Who Starts with Open Source? Institutional Choice of Start-Ups in the German ICT Sector

University of Jena Economics Research Paper No. 2010-049

31 Pages Posted: 12 Feb 2011 Last revised: 7 May 2013

See all articles by Michael Fritsch

Michael Fritsch

University of Jena - School of Economics and Business Administration

Sebastian von Engelhardt

University of Jena - Economics Department

Date Written: August 4, 2010

Abstract

We analyze the characteristics of new businesses in the German ICT industry, distinguishing them based on their choice between two IPR regimes: open source software (OSS) or closed source software (CSS). The share of new firms with an OSS-based business model has increased considerably over the last several years. OSS-based firms tend to be smaller (in terms of staff and capital) and experience less shortages of capital. Only older cohorts of OSS-intensive start-ups had more difficulty than their CSS counterparts in convincing potential financiers of their viability, indicating that OSS business models are now well established. We find no evidence that the lower entry barriers for OSS firms are particularly attractive to start-ups with low human capital endowment or to necessity-motivated entrepreneurs.

Keywords: New Business Formation, Institutions, Open Source, Intellectual Property Rights, Software Industry

JEL Classification: D02, L17, L26, L86

Suggested Citation

Fritsch, Michael and Engelhardt, Sebastian von, Who Starts with Open Source? Institutional Choice of Start-Ups in the German ICT Sector (August 4, 2010). University of Jena Economics Research Paper No. 2010-049, Available at SSRN: https://ssrn.com/abstract=1760047 or http://dx.doi.org/10.2139/ssrn.1760047

Michael Fritsch (Contact Author)

University of Jena - School of Economics and Business Administration ( email )

Carl-Zeiss-Str. 3
D-07743 Jena
Germany

Sebastian von Engelhardt

University of Jena - Economics Department ( email )

Carl-Zeiss-Str. 3
07743 Jena
Germany

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