Scholion.ai

Open Source Software and Firm Productivity

Frank Nagle

Management Science · 2019 · Volume 65 · Issue 3

DOI: 10.1287/mnsc.2017.2977

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.

Keywords

productivity of IT, user innovation, open source software, economics of IS, technology strategy, IT policy and management

Enable JavaScript for citation tools and additional paper interactions.