field. Instead, they describe how they are playing around with postmodern ideas in practice and developing unique approaches to the diverse educational circumstances that confront early childhood educators. Whether it is preparing teachers, using materials, or developing policies, each chapter provides readers with possibilities for enacting pedagogies that are responsive to the contemporary circumstances shaping the lives of young children.

A study of entrepreneurship : Taiwanese digital content companies in China

China’s accession to the World Trade Organisation (WTO) has greatly enhanced global interest in investment in the Chinese media market, where demand for digital content is growing rapidly. The East Asian region is positioned as a growth area in many forms of digital content and digital service industries. China is attempting to catch up and take its place as a production centre to offset challenges from neighbouring countries. Meanwhile, Taiwan is seeking to use China both as an export market and as a production site for its digital content. This research investigates entry strategies of Taiwanese digital content firms into the Chinese market. By examining the strategies of a sample of Taiwan-based companies, this study also explores the evolution of their market strategies. However, the focus is on how distinctive business practices such as guanxi are important to Taiwanese business and to relations with Mainland China. This research examines how entrepreneurs manage the characteristics of digital content products and in turn how digital content entrepreneurs adapt to changing market circumstances. This project selected five Taiwan-based digital content companies that have business operations in China: Wang Film, Artkey, CnYES, Somode and iPartment. The study involved a field trip, undertaken between November 2006 and March 2007 to Shanghai and Taiwan to conduct interviews and to gather documentation and archival reports. Six senior managers and nine experts were interviewed. Data were analysed according to Miller’s firm-level entrepreneurship theory, foreign direct investment theory, Life Cycle Model and guanxi philosophy. Most studies of SMEs have focused on free market (capitalist) environments. In contrast, this thesis examines how Taiwanese digital content firms’ strategies apply in the Chinese market. I identified three main types of business strategy: cost-reduction, innovation and quality-enhancement; and four categories of functional strategies: product, marketing, resource acquisition and organizational restructuring. In this study, I introduce the concept of ‘entrepreneurial guanxi’, special relationships that imply mutual obligation, assurance and understanding to secure and exchange favors in entrepreneurial activities. While guanxi is a feature of many studies of business in Pan-Chinese society, it plays an important mediating role in digital content industries. In this thesis, I integrate the ‘Life Cycle Model’ with the dynamic concept of strategy. I outline the significant differences in the evolution of strategy between two types of digital content companies: off-line firms (Wang Film and Artkey) and web-based firms (CnYES, Somode and iPartment). Off-line digital content firms tended to adopt ‘resource acquisition strategies’ in their initial stages and ‘marketing strategies’ in second and subsequent stages. In contrast, web-based digital content companies mainly adopted product and marketing strategies in the early stages, and would adopt innovative approaches towards product and marketing strategies in the whole process of their business development. Some web-based digital content companies also adopted organizational restructuring strategies in the final stage. Finally, I propose the ‘Taxonomy Matrix of Entrepreneurial Strategies’ to emphasise the two dimensions of this matrix: innovation, and the firm’s resource acquisition for entrepreneurial strategy. This matrix is divided into four cells: Effective, Bounded, Conservative, and Impoverished.

AITPM Email Newsletter Volume 0903, March 2009: Presidents Message

President’s Report Hello fellow AITPM members, First I would like on behalf of all AITPM members to send our condolences to all who have been affected by February’s tragic bushfires in regional Victoria, and deliver our best wishes to all of those involved in the rebuilding efforts. Over time I expect that the Victorian Government’s Royal Commission will analyse the circumstances and put forward a range of measures which will improve fire safety in vulnerable areas. As transport professionals it will be important for us to consider the findings and look to undertaking any recommendations that relate to the work we do. Not only in Victoria, but nationwide. In particular, the importance of logistics was highlighted following the fire events. Donors across Australia were this time requested to donate money rather than goods, presumably due in part to problems associated with the transport system coping with additional uncoordinated freight load, whilst being needed to support emergency management vehicle and managed freight movements. Notwithstanding, it was wonderful to see otherwise difficult to obtain goods, such as animal feed, being donated from far afield and transported in kind by trucking operators. As stated in last month’s Newsletter, AITPM made a direct cash donation to the Red Cross Bushfire Appeal immediately following the events, and a further donation to the Queensland Premier’s Disaster Relief Fund to support recovery after the North Queensland floods, which claimed seven lives. Again, we will need to monitor how the rebuilding effort unfolds particularly in regional Victoria and centres including Ingham in North Queensland, but I would urge all AITPM members who are in a position to support the restoration of the affected communities to play a part, particularly over time once the initial shock subsides and the steady job of rebuilding is underway. Onto lighter matters, AITPM’s flagship event, the 2009 AITPM National Conference, Traffic Beyond Tomorrow, being held in Adelaide from 5 to 7 August, is fast approaching. www.aitpm.com has all of the details about how to register, sponsor a booth, and so forth. We are looking forward to catching up with our conference “regulars” and meeting with new folks to AITPM, and Australian traffic and transport planning and management. Adelaide is one of my favourite places to visit and I’m looking forward to riding the light rail line extension through town and checking out progress on the road system development. Best regards all, Jon Bunker

The effectiveness of using a simple ARIA based geographical classification to identify road crash patterns in rural and urban areas of Queensland

Research has noted a ‘pronounced pattern of increase with increasing remoteness' of death rates in road crashes. However, crash characteristics by remoteness are not commonly or consistently reported, with definitions of rural and urban often relying on proxy representations such as prevailing speed limit. The current paper seeks to evaluate the efficacy of the Accessibility / Remoteness Index of Australia (ARIA+) to identifying trends in road crashes. ARIA+ does not rely on road-specific measures and uses distances to populated centres to attribute a score to an area, which can in turn be grouped into 5 classifications of increasing remoteness. The current paper uses applications of these classifications at the broad level of Australian Bureau of Statistics' Statistical Local Areas, thus avoiding precise crash locating or dedicated mapping software. Analyses used Queensland road crash database details for all 31,346 crashes resulting in a fatality or hospitalisation occurring between 1st July, 2001 and 30th June 2006 inclusive. Results showed that this simplified application of ARIA+ aligned with previous definitions such as speed limit, while also providing further delineation. Differences in crash contributing factors were noted with increasing remoteness such as a greater representation of alcohol and ‘excessive speed for circumstances.' Other factors such as the predominance of younger drivers in crashes differed little by remoteness classification. The results are discussed in terms of the utility of remoteness as a graduated rather than binary (rural/urban) construct and the potential for combining ARIA crash data with census and hospital datasets.

Risk-assessment practices in the private rental sector : implications for low-income renters (Final Report)

This report focuses on risk-assessment practices in the private rental market, with particular consideration of their impact on low-income renters. It is based on the fieldwork undertaken in the second stage of the research process that followed completion of the Positioning Paper. The key research question this study addressed was: What are the various factors included in ‘risk-assessments’ by real estate agents in allocating ‘affordable’ tenancies? How are these risks quantified and managed? What are the key outcomes of their decision-making? The study builds on previous research demonstrating that a relatively large proportion of low-cost private rental accommodation is occupied by moderate- to high-income households (Wulff and Yates 2001; Seelig 2001; Yates et al. 2004). This is occurring in an environment where the private rental sector is now the de facto main provider of rental housing for lower-income households across Australia (Seelig et al. 2005) and where a number of factors are implicated in patterns of ‘income–rent mismatching’. These include ongoing shifts in public housing assistance; issues concerning eligibility for rent assistance; ‘supply’ factors, such as loss of low-cost rental stock through upgrading and/or transfer to owner-occupied housing; patterns of supply and demand driven largely by middle- to high-income owner-investors and renters; and patterns of housing need among low-income households for whom affordable housing is not appropriate. In formulating a way of approaching the analysis of ‘risk-assessment’ in rental housing management, this study has applied three sociological perspectives on risk: Beck’s (1992) formulation of risk society as entailing processes of ‘individualisation’; a socio-cultural perspective which emphasises the situated nature of perceptions of risk; and a perspective which has drawn attention to different modes of institutional governance of subjects, as ‘carriers of specific indicators of risk’. The private rental market was viewed as a social institution, and the research strategy was informed by ‘institutional ethnography’ as a method of enquiry. The study was based on interviews with property managers, real estate industry representatives, tenant advocates and community housing providers. The primary focus of inquiry was on ‘the moment of allocation’. Six local areas across metropolitan and regional Queensland, New South Wales, and South Australia were selected as case study localities. In terms of the main findings, it is evident that access to private rental housing is not just a matter of ‘supply and demand’. It is also about assessment of risk among applicants. Risk – perceived or actual – is thus a critical factor in deciding who gets housed, and how. Risk and its assessment matter in the context of housing provision and in the development of policy responses. The outcomes from this study also highlight a number of salient points: 1.There are two principal forms of risk associated with property management: financial risk and risk of litigation. 2. Certain tenant characteristics and/or circumstances – ability to pay and ability to care for the rented property – are the main factors focused on in assessing risk among applicants for rental housing. Signals of either ‘(in)ability to pay’ and/or ‘(in)ability to care for the property’ are almost always interpreted as markers of high levels of risk. 3. The processing of tenancy applications entails a complex and variable mix of formal and informal strategies of risk-assessment and allocation where sorting (out), ranking, discriminating and handing over characterise the process. 4. In the eyes of property managers, ‘suitable’ tenants can be conceptualised as those who are resourceful, reputable, competent, strategic and presentable. 5. Property managers clearly articulated concern about risks entailed in a number of characteristics or situations. Being on a low income was the principal and overarching factor which agents considered. Others included: - unemployment - ‘big’ families; sole parent families - domestic violence - marital breakdown - shift from home ownership to private rental - Aboriginality and specific ethnicities - physical incapacity - aspects of ‘presentation’. The financial vulnerability of applicants in these groups can be invoked, alongside expressed concerns about compromised capacities to manage income and/or ‘care for’ the property, as legitimate grounds for rejection or a lower ranking. 6. At the level of face-to-face interaction between the property manager and applicants, more intuitive assessments of risk based upon past experience or ‘gut feelings’ come into play. These judgements are interwoven with more systematic procedures of tenant selection. The findings suggest that considerable ‘risk’ is associated with low-income status, either directly or insofar as it is associated with other forms of perceived risk, and that such risks are likely to impede access to the professionally managed private rental market. Detailed analysis suggests that opportunities for access to housing by low-income householders also arise where, for example: - the ‘local experience’ of an agency and/or property manager works in favour of particular applicants - applicants can demonstrate available social support and financial guarantors - an applicant’s preference or need for longer-term rental is seen to provide a level of financial security for the landlord - applicants are prepared to agree to specific, more stringent conditions for inspection of properties and review of contracts - the particular circumstances and motivations of landlords lead them to consider a wider range of applicants - In particular circumstances, property managers are prepared to give special consideration to applicants who appear worthy, albeit ‘risky’. The strategic actions of demonstrating and documenting on the part of vulnerable (low-income) tenant applicants can improve their chances of being perceived as resourceful, capable and ‘savvy’. Such actions are significant because they help to persuade property managers not only that the applicant may have sufficient resources (personal and material) but that they accept that the onus is on themselves to show they are reputable, and that they have valued ‘competencies’ and understand ‘how the system works’. The parameters of the market do shape the processes of risk-assessment and, ultimately, the strategic relation of power between property manager and the tenant applicant. Low vacancy rates and limited supply of lower-cost rental stock, in all areas, mean that there are many more tenant applicants than available properties, creating a highly competitive environment for applicants. The fundamental problem of supply is an aspect of the market that severely limits the chances of access to appropriate and affordable housing for low-income rental housing applicants. There is recognition of the impact of this problem of supply. The study indicates three main directions for future focus in policy and program development: providing appropriate supports to tenants to access and sustain private rental housing, addressing issues of discrimination and privacy arising in the processes of selecting suitable tenants, and addressing problems of supply.