If a company takes a permissively licensed open source application and then develops a closed source application from that by reworking extensive parts of the application, adding new features and applying bug fixes...

Ignoring any license requirements...

• How does the transition happen and what can be done to prevent it beyond choosing a difference license?
• What are the (ethical or social) responsibilities for the company? (For example: Giving back to the open source project would be the ethical thing to do)
• If the open source version and closed source version are both available, how does the competition affect either product?

Are there any examples of companies or products that have done this (either successfully or unsuccessfully) in the past? What was the community attitude toward those projects?