August 3, 2009.

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

Open Source
Software and
Innovation
Alexia Gaudeul
GSBC, Jena

1
Outline of the
presentation
 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.

OSS = Open Source Software

2
OS = Open Source
Motivation
 Practice: Development of new software is a very complex
process, not well understood.
 Policy: How to encourage innovation in the production of
information goods.
 Theory: OSS is a challenge to the established theories of
innovation.
 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 innovation
predict it would not.
Note: Software is protected by copyright,
only very few software processes are
patented (“An Empirical Look at Software
3
Patents”, Bessen and Hunt, 2004).
What is software
innovation?
 Identifying and responding to new users’ needs?
 “Satisfying heterogeneous user needs via innovation
toolkits”, 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 (process
innovation)?
 Open sourcing / reverse engineering existing proprietary
software?
 Making software portable/ compatible/ inter-operable
with other software?

4
How innovative is OSS?
(1)
 “Innovativeness of OSS projects”, Klincewicz,
2005.
 Based on the description of OS projects.

5
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 the

difficulty in establishing measures of innovation
and measures of diffusion in this sector.

6
Private Provision of a
Public 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 on
OSS.
 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 software
maintenance are necessary.

7
Licensing and incentives
 “The Scope of Open Source Licensing”, Lerner and
Tirole, 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. BSD
projects (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.

8
OSS as a threat to
proprietary 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-user 9
applications.
Public/Private
Competition/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 or
Both”, von Engelhardt and Swaminathan, 2008.
 A mixture of OS and proprietary software maximizes
growth.
 “A Model of Competition Between Open Source and
Proprietary Software”, Gaudeul, 2008.
 A mixture of OS and proprietary software maximizes
welfare.

10
Public/Private
Competition/Cooperation
 “What is the point of the BSD license?”, Gaudeul, 2005.
 Depending on development costs and market potential, a
project leader may prefer OS licenses over keeping the
project private.
 In order to prevent successive developers from
appropriating the software, the leader may choose to put
them in competition by broadening participation.
 The prospect of releasing a major improvement under a
proprietary license (allowed under the BSD) induces
developers to work on the project.
 The BSD license may thus be preferred to the GPL.
 This leads to a pattern of cohabitation of several
proprietary versions of the same OSS.

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Sequence of innovations
in 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 the
market for typesetting software.
 LaTeX
 started out a market for desktop scientific publishing.
 was squeezed out by higher end and lower end
proprietary solutions,
 was regenerated by independent efforts to establish
common standards in the publishing industry.
 Proprietary software emerged to support the use of
LaTeX by non-specialists and users with specialized
needs. 12
 Script
Dominance
Scribe
Precursors

Roff

70s 80s 90s 00s

 High-end typesetting and publishing
Structured text Desktop
processors publishing
Framemaker Quark
3B2 Pagemaker
Arbortext Ventura
Xyvision Indesign
Script
Dominance
Scribe
Precursors

Roff

Squeeze

Word processors
Corel WordPerfect
MS Word

Low-end typesetting and publishing

70s 80s 90s 00s

 High-end typesetting and publishing
Structured text Desktop PDF
processors publishing Open Standards
Framemaker Quark XML
3B2 Pagemaker
Arbortext Ventura
Xyvision Indesign Engines Packages
Script Omega Eplain
Dominance Fragmentation
NTS LaTeX2e
Scribe pdfTeX ConTeXt
Precursors XeTeX TeXinfo
Interfaces/Distributions
Roff LyX
Squeeze
XeMTeX
TeXShop
Word processors
Corel WordPerfect
MS Word OpenOffice
OS Software
Low-end typesetting and publishing Abiword

70s 80s 90s 00s

 Proprietary

TeXtures
PCTeX Y&Y
MicroTeX Scientific Word
Di WinEdt
In
st tWinShell
rib er
ut fa
io ce
Open-source ns s

Core Macro emTeX

TeX LaTeX MikTeX
TeXshop
TeXLive
XeMTeX

1970 1980 1990 2000

Note: Not all relevant projects are shown.

Directions for future
research
 Empirical work.
 Current empirical work is with small samples.
 A variety of measures of innovation are used.
 Very little systematic analysis of the dynamics of
innovation and their interaction with their general
context.

 Theory.
 Need for a simple dynamic model of collective innovation.
 Difficulties in studying the interaction of proprietary and
OS innovation in a common, consistent framework.

17
References
1. 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. 18