Firm Assets and the Rate of Product Introduction in Open Source Software

Abstract

Drawing on the resource-based theory of the firm, this paper investigates the role played by firm assets both upstream and downstream, in the software and the hardware dimensions, to explain the rate of product introduction in open source software (OSS). Using a selfassembled database of firms that announced releases of OSS products between 1995 and 2003, we find that the rate of product introduction can be explained by a strong position in software technology and downstream market presence in hardware. Firms with consolidated market presence in proprietary software and strong technological competence in hardware are more reluctant to shift to the new paradigm. The fear of cannibalization, the crucial role of absorptive capacity, and complementarities between hardware and software are plausible explanations behind our findings.

Keywords: Product Introduction, Open Source Software, Absorptive Capacity

JEL Classification: L86