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

Abstract

This study examines the impact of technological acquisitions on contributions to firm-sponsored community-based open-source software (OSS). We distinguish between internal contributors affiliated with target firms and external contributors from the community, and examine how they respond to technological acquisitions differently. Theoretically, we examine how technological acquisition influences contributors’ uncertainty about project quality through a signaling effect and influences their uncertainty about project continuity through potential resource combination. We connect uncertainties with contributors’ motivations to theorize their responses to acquisitions. Empirically, we find that external contributors contribute more actively to both target firms’ sponsored projects and other projects in the OSS community after acquisitions, which contrast with the adverse effects of acquisitions observed in traditional corporate innovation. While internal contributors reduce contributions to target firms' sponsored projects after acquisitions, they increase contributions to other OSS projects in the community. We also find that the acquirer’s OSS experience and the project similarity between the acquirer and the target drive both external and internal contributors to shift their development efforts to the acquirer's projects and other projects in the OSS community. By examining these effort shifts in OSS contributions, our study generates unique theoretical insights about the impacts of technological acquisitions in the OSS context and important practical implications for acquirers, target firms, and the general OSS community.

Keywords: Open-Source Software, Technological Acquisitions, Internal Contributions, External Contributions, Openness, Difference-in-difference

JEL Classification: G34, L17, L86, O31, O36