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  • March 2019
  • Article
  • Management Science

Open Source Software and Firm Productivity

By: Frank Nagle
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Abstract

As open source software (OSS) is increasingly used as a key input by firms, understanding its impact on productivity becomes critical. This study measures the firm-level productivity impact of nonpecuniary (free) OSS and finds a positive and significant value-added return for firms that have an ecosystem of complementary capabilities. There is no such impact for firms without this ecosystem of complements. Dynamic panel analysis, instrumental variables, and a variety of robustness checks are used to address measurement error concerns and to add support for a more causal interpretation of the results. For firms with an ecosystem of complements, a 1% increase in the use of nonpecuniary OSS leads to an increase in value-added productivity of between 0.002% and 0.008%. This effect is smaller for larger firms, and the results indicate that prior research underestimates the amount of IT firms use.

Keywords

Applications and Software; Open Source Distribution; Performance Productivity; Information Technology; Strategy

Citation

Nagle, Frank. "Open Source Software and Firm Productivity." Management Science 65, no. 3 (March 2019): 1191–1215.
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About The Author

Frank Nagle

Strategy
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