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An economic analysis of enterprise adoption of open source software

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Author Info

  • Evangelos Katsamakas

    ()
    (Graduate School of Business, Fordham University)

  • Mingdi Xin

    ()
    (Stern School of Business, New York University)

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    Abstract

    The emergence of open source and Linux has burdened IT managers with the challenge of whether, when, and in what applications to adopt open source software in their firms. We characterize the conditions under which enterprises adopt open source software. We show that adoption depends crucially on network effects, the fit of software with the range of applications used by each firm, and the IT capabilities of a firm. Our model predicts that most firms will adopt a heterogeneous IT architecture that consists of open source and proprietary software. The equilibrium adoption is often socially inefficient. This is the first paper in the open source literature to model the enterprise adoption of open source.

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    File URL: http://www.netinst.org/Katsamakas_Xin.pdf
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    Bibliographic Info

    Paper provided by NET Institute in its series Working Papers with number 05-29.

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    Length: 28 pages
    Date of creation: Oct 2005
    Date of revision: Oct 2005
    Handle: RePEc:net:wpaper:0529

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    Web page: http://www.NETinst.org/

    Related research

    Keywords: Open source software; Linux; IT management; IT architecture; IT capabilities; technology adoption.;

    This paper has been announced in the following NEP Reports:

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    1. Nicholas Economides, 1995. "The Economics of Networks," Working Papers 94-24, New York University, Leonard N. Stern School of Business, Department of Economics, revised Sep 1995.
    2. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
    3. Stefano Comino & Fabio M. Manenti, 2003. "Open Source vs Closed Source Software: Public Policies in the Software Market," Industrial Organization 0306001, EconWPA.
    4. Jürgen Bitzer & Philipp J. H. Schröder, 2003. "Competition and Innovation in a Technology Setting Software Duopoly," Discussion Papers of DIW Berlin 363, DIW Berlin, German Institute for Economic Research.
    5. Lerner, Josh & Tirole, Jean, 2001. "The open source movement: Key research questions," European Economic Review, Elsevier, vol. 45(4-6), pages 819-826, May.
    6. Justin Pappas Johnson, 2002. "Open Source Software: Private Provision of a Public Good," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(4), pages 637-662, December.
    7. Josh Lerner & Jean Tirole, 2004. "The Economics of Technology Sharing: Open Source and Beyond," NBER Working Papers 10956, National Bureau of Economic Research, Inc.
    8. Mikko Mustonen, 2005. "When Does a Firm Support Substitute Open Source Programming?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 121-139, 03.
    9. Mustonen, Mikko, 2003. "Copyleft--the economics of Linux and other open source software," Information Economics and Policy, Elsevier, vol. 15(1), pages 99-121, March.
    10. Casadesus-Masanell, Ramon & Ghemawat, Pankaj, 2003. "Dynamic mixed duopoly: A model motivated by Linux vs. Windows," IESE Research Papers D/519, IESE Business School.
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