I’m absolutely delighted that Elinor Ostrom has been selected to receive this year’s Nobel in Economics (along with Oliver Williamson). I started reading her work regularly a couple of years ago now, and I am working to pattern my research stream on Innovation Systems after her work on the governance of the commons. Ostrom is primarily a field researcher – her books and papers are based on well-designed, thoroughly executed empirical work. This is one of the reasons that I think she is a terrific choice for the Nobel – it is great to see careful empirical work recognised.

Ostrom’s work has some important implications for innovation studies as well. I have primarily focused on her research regarding the collective management of common-property resources (CPRs). She does a great job of defining the conditions in which shared resources can be managed effectively. While Ostrom has primarily looked at physical resources, I believe that her ideas also can apply to managing shared intellectual resources as well – for example, in open innovation regimes.

Ostrom shows that effective institutions for the management of CPRs can arise spontaneously when certain conditions are met. These include communication between actors, repeated interactions between stakeholders, and some ability to sanction those who renege on agreements. From this, she builds a model of collective action based on the ideas that people have limited access to information and limited capacity to evaluate the information that they have, that governance institutions evolve slowly and often from the bottom up (although legislative initiatives also influence their development), and that information flow and transaction costs are essential drivers of institutional development.

Elinor Ostrom is a top-tier researcher and thinker. Her work has important applications for people thinking about innovation and sustainability, and I hope that this Nobel award will expose her thoughts to a wider audience.

Sean Safford has written a nice entry on her research from a sociological perspective, and Peter Boettke has done the same taking an Austrian economics angle. You can find a good summary interview with her here, Alex Tabbarok discusses her ideas with some good links, and David Romer has one of the best summaries of why her work is great that I’ve run across so far. Here is a short video of Ostrom explaining some of her key ideas: