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

Abstract

This study investigates the impact of technological acquisitions on contributions to firm-sponsored open-source software (OSS). We distinguish between internal contributors affiliated with target firms and external contributors from the community, and examine how they adjust and shift their contribution efforts as a response to technological acquisitions. Our findings reveal that acquisitions make external contributors more active both in contributing to target firms’ sponsored projects and in contributing to other projects in the community. While internal contributors reduce contributions to target firms' sponsored projects after acquisitions, they become more active in contributing to other projects in the OSS community. Therefore, our study illustrates how technological acquisitions can potentially benefit the whole OSS community by motivating contributors to reallocate development efforts. We also find that when the acquirer’s OSS experience and the project similarity between the acquirer and the target motivate both external and internal contributors to shift more of their development efforts to the acquirer's OSS projects. The implication is that the signaling effect and the synergy potential in technological acquisitions can also benefit the acquirer's own projects within the OSS community. Taken together, by diving in more granular details of OSS contribution activities, our study improves the understanding of the impacts of technological acquisitions on innovation in the OSS context.

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

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