Open Source Software Development, Innovation, and Coordination Costs

Open source is often presented as a very promising governance structure for the development of software in the Internet world. One of its greatest advantages is that it enables and integrates the flow of innovation coming from many unrelated developers. We extend previous inquiries by showing that, due to information communication problems, this governance structure is in fact more efficient for the development of incremental innovations rather than radical innovations. Implications are drawn in terms of the future of the open source system, the economics of innovation and public policy.