Why develop open-source software? The role of non-pecuniary benefits, monetary rewards, and open-source licence type

TLDR: In this paper, the authors present an estimable dynamic programming model of joint labour supply and open-source participation decisions that can provide empirical estimates of relative importance within a single unified framework of optimal decision-making.

Abstract: A review of the basic theory of optimal open-source software contributions points to three key factors affecting the decision to contribute to the open-source development process: non-pecuniary benefits, future expected monetary returns, and open-source licence type. This paper argues that existing large-scale software developer surveys are inadequate for measuring the relative importance of these three factors. Previous econometric studies that collect their own unique datasets also fall short because they generally measure the importance of only one supply factor in isolation. To fill the gap, I specify an estimable dynamic programming model of joint labour supply and open-source participation decisions that can provide empirical estimates of relative importance within a single unified framework of optimal decision-making.

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Sauer, Robert M.
Working Paper
Why develop open source software? The role of
non-pecuniary benefits, monetary rewards and open
source licence type
IZA Discussion Papers, No. 3197
Provided in Cooperation with:
IZA – Institute of Labor Economics
Suggested Citation: Sauer, Robert M. (2007) : Why develop open source software? The role
of non-pecuniary benefits, monetary rewards and open source licence type, IZA Discussion
Papers, No. 3197, Institute for the Study of Labor (IZA), Bonn
This Version is available at:
http://hdl.handle.net/10419/34637
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IZA DP No. 3197
Why Develop Open Source Software?
The Role of Non-Pecuniary Benefits,
Monetary Rewards and Open Source Licence Type
Robert M. Sauer
DISCUSSION PAPER SERIES
Forschungsinstitut
zur Zukunft der Arbeit
Institute for the Study
of Labor
December 2007

Why Develop Open Source Software?
The Role of Non-Pecuniary Benefits,
Monetary Rewards and Open Source
Licence Type
Robert M. Sauer
University of Southampton
and IZA
Discussion Paper No. 3197
December 2007
IZA
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IZA Discussion Paper No. 3197
December 2007
ABSTRACT
Why Develop Open Source Software?
The Role of Non-Pecuniary Benefits, Monetary Rewards
and Open Source Licence Type
*
A review of the basic theory of optimal open-source software contributions points to three key
factors affecting supply: non-pecuniary benefits, future expected monetary returns, and open-
source licence type. This paper argues that existing large-scale software developer surveys
are inadequate for measuring the relative importance of these three factors. Moreover,
previous econometric studies that collect their own unique datasets generally measure the
importance of only one supply factor in isolation. To fill the gap, I specify a dynamic
programming model of joint labour supply and open-source contribution decisions that can
provide empirical estimates of relative importance within a single unified framework.
JEL Classification: C61, C80, J24, J44
Keywords: software, open-source, labour supply, dynamic programming
Corresponding author:
Robert M. Sauer
University of Southampton
School of Social Sciences
Southampton SO17 1BJ
United Kingdom
E-mail:
R.M.Sauer@soton.ac.uk
*
I thank Julian Morris, Eric Raymond, Corinne Sauer and Margaret Stevens for providing insightful
comments on previous drafts.

1Introduction
Ov er the past decade, there has been a phenomenal increase in the adoption of open
source software by both firm s and go vernmen ts. In 1996,themarketshareofthe
open source operating system Lin u x , in the global server mark et, was roughly 6
percen t. By the yea r 2003, Lin u x’s mar ket share had reac h ed 28 percent. Bet ween
1996 and 2003, Linux overtook its proprietary software competitors U nix and Netware
and substantially closed the gap with the traditional leader in the sector, Microsoft
Windo ws (see Wheeler (2004)).
The reasons wh y firms and go v ernm ents have increased their adoption of open
source software are generally well-understood. In certain computing environmen ts,
the total cost of o wnership (TCO) of open source software can be lower than the
TCO of proprietary soft ware. Open source software is also n ow considered to be
of equivalent or higher quality t ha n many prop rietary software alternatives. The
increasin g deman d for open sou rce soft ware is mainly a function of falling TCO and
impr ov ed program function ality (see M acCormack (2003)).
1
In stark con trast to the demand side of the software mark et, the main determi-
nan ts of the supply of open source soft ware are still unknown. The cen tral puzzle is
that most open source software developers are volun teers that supply their labor for
free, and many developers agree to have their con tributions licensed in such a way
that it is difficult for them to directly profit from the resulting software product. Pre-
vious researc h addressing this puzzle has poin ted to non-pecuniary benefits, future
monetary rewards and open source license t ype as the three key factors influencing
the individu al’s decision to vo luntarily contr ibut e to open source develop me nt (see,
e.g., Lerner and Tirole (2002)). How ever, there is currently ve ry little emp irical evi-
dence on the relative importance of these three supply factors. Obtaining empirical
1
Governments may also prefer open source software solutions for "non-pecuniary" reasons. For
example, open source software can in some cases be more easily adapted to meet linguistic and
cultural preferences.
2

Frequently asked questions

Q1. What are the contributions in "Why develop open source software? the role of non-pecuniary benefits, monetary rewards and open source licence type" ?

This paper argues that existing large-scale software developer surveys are inadequate for measuring the relative importance of these three factors. To fill the gap, I specify a dynamic programming model of joint labour supply and open-source contribution decisions that can provide empirical estimates of relative importance within a single unified framework. 

Q2. What are the future works mentioned in the paper "Why develop open source software? the role of non-pecuniary benefits, monetary rewards and open source licence type" ?

Unfortunately, the developer surveys that are available to researchers today are inadequate for studying the relative importance of these three key factors. 

Q3. What are the main determinants of the supply of open source software?

The increasing demand for open source software is mainly a function of falling TCO and improved program functionality (see MacCormack (2003)). 

Q4. What does Lerner and Tirole (2002) suggest?

Lerner and Tirole (2002) also note that the signaling incentive to voluntary contributions suggests that strategic complementarities may be important. 

Q5. What are the notable surveys of open source developers?

Most notable are the FLOSS (Free/Libre and Open Source Software) surveys which tend to over-sample developers from particular geographical regions. 

Q6. What is the main reason for the open source developer’s decision problem?

With firm-initiated projects, developers are less likely to reap non-pecuniary benefits related to ideological satisfaction and/or enhanced status in the open source community. 

Q7. What is the probability of a developer receiving an offer to participate in an open source project?

With probability λos2t , a developer receives an offer to participate in a project that is licensed solely under GPL, and with probability 1− λos1t − λos2t , the developer receives no offer and cannot choose to participate in an open source project for that period. 

Q8. What are the main factors influencing the adoption of open source software?

Previous research addressing this puzzle has pointed to non-pecuniary benefits, future monetary rewards and open source license type as the three key factors influencing the individual’s decision to voluntarily contribute to open source development (see, e.g., Lerner and Tirole (2002)). 

Q9. How can the model be estimated using the standard techniques employed in the literature?

As soon as suitable panel data become available, the model could be estimated using the standard techniques employed in the literature on the solution and estimation of dynamic programming models. 

Q10. What is the only way a firm can induce developers to participate in an open source project?

In some cases, it may be that the only way a firm (or other project initiator) can induce developers to participate in an open source project is to put the project under a restrictive license such as the GNU General Public License (GPL).