Companies that contribute to open source software and use it in their own IT systems and applications can gain a competitive advantage—even though they may be helping their competitors in the short run.
Open source software is software whose code can be adopted, adapted and modified by anyone. As part of the open source ethos, it is expected that people or companies who use open source code will “give back” to the community in the form of code improvements and enhancements.
And that presents an interesting dilemma for firms that rely heavily on open source. Should they allow employees on company time to make updates and edits to the software for community use that could be used by competitors? New research by Assistant Professor Frank Nagle, a member of the Strategy Unit at Harvard Business School, shows that paying employees to contribute to such software boosts the company’s productivity from using the software by as much as 100 percent, when compared with free-riding competitors.