Adapted from “Open Source Software and Global Entrepreneurship” by Nataliya L. Wright of Columbia Business School, Frank Nagle from Harvard Business School, and Shane Greenstein from Harvard Business School.
Key Takeaways:
- In countries with a high participation in open source software (OSS) — which can be freely used, changed, and distributed —the number of new technology ventures founded in those countries the following year increases, showing a clear correlation between OSS contributions and entrepreneurship.
- These ventures tend to be higher quality and more mission- and global-oriented than others.
- However, policymakers should not expect to spur progress via OSS alone. The researchers found that the relationship between OSS contributions and venture founding is stronger in countries with more human capital and income, suggesting that such local resources complement OSS.
Why the research was done: Open source software (OSS) — computer software that’s distributed with its source code, allowing users the rights to use, study, change, and distribute it — has the potential to be an immense resource for new ventures and technologies. But so far, the vast majority of research on the impact of OSS has been in high-income countries like the United States, with very little similar research done in other countries around the world. On a recent field research trip in Poland, CBS Assistant Professor Nataliya L. Wright discovered that one of her subjects was able to launch his own venture in part due to his participation in OSS: “It made me realize that open source might have the unexplored benefit of enabling people to realize venture opportunities or find collaborators for entrepreneurship.”
How it was done: The best and most accessible data about OSS contributions is in high-income countries. Data from middle- and lower-income countries tend to be less structured or incomplete, Wright says. “But I'm a huge believer that there are promising entrepreneurs in various pockets of the world that we miss out on if we don't look at the perhaps messier global data.”
To overcome this hurdle, the researchers augmented the data on OSS participation with field research and in-person interviews with entrepreneurs. “That usually helps to qualitatively uncover some of the gaps in data that we might not otherwise fully capture when looking at the aggregated datasets,” Wright says.
Drawing from disparate sources, Wright and her co-authors pioneered a method for synchronizing the data and creating a complete, macro-level picture of the impact of OSS on entrepreneurial founding in countries around the world.
What the researchers found: The researchers discovered a clear correlation between countries with higher contributions to OSS and the number of new technology ventures founded in the following year.
They also found that OSS ventures tended to be more mission- and global-oriented, for example, tackling socially impactful activities like gender equality, economic opportunity, environmental sustainability, and education. These ventures are also typically of higher quality. The researchers theorized that this effect was because OSS enabled founders to explore new ideas, access valuable code, and collaborate with others. But OSS can’t have this positive impact on its own. It is much more effective in contexts with sufficient human capital resources, a correlation that is contrary to common beliefs in the field.
“There's this view that new digital technologies, like open source, AI, and others, can essentially help economies leap frog — that even if countries didn't have all the initial investments in place, this technology can compensate for that,” Wright says. “What we actually find is that there's a stronger relationship between OSS and entry into entrepreneurship in economies that essentially have a robust labor supply available.”
Why it matters: Wright’s research shows that OSS platforms can be a vital resource for economies — however, policymakers can’t expect OSS to be their only solution. “It’s a useful tool in your toolbelt, but it’s just a tool. It is still important to do the groundwork of building up a labor force with education and other types of workforce programs,” Wright says. “It also doesn't compensate for not having a big enough market or enough flourishing enterprises that could be buyers of the open source products.”
In follow-up work, the researchers found that OSS not only helps spur the founding of tech ventures globally but continues to be important for their subsequent growth.
