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Who Starts with Open Source? Institutional Choice of Start-Ups in the German ICT Sector

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Listed:
  • Michael Fritsch

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

  • Sebastian von Engelhardt

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

Abstract

We analyze the characteristics of new businesses in the German ICT industry, distinguishing them based on their choice between two IPR regimes: open source software (OSS) or closed source software (CSS). The share of new firms with an OSS-based business model has increased considerably over the last several years. OSS-based firms tend to be smaller (in terms of staff and capital) and experience less shortages of capital. Only older cohorts of OSS-intensive start-ups had more difficulty than their CSS counterparts in convincing potential financiers of their viability, indicating that OSS business models are now well established. We find no evidence that the lower entry barriers for OSS firms are particularly attractive to start-ups with low human capital endowment or to necessity-motivated entrepreneurs.

Suggested Citation

  • Michael Fritsch & Sebastian von Engelhardt, 2010. "Who Starts with Open Source? Institutional Choice of Start-Ups in the German ICT Sector," Jena Economic Research Papers 2010-049, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2010-049
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    References listed on IDEAS

    as
    1. Michael Fritsch & Alexandra Schroeter, 2009. "Are More Start-Ups Really Better? Quantity and Quality of New Businesses and Their Effect on Regional Development," Jena Economic Research Papers 2009-070, Friedrich-Schiller-University Jena.
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    More about this item

    Keywords

    New business formation; institutions; open source; intellectual property rights; software industry;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • L17 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Open Source Products and Markets
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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