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

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
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/

For technical questions regarding this item, or to correct its listing, contact: (Nicholas Economides).

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:

References listed on IDEAS
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  1. Mikko Mustonen, 2005. "When Does a Firm Support Substitute Open Source Programming?," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 14(1), pages 121-139, 03. [Downloadable!] (restricted)
  2. 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. [Downloadable!]
  3. Stefano Comino & Fabio M. Manenti, 2003. "Open Source vs Closed Source Software: Public Policies in the Software Market," Industrial Organization 0306001, EconWPA. [Downloadable!]
  4. Lerner, Josh & Tirole, Jean, 2002. "Some Simple Economics of Open," Journal of Industrial Economics, Blackwell Publishing, vol. 50(2), pages 197-234, June. [Downloadable!] (restricted)
  5. Justin Pappas Johnson, 2002. "Open Source Software: Private Provision of a Public Good," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 11(4), pages 637-662, December. [Downloadable!] (restricted)
  6. Katz, Michael L & Shapiro, Carl, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring. [Downloadable!] (restricted)
  7. Casadesus-Masanell, Ramon & Ghemawat, Pankaj, 2003. "Dynamic mixed duopoly: A model motivated by Linux vs. Windows," IESE Research Papers D/519, IESE Business School. [Downloadable!]
  8. Economides, Nicholas, 1996. "The economics of networks," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 673-699, October. [Downloadable!] (restricted)
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  9. Lerner, Josh & Tirole, Jean, 2001. "The open source movement: Key research questions," European Economic Review, Elsevier, vol. 45(4-6), pages 819-826, May. [Downloadable!] (restricted)
  10. Josh Lerner & Jean Tirole, 2004. "The Economics of Technology Sharing: Open Source and Beyond," NBER Working Papers 10956, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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