Crowdsourced Digital Goods and Firm Productivity: Evidence from Open Source Software

As firms increasingly rely on crowdsourced digital goods, understanding their impact on productivity becomes critical. This study measures the firm-level productivity impact of one such good, non-pecuniary (free) open source software (OSS). The results show a previously unmeasured positive and significant return to the usage of non-pecuniary OSS that is not solely due to cost savings. Inverse probability weighting, instrumental variables, firm fixed effects, and management quality data add support for a causal interpretation. Across firms, a 1% increase in non-pecuniary OSS leads to a .073% increase in productivity or a $1.35 million increase in value-added production for the average firm in the sample. This effect is greater for larger firms and for firms in the services industry. These findings indicate that existing studies underestimate the amount of IT firms use and suggest that firms assuming the risks associated with non-pecuniary OSS gain benefits from collective intelligence and labor spillovers.