Flourish or Perish? The Impact of Mergers and Acquisitions on Contributions to Open-Source Software Projects

Posted: 1 Jul 2018

See all articles by Wei Chen

Wei Chen

University of Arizona - Eller College of Management

Fujie Jin

Kelley School of Business, Indiana University

Ling Xue

Georgia State University

Date Written: June 12, 2018

Abstract

This study examines how mergers and acquisitions (M&A) impact the acquired firms’ key initiatives of open innovation – their community-based open-source software (OSS) projects. We distinguish between internal contributions made by the acquired firms’ affiliated developers and external contributions made by outside developers, focusing on the potential differential impacts of M&A on these two types of contributions. We also consider how the organizational characteristics of OSS projects influence the impact of M&A. Our empirical investigation using a large panel dataset of technology startups generates novel findings. While M&A causes a significant decline in internal contributions, external contributions are less affected by the negative impact of M&A. We also find that while the effort and geographic dispersions of OSS contributors significantly escalate the negative impact of M&A on internal contributions, they do not exert a similar effect on external contributions. The geographic dispersion may even cultivate a positive impact of M&A on external contributions. These findings augment the existing understanding of the relationship between M&A and technological innovation by illustrating how the impact of M&A may alter in the domain of open innovation, and provide insights on practices for organizing open innovation to brace for the impact of M&A.

Keywords: Open-Source Software, Mergers & Acquisitions, Effort Dispersion, Geographic Dispersion, Difference-in-Differences

Suggested Citation

Chen, Wei and Jin, Fujie and Xue, Ling, Flourish or Perish? The Impact of Mergers and Acquisitions on Contributions to Open-Source Software Projects (June 12, 2018). Kelley School of Business Research Paper No. 18-55. Available at SSRN: https://ssrn.com/abstract=3197897

Wei Chen (Contact Author)

University of Arizona - Eller College of Management ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

Fujie Jin

Kelley School of Business, Indiana University ( email )

Business 670
1309 E. Tenth Street
Bloomington, IN 47401
United States
812-855-0943 (Phone)

HOME PAGE: http://https://kelley.iu.edu/facultyglobal/directory/FacultyProfile.cfm?netID=jinf

Ling Xue

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

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