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Do Technology Diffusion Theories Explain the OSS Business Model Adoption Patterns ?

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  • Koski, Heli

Abstract

This paper addresses the question of the software companies timing of adoption of the open source software (OSS) business models comprising the supply of OSS products and/or services. The game-theoretic technology adoption models do not explain well the observed diffusion patterns of the OSS business model among the sample of 716 European software firms. Instead, it seems that the network effects influentially shape the diffusion path of the OSS supply strategies. Our study further contributes to the technology diffusion literature as our econometric model aims at separating, unlike the previous empirical studies on technology diffusion, the role that the replacement effect has in the diffusion patterns of new technologies. Our data detect a clear replacement effect hindering the incumbents investments in new technology. The expected price declines of the computer programs and thus the expected declining license revenues from the proprietary software accelerate less the incumbent firms timing of adoption of the OSS supply model than that of the entrants.

Suggested Citation

  • Koski, Heli, 2007. "Do Technology Diffusion Theories Explain the OSS Business Model Adoption Patterns ?," Discussion Papers 1102, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:dpaper:1102
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    Keywords

    timing of technology adoption; diffusion; open source software; business models;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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