Contributing to Growth? The Strategic Role of Open Source Software for Global Startups

Abstract

How does participating in open source software (OSS) communities spur entrepreneurial growth? To address this question, we analyze novel data matching accounts from GitHub—the largest OSS hosting platform—to the universe of global software venture-backed firms identified by PitchBook. We find a robustly positive relationship between OSS contributions and entrepreneurial growth. These effects stem from mechanisms related to OSS contributions helping firms shape the direction of code, signal to potential acquirers and investors, and engage clients, rather than those related to learning about new software developments or cutting costs in software production. Consistent with these mechanisms, human capital, OSS policies, and market size positively moderate these effects, suggesting that OSS complements supply-side and demand-side country endowments. This research reveals that contributing to OSS can lead to entrepreneurial growth worldwide since sophisticated entrepreneurs can take strategic advantage of nudging code in a direction that fits their commercial interests as well as attracting acquirers and users. Further, we discuss important implications for policy and entrepreneurial strategy

Keywords: Entrepreneurship, open source software, GitHub, human capital, global entrepreneurship, scaling, entrepreneurial strategy