The License Choices of SMEs doing Business with Open Source Software: Empirical Evidence on Italian Firms

Introduction

In the late Nineties, the Open Source Initiative, a foundation established to push forward the diffusion of the Open Source (OS) software paradigm (Lee, 1999), elaborated the Open Source Definition. The preamble of the Open Source Definition¹ explicitly states that OS “doesn't just mean access to the source code”. To say that software is OS “is to say that it is subject to one of a particular category of licenses” (McGowan, 2001, 253). The Open Source Definition specifies all the criteria that a license must comply with to become “Open Source Initiative approved”² and, thus, be defined as an OS license.

In the last decade, OS licenses have attracted the interest of many scholars studying the OS phenomenon. The first studies on OS licenses have focused on the description and classification of the main legal and technological features of these licenses (Fink, 2003; Kennedy, 2001; Oksanen & Valimaki, 2002; Pearson, 2000; Skidmore, 2007). More recently, scholars have investigated the determinants of the license choices made by the administrators of OS projects³ (Lerner & Tirole, 2005; Sen et al., 2008, 2011; Singh & Phelps, 2009) and the consequences of these choices on OS projects’ evolution and success (Stewart et al., 2006; Colazo & Fang, 2009; Ghapanchi & Aurum, 2011; Midha & Palvia, 2012). Comparatively less attention has been paid to the license choices made by firms doing business with OS (see, e.g., Koski, 2005; Lindman et al., 2011 for two notable exceptions). In particular, substantial opportunity still exists to improve our understanding of the license choices made by small and medium enterprises that offer OS-based solutions to their customers (OS SMEs).

Studying the license choices of these firms is undoubtedly relevant for two key reasons. First, more and more SMEs in the software industry are successfully basing their business on the provision of OS solutions (Bonaccorsi et al., 2006). For these firms, the community of OS users and developers (hereafter, OS community) constitutes a common pool from which they can in-source software code and programming competences. By using the OS code available on the Internet to develop new software solutions, OS SMEs can overcome the shortage of resources and competences that traditionally threats the survival and growth of small firms (Stinchcombe, 1965).⁴ As we will extensively describe in the following, the license choices made by OS SMEs have a fundamental impact on these firms’ ability to successfully in-source software and competences from the OS community. An OS SME that decides not to rely on copyleft licenses is likely to encounter problems in integrating its software with the code produced by the OS community, which is for the most part GPLed (Lerner & Tirole, 2005). Second, license choices have important consequences for OS SMEs’ stakeholders. It is conventional wisdom that license choices primarily affect OS developers’ motivations to contribute to software development processes (see, e.g., Allyn & Misra, 2009). License choices may influence also the behaviour of OS SMEs’ customers. This effect is likely to vary depending on the type of customers, be they other firms, end-users or public bodies. For example, customer firms may be plagued by the GPL fear (Rosenberg, 2002) theorized by the OS founding fathers, and thus reduce the purchase of solutions provided by OS SMEs that have chosen copyleft licenses. This should not apply to public administrations and governments. Finally, the license choices of OS SMEs may affect the choices of the producers of complementary software solutions.