Deciding on Open Innovation: An Exploration of How Firms Create and Capture Value with Open Source Software

Open innovation is a paradigm that proposes that firms can and should use external as well as internal innovations/ideas. A popular example of open innovation has been open source software (OSS). The key issues facing organizational decision makers considering OSS strategies is, how does the firm create value for the customer while simultaneously extracting value for itself? However, the adoption of OSS as part of an open innovation strategy is a recent phenomenon and many unanswered questions remain. Taking the viewpoint of seven IS/IT decision makers in European firms, this paper reveals how decision makers considered aspects of value creation, capture, and networking in making decisions on adopting open source software. The findings reveal that while decision makers look to open innovation for value creation and capture, there is still a desire to remain self reliant, resulting in collaborative design (of external innovations) rather than collaborative decision making with value network partners in relation to how such innovations would help create and capture value within firms.

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