Beyond free software: An exploration of the business value of strategic open source

Abstract

The phenomenon of open source software (OSS) has been well studied from the software development perspective, but it has received much less attention from the perspective of business value. Nevertheless, OSS, when viewed as a value creation process rather than ‘free’ software, provides businesses with value through access to knowledge and innovation capacity resident in online communities. This conceptualisation, which we label ‘strategic open source’ requires firms to rethink their strategy and processes as there is a shift in focus from ownership to openness and collaboration with external parties. Nonetheless, the emergence of OSS poses a puzzle for conceptions of organisational theory. Therefore, a theorising process is needed in order to develop a deeper understanding of how value is created and captured with OSS. Using a field study of eleven European firms, this paper explores the creation and capture of business value from strategic open source. The findings reveal that while decision makers look to open innovation initiatives like OSS for value creation and capture, there is still a desire to remain self reliant, resulting in collaborative design (of external innovations) rather than collaborative decision making with value network partners in relation to how such innovations would help create and capture value within firms.