Technology entrepreneurship and value creation on open innovation platforms

Yang, Wei (Ph. D. in management)
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This dissertation studies how entrepreneurial firms create economic value from open source technology platforms, interfaces on which firms disclose knowledge and distribute innovation for free without retaining any proprietary rights. Despite their increasing importance in innovation and growing popularity among profit-seeking new ventures, open source platforms present a major challenge for value creation, as they lack price signals to guide ventures’ transactions and forfeit ventures’ control over key resources and knowledge for innovation. Those features are in contrast with the fundamental assumption about price and revenue in economics. They also run counter to the central tenet in strategy research that private knowledge and rare resources are central to competitive advantage and profiting from innovation. To address this puzzle about value creation from free technologies base on free knowledge and resources, this dissertation specifically focus on the economic implications of strategies ventures can leverage within and across open source development communities. Chapter I reviews the literature relevant to entrepreneurship in an open and inter-dependent innovation environment. Exploring research opportunities emerged from the literature review, Chapter II explores the possibility that multihoming, a critical growth strategy of ventures as open source complementors in platform competition, allows ventures to reinforce their existing user base – a prerequisite of value creation from open source. Chapter III directly addresses value creation by investigating how collaborating with external contributors, another critical open source strategy, influences venture capital investment. Both essays highlight how platform network effects unfold without price signals and proprietary rights of the technologies in shaping the outcome for ventures’ strategies. They also emphasize those strategies’ demand side implications on users, participants on another side of open source platforms. The empirical analyses of this dissertation are based on multiple open source technologies platforms, with data obtained from on GitHub, the worlds’ largest open source software storage provider, containing 5 Terabytes of information on 2.1 million ventures, 96 million technologies and over 2 billion development activities, under research designs for deriving causal references. Overall, the dissertation seeks to advance the understanding of value creation in entrepreneurship through open source platforms, an increasingly important phenomenon in contemporary economy.