Better Keep the Twenty Dollars: Incentivizing Innovation in Open Source

Open source is key to innovation yet is assumed to be done largely through intrinsic motivation. How can we incentivize it? In this paper, we examine the impact of a program providing monetary incentives to motivate innovators to contribute to open source. The Sponsors program was introduced by GitHub in May 2019 and enabled organizations and individuals alike to pay developers for their open source work. We study this program by collecting fine-grained data on nearly 100,000 GitHub users, their activities, and sponsorship events. We first, using a difference-in-differences approach, document two main effects. One, developers who opted into the program, an action that does not itself entail a financial reward, increased their output after the program’s launch. Two, the actual receipt of a financial sponsorship has a long-lasting negative effect on two measures of innovation –repository creation and community-oriented tasks– but not in coding effort. Despite a net positive effect on innovation, sponsorship appears to crowd out intrinsic motivation, shifting effort toward self-promoting activities. Results from a pre-registered survey and experiment reinforce these findings, showing that modest sponsorship (USD 20) deters collaborative contributions compared to no compensation, larger rewards (USD 1000), or company sponsorships.