1

Open SourceSoftware andInnovation

Alexia Gaudeul

GSBC, Jena

August 3, 2009.3rd Jena Summer Academy on “Innovation and Uncertainty”.

2OSS = Open Source SoftwareOS = Open Source

Outline of thepresentation Motivation. Main areas of study: theories of public goods and of

sequential innovation. What is innovation in the software industry, and how

much is there? OSS: a public good subject to free riding. Is OSS a threat to innovation? Patterns of cohabitation of OS and proprietary software

innovation.

3

Note: Software is protected by copyright,only very few software processes arepatented (“An Empirical Look at SoftwarePatents”, Bessen and Hunt, 2004).

Motivation

Practice: Development of new software is a very complexprocess, not well understood.

Policy: How to encourage innovation in the production ofinformation goods.

Theory: OSS is a challenge to the established theories ofinnovation. Free revelation of source code rather than “closed”

innovation protected by patents and trademarks.

No separation between innovator and users.

Works even though models of collective innovationpredict it would not.

4

What is softwareinnovation? Identifying and responding to new users’ needs?

“Satisfying heterogeneous user needs via innovationtoolkits”, Franke and von Hippel, 2003.

Improving the quality and reliability of software? “A study of open and closed source quality”, Kuan, 2002.

Finding new ways to develop software (processinnovation)?

Open sourcing / reverse engineering existing proprietarysoftware?

Making software portable/ compatible/ inter-operablewith other software?

5

How innovative is OSS?(1) “Innovativeness of OSS projects”, Klincewicz,

2005. Based on the description of OS projects.

6

How innovative is OSS?(2) “Innovativeness of OSS solutions: an alternative

methodology”, Lorenzi and Rossi, 2007. OSS more innovative than PS.

Based on experts opinion on a small sample.

Overall, evidence is mixed, owing notably to thedifficulty in establishing measures of innovationand measures of diffusion in this sector.

7

Private Provision of aPublic Good “OSS: private provision of public goods”, Johnson, 2003.

OSS raises issues of free riding, but

Those are lessened if only the most able programmers work onOSS.

Those are lessened if work is organized in a modular way. The lack of formal leadership leads to a risk of forking

(developers setting out on their own).

“Collaboration, peer review and open source software”,Johnson, 2006. OS development is inefficient, but not as much as

proprietary production!

Especially in cases where critical peer review and regular softwaremaintenance are necessary.

8

Licensing and incentives

“The Scope of Open Source Licensing”, Lerner andTirole, 2002. Activity of OS developers depends on the type of license.

More restrictive licenses --> a tool to signal programming ability. Less restrictive licenses --> a tool to foster collaboration.

This may affect the innovativeness of GPL vs. BSDprojects (open question). Some circumstantial evidence that flagship BSD software

is more innovative than flagship GPL software.

LaTeX, Apache, Sendmail, Unix all precursors. Linux, Gnome, Firefox imitations of existing (OS or proprietary)

software.

9

OSS as a threat toproprietary innovation “Public subsidies for open source?”, Schmidt and

Schnitzer, 2003. Threat on innovation by crowding out private provision.

BUT: “The impact of entry and competition by OSS on

innovation activity”, Bitzer and Schröder, 2005. The pace of commercial innovation has increased since

the introduction of competing OSS.

Measured by frequency of release.

“Why open-source software does not succeed”,Gaudeul, 2008. OSS has made forays in only a limited number of fields,

usually developer oriented, not in end-userapplications.

10

Public/PrivateCompetition/Cooperation “The private-collective innovation model”, von Hippel

and von Krogh, 2003. OSS developers derive private and organizational benefits

from contributing to the development of a public good.

“Open Source Software, Closed Source Software orBoth”, von Engelhardt and Swaminathan, 2008. A mixture of OS and proprietary software maximizes

growth.

“A Model of Competition Between Open Source andProprietary Software”, Gaudeul, 2008. A mixture of OS and proprietary software maximizes

welfare.

11

Public/PrivateCompetition/Cooperation “What is the point of the BSD license?”, Gaudeul, 2005.

Depending on development costs and market potential, aproject leader may prefer OS licenses over keeping theproject private.

In order to prevent successive developers fromappropriating the software, the leader may choose to putthem in competition by broadening participation.

The prospect of releasing a major improvement under aproprietary license (allowed under the BSD) inducesdevelopers to work on the project.

The BSD license may thus be preferred to the GPL.

This leads to a pattern of cohabitation of severalproprietary versions of the same OSS.

12

Sequence of innovationsin the case of LaTeX

“Do open source developers respond to competition?The LaTeX case study”, Gaudeul, 2007. Study of the succession and interaction between public

and private (OS and proprietary) innovations in themarket for typesetting software.

LaTeX started out a market for desktop scientific publishing.

was squeezed out by higher end and lower endproprietary solutions,

was regenerated by independent efforts to establishcommon standards in the publishing industry.

Proprietary software emerged to support the use ofLaTeX by non-specialists and users with specializedneeds.

Script

Scribe

Roff

70s 80s 90s 00s

Dominance

Precursors

Script

Scribe

Roff

Word processorsCorel WordPerfectMS Word

Structured textprocessorsFramemaker3B2ArbortextXyvision

DesktoppublishingQuarkPagemakerVenturaIndesign

High-end typesetting and publishing

Low-end typesetting and publishing

Squeeze

Dominance

70s 80s 90s 00s

Precursors

Script

Scribe

Roff

Word processorsCorel WordPerfectMS Word

Structured textprocessorsFramemaker3B2ArbortextXyvision

DesktoppublishingQuarkPagemakerVenturaIndesign

PDF

XML

OpenOffice

Abiword

Precursors

Open Standards

High-end typesetting and publishing

Low-end typesetting and publishing

Squeeze

Dominance

70s 80s 90s 00s

EnginesOmegaNTSpdfTeXXeTeX

Fragmentation

Interfaces/DistributionsLyX

XeMTeXTeXShop

PackagesEplainLaTeX2eConTeXtTeXinfo

OS Software

1970 1980 1990 2000

LaTeX

PCTeXMicroTeX

TeXturesY&Y

Scientific Word

emTeXMikTeXTeXLive

WinShell

Macro

WinEdt

Proprietary

Open-source

Distributions

CoreTeX

TeXshopXeMTeX

Interfaces

Note: Not all relevant projects are shown.

17

Directions for futureresearch Empirical work.

Current empirical work is with small samples.

A variety of measures of innovation are used.

Very little systematic analysis of the dynamics ofinnovation and their interaction with their generalcontext.

Theory. Need for a simple dynamic model of collective innovation.

Difficulties in studying the interaction of proprietary andOS innovation in a common, consistent framework.

18

References1. Bessen and Hunt, 2004, An Empirical Look at Software Patents.2. Bitzer and Schröder, 2005, The impact of entry and competition by OSS on innovation

activity.3. Franke and von Hippel, 2003, Satisfying heterogeneous user needs via innovation

toolkits.4. Gaudeul, 2005, What is the point of the BSD license?5. Gaudeul, 2007, Do open source developers respond to competition? The LaTeX case

study.6. Gaudeul, 2008, Why open-source software does not succeed.7. Gaudeul, 2008, A Model of Competition Between Open Source and Proprietary Software.8. Johnson, 2003, OSS: private provision of public goods.9. Johnson, 2006, Collaboration, peer review and open source software.10. Klincewicz, 2005, Innovativeness of OSS projects.11. Kuan, 2002, A study of open and closed source quality.12. Lerner and Tirole, 2002, The Scope of Open Source Licensing.13. Lorenzi and Rossi, 2007, Innovativeness of OSS solutions: an alternative methodology.14. Schmidt and Schnitzer, 2003, Public subsidies for open source?15. von Engelhardt and Swaminathan, 2008, Open Source Software, Closed Source Software

or Both.16. von Hippel and von Krogh, 2003, The private-collective innovation model.