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Reconciling investors and donators - The governance structure of open source

Egon Franck () and Carola Jungwirth ()
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Carola Jungwirth: Institute for Strategy and Business Economics, University of Zurich

No 8, Working Papers from University of Zurich, Institute for Strategy and Business Economics (ISU)

Abstract: Software developed and produced in open source projects has become an important competitor in the software industry. Since it can be downloaded for free and no wages are paid to developers, the open source endeavor seems to rest on voluntary contributions by hobbyists. In the discussion of this puzzle two basic patterns of argumentation stand out. In what we call investor approaches, emphasis is put on the fact that although no wages are paid to contributors, other pay-offs may turn their effort into a profitable investment. In what we call donator approaches the point is made that many people contribute to open source projects without expecting to ever receive any individual rewards. We argue that the basic institutional innovation in open source has been the crafting of a governance structure, which enables investment without crowding out donations. The focus of the presented analysis lies on the specific institutional mechanisms, by which the open source governance structure achieves to reconcile the interests of investors and donators.

Date: 2002
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Published in: Journal of Management and Governance, 7, 2003, S. 401-421.

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