Open Source Software and Firm Productivity

Abstract

As open source software (OSS) is increasingly used as a key input by firms, understanding its impact on productivity becomes critical. This study measures the firm-level productivity impact of nonpecuniary (free) OSS and finds a positive and significant value-added return for firms that have an ecosystem of complementary capabilities. There is no such impact for firms without this ecosystem of complements. Dynamic panel analysis, instrumental variables, and a variety of robustness checks are used to address measurement error concerns and to add support for a more causal interpretation of the results. For firms with an ecosystem of complements, a 1% increase in the use of nonpecuniary OSS leads to an increase in value-added productivity of between 0.002% and 0.008%. This effect is smaller for larger firms, and the results indicate that prior research underestimates the amount of IT firms use. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2977 . This paper was accepted by Chris Forman, information systems.

Why makers make what they make: motivations to contribute to open source hardware development

“…They show that rational choice can explain this private provision, once one assumes that private benefits continue to exist even after the free contribution. Others have followed this argument (Spaeth et al, 2008;Nagle, 2018). Yet, more often, theories not only relying on rationality have been used to explain volunteer contributions.…”

Designing shared spaces for firm‐community collaborations for innovation: Formal policies and coordination in open source projects

“…The literature shows that the success, sustainability and functioning of such collaborations cannot be assumed (e.g., Chesbrough, Lettl, & Ritter, 2018; Comino, Manenti, & Parisi, 2007; Schröder & Hölzle, 2010). It may depend crucially on specific features of the community involved (Akgün, Byrne, Keskin, Lynn, & Imamoglu, 2005; Giuri, Ploner, Rullani, & Torrisi, 2010; Parmentier & Gandia, 2013; Swink & Song, 2007), on the knowledge it produces (Brun, Saetre, & Gjelsvik, 2009; Chatterji & Fabrizio, 2014), on certain firm‐specific characteristics (Nagle, 2018b; Stam, 2009), on environmental factors (Akgün, Byrne, Lynn, & Keskin, 2007) and on the nature of the problem to be solved (Felin & Zenger, 2014; Nickerson, Wuebker, & Zenger, 2017). In addition to the community, firm and environmental characteristics, an important factor affecting the success of these collaborations is the organization of the space they share to collaborate (Altman, Nagle, & Tushman, 2019; Dahlander & Magnusson, 2005; Fjeldstad, Snow, Miles, & Lettl, 2012; Puranam, Alexy, & Reitzig, 2014).…”

Managed Ecosystems and Translucent Institutional Logics: Engaging Communities

“…Additionally, exponentially decreasing information costs allow firms to engage in new innovation processes utilizing new search methods. Innovation processes are often compared to Darwinian evolutionary processes incorporating variation, selection, and retention (Nelson and Winter, 1982). In this framework, at the same time that decreasing information costs speed the exponential growth of solution spaces, they also enable new search methods at all stages of the innovation process, including variation, selection, and retention.…”

“…An old college ride-sharing board was self-managing and therefore not a managed ecosystem. In the open source software (OSS) world, while firms benefit by using and contributing to the creation of OSS (Athey and Ellison, 2014;Harhoff, Henkel, and von Hippel, 2003;Nagle, 2018Nagle, , 2019West and O'Mahony, 2008), OSS projects are only considered managed ecosystems when one organization controls the direction the ecosystem moves. For example, although many firms and individuals use and contribute to Linux and Apache, both have an organization at the center that sets the rules for collaboration and production, so they are managed ecosystems.…”