32 Pages Posted: 10 Nov 2004
Date Written: September 2004
Linux is an important phenomenon at the center of the current open source software [OSS] movement. Academic research has thus far focused on motivations of individual programmers to participate in this movement and on the economics of OSS. There has been inadequate focus on the level of network effects enjoyed by Linux within the community of complementors: those independent software companies that design and deliver complementary products on the Linux platform. The success of the OSS movement relies on indirect network effects through the provision of complementary commercial software products to make the Linux platform attractive and acceptable to end-customers. Using data from over 1100 software companies over five years 1998-2002, we develop and test a model of why and when independent software product companies first embrace the Penguin icon representing Linux. We find strong support that commitment to Linux is explained by the age and business scope of independent software companies. Moreover, we find that the software firm's position relative to Microsoft is a significant predictor of commitment to Linux: higher dependence on Microsoft lowers the likelihood of Linux commitment and that the dependence on Microsoft is sticky. Collectively, we provide the first set of empirical results on the development and evolution of indirect network effects for Linux. We identify fruitful directions for further research to understand the dynamics of evolution in software networks.
Keywords: Linux, networks, software industry, network visualization, corporate performance
JEL Classification: O33
Suggested Citation: Suggested Citation
Venkatraman, N. Venkat and Lee, Chi-Hyon and Iyer, Bala, Make Way for the Penguin? Explaining Commitment to Linux by Independent Software Companies (September 2004). Available at SSRN: https://ssrn.com/abstract=615621 or http://dx.doi.org/10.2139/ssrn.615621