Flourish or Perish? The Impact of Technological Acquisitions on Contributions to Open-Source Software

Abstract

Flourish or Perish? The Impact of Technological Acquisitions on Contributions to Open-Source Software This study examines how acquisitions of open-source software (OSS) firms may impact the internal and external contributors to the OSS projects of acquisition targets. We find that, for target firms, acquisitions hurt internal contributions from their employees to their OSS projects but attract more external contributions from outside developers. Therefore, managers of merged entities should strive to maintain the incentives of target firms’ internal developers after acquisitions, and they can also leverage acquisitions to attract external developers. We also find that acquirers with prior OSS experiences and similar OSS projects with target firms are in an advantageous position to attract contributions from both target firms’ internal developers and external developers in the OSS community. In this regard, managers of acquirers can consider building their OSS experiences and selecting appropriate target firms before acquisitions. Moreover, our study suggests that acquisitions of OSS firms can also benefit the whole OSS community by motivating the contributions of internal and external developers to other projects in the community. Therefore, for both practitioners and policy makers, acquisitions should have important implications for nourishing the entire OSS community.