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The institutionalization of Open Source

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Poiesis & Praxis

Abstract

Using concepts of neoinstitutional economics, such as transaction cost economics, institutional economics, property rights theory, and information economics, the development of the Open Source movement is investigated. Following the evolution of institutions in Open Source, it is discussed what the comparative institutional advantages of this model are. The conclusion is that it is the institutional framework of Open Source, not merely the low cost of Open Source software that makes it an attractive alternative mode of organizing the production and distribution of software and software-related services. Alternative organizations will be formed and existing organizations will be transformed to take advantage of its opportunities.

Zusammenfassung

Unter Rückgriff auf Konzepte der neuen Institutionenökonomik—Transaktionskosten, Institutionen, Eigentumsrechte und Informationsökonomik—wird die Entstehung der Open-Source-Bewegung untersucht. Die Herausbildung von Institutionen innerhalb der Open-Source-Bewegung wird hinsichtlich der dadurch induzierten komparativen Vorteile diskutiert. Es wird geschlussfolgert, dass nicht singuläre Faktoren wie etwa der niedrige Preis von Open-Source-Software für die Akzeptanz dieses Modelles ausschlaggebend sind. Vielmehr ist es die Gesamtheit der institutionellen Rahmenbedingungen, die Open Source als alternatives Modell für die Produktion und Distribution von Software attraktiv machen. Es ist davon auszugehen, dass unter Verwendung dieses Modells alternative Organisationen zur Softwareproduktion entstehen werden bzw. bestehende Organisationen sich transformieren.

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Notes

  1. Within this article, Free Software and Open Source software are used as synonyms.

  2. The term hacker, in its original sense, stems from hack, describing the process of a technological undertaking like computer programming primarily for the pleasure of itself (Levy 2001, p. 23).

  3. A nickname for the IBM 704 mainframe computer (Levy 2001, p. 19).

  4. According to the market research firm IDC, the quarterly revenue from Linux server sales now exceeds US$ 1.2 billion. With 27.7% market share, HP takes the leading position. IBM comes second with a 19.8% market share (Dunwoodie 2005).

  5. See SCO v. IBM and SCO v. Novell. Both cases are extensively documented by the GrokLaw project at http://www.groklaw.net/.

  6. For a broad view see Pool (1997).

  7. For the most comprehensive treatise on the Open Source movement yet see Weber (2004).

  8. For a comprehensive survey of the literature on neoinstitutional economics see Eggertsson (1990).

  9. We can take copyright and internet file sharing to illustrate what happens if ideology breaks down in face of changes in the institutional setting (see Litman 2001).

  10. Path dependency is the result of the establishment of inefficient technologies as industry standards, especially where strong network effects exist. Network externalities create high switching costs often avoided by the users. Thus, an inferior technology may persist for long times (see Stack and Gartland 2003).

  11. Coase (1988c) discusses how, in the presence of positive transaction costs, the firm as opposed to the market is a superior form of organizing production for realizing gains from specialization and cooperation.

  12. Since organizations constrain the behavior of their members, they are part of the institutional framework of their members, too. Firms are organizations (Coase 1988c) as well as institutions (Williamson 1985, p. 15).

  13. The world market for packaged software was estimated at US$ 169 billion in 2001 (OECD 2002, p. 5), up from about US$ 68 billion in 1994 (ibid.) and US$ 30 billion in 1987 (OECD 1996, p. 18).

  14. See Reidenberg (1998); Lessig (1999); Kesan and Shah (2002)

  15. The term ‘information-rich goods’ was chosen to denote products “such as songs, computer programs, novels, or scientific articles” (Besen 1987, p. 1).

  16. Benkler (2002) calls it “commons-based peer production” while von Hippel (2005b) speaks of a “user-centered innovation process” (p. 2) and “user-to-user assistance” (p. 105).

  17. cf. Himanen (2001) for an insightful comparison of both ethics.

  18. For a discussion of the motivation crowding-out effect see Frey and Jegaen 2000 and Osterloh and Frey 2000.

  19. Sometimes ideology trumps (pure) rationality (North 1981, pp. 50–54).

  20. cf. http://www.gnu.org/licenses/gpl.html.

  21. This clause defines the much discussed virality of the GPL, i.e. that derivative code inherits the GPL with its freedoms as its license.

  22. That coincides with an industry-wide trend towards computing services (see Carr 2005).

  23. The Open Source web browser Firefox impressingly demonstrates this with its fast growing installation base. See the Firefox homepage at http://www.mozilla.org/products/firefox/.

  24. IBM paved the way for licensing with their unbundling policy in 1969, cf. Grad (2002).

  25. Information goods are information-rich goods without physical embodiment, for example music when transferred over networks.

  26. To be precise, one has to distinguish between the anglo-american copyright regime and the continental droît d’auteur tradition, the first one building on a utilitarian philosophy while the latter one embracing a natural law assumption.

  27. cf. U.S. Constitution, art. 1, §8, cl. 8.

  28. For short treatises on common property see Eggertsson (1990) and Libecap (1998). For a comprehensive treatise see Ostrom (1990).

  29. Innovation in Open Source software is largely user-driven. Thereby, not only agency costs can be avoided, but an individual best-fit solution is possible, cf. Weber (2004) at pp. 265–267. When local solutions are propagated through distribution, global innovation takes place, cf., e.g., Franke and von Hippel (2003); Foray (2004) at p. 178, and von Hippel (2005a).

  30. “[C]opyright protects the expression of ideas; patent protects the ideas themselves.” Stobbs (2000) at p. 28. For any given idea there are almost infinite ways of expressing it, what makes copyright protection comparatively weak. Under a patent system, however, even independent development may constitute infringement. National Commission on New Technological Uses of Copyrighted Works (1979) at pp. 16–17.

  31. A recent study by Evans Data revealed that 56.2% of software developers are using Open Source modules, up from 38.1% in 2001 (Kuchinskas 2005)

  32. See David and Steinmueller (1994) for a detailed discussion.

  33. Foray (2004), at p. 36, qualifies standards as “integrative knowledge.”

  34. The code repositories usually contain a version control system for coordinating contributions of source code changes from distributed developers. The best known of its kind is the Concurrent Versions System (CVS). See Bar and Fogel (2003).

  35. See, e.g., the SourceForge portal http://sourceforge.net/ and the FreshMeat portal http://freshmeat.net/.

  36. The history of UNIX is reconstructed by Salus (1995).

  37. That refers to the experiences with the development of the MULTICS operating system, cf. Salus (1995) at p. 11.

  38. First software patents were upheld in US appeals courts as early as 1976. See In re Noll, 545 F.2d 141 (CCPA 1976) and In re Chatfield, 545 F.2d 152 (CCPA 1976).

  39. See von Hippel (2001); Chesbrough (2003); anon. (2003).

  40. The GPL forbids to charge license fees, cf. GPL section 11. See also Jaeger and Metzger (2002) at pp. 47–48.

  41. The observation of Kooths et al. (2003) is almost right in this regard. Their conclusion, however, that Open Source software development automatically has to be an inferior mode of software production and distribution (“...leads to the substantial economic and functional deficits of the open-source model”) (ibid, p. 3), is grounded in overly simplistic assumptions of software economics.

  42. See, e.g., the Eclipse project, online at http://www.eclipse.org/.

  43. See Castells (2001).

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  1. Informatik und Gesellschaft, Technische Universität Berlin, Sekr. FR 5-10, Franklinstr. 28/29, 10587, Berlin, Germany

    R.A. Gehring

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Gehring, R. The institutionalization of Open Source. Poiesis Prax 4, 54–73 (2006). https://doi.org/10.1007/s10202-005-0012-1

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