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

Heli Koski

No 1102, Discussion Papers from The Research Institute of the Finnish Economy

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.

Keywords: timing of technology adoption; diffusion; open source software; business models (search for similar items in EconPapers)
JEL-codes: C41 D21 D23 L2 L86 O14 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2007
New Economics Papers: this item is included in nep-ict, nep-ino, nep-ipr, nep-pr~, nep-net and nep-tid
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