New Ventures Based on Open Innovation - an Empirical Analysis of Start-Up Firms in Embedded Linux

An important and intriguing aspect of entrepreneurship is the formation of new ventures in the domain of open source software (OSS). Previous research on these ventures has primarily looked at the design of business models, yet has neglected other key questions relating to the management of these firms, despite clear indications that some existing insights on venture management cannot be applied to new ventures in OSS. The purpose of this paper is to explore how three key challenges of venture management - the liabilities of newness and smallness of start-ups and market entry barriers - affect new ventures in OSS. Based on empirical data from interviews and a large scale survey we find that many of the liabilities that are typically discussed in the entrepreneurship literature are much less of a challenge for new ventures in OSS. Our findings have interesting implications for the emerging theory on e-entrepreneurship, and for entrepreneurs considering to exploit business opportunities in OSS, and more generally business opportunities based on open innovations