When less is more: coordinating innovation in open versus closed source software development

Abstract

This paper compares the coordination effort required for innovative work in a typical firm and in an open source software development project. It concludes that the open mode of organising requires a lower amount of coordination compared to the closed mode typical of firms. The reasons for this finding are a reduced need for subsystem differentiation, task variability and interdependence in open source software development. The open mode is therefore interesting for entrepreneurial ventures striving to overcome limited resources. It has two advantages: it creates fewer costs and is better suited to generating innovative output compared to the closed model used in firms. This conceptual paper builds on the literature on open organisations, the open source software phenomenon and contingency theory. It illustrates its theoretical findings with two cases (Microsoft and the Arch Linux open source project).