APPROPRIATION AND APPROPRIABILITY IN OPEN SOURCE SOFTWARE

Firms in open source software (OSS) are active in a field encompassing all the characteristics of a public good, given the non-excludability and non-rivalry nature of OSS. The fact that many important inputs to the innovative process are public should not be taken to mean that innovators are prevented from capturing private returns. The objective of this paper is to explore how firms appropriate returns from innovations that are created outside the boundaries of firms and in the public domain, using the case of OSS. To do so, the paper draws upon an explorative multiple case study of five small firms that attempt to appropriate returns from OSS, with rich empirical evidence from various data sources. The cases illustrate how firms try a variety of approaches to appropriate adequate returns, and suggest that selling services is the dominant trend. Firms also balance the relative inefficiency of traditional means of intellectual property rights such as patents by putting greater emphasis on first-mover advantages and creating network externalities.