Opening Up Intellectual Property Strategy: Implications for Open Source Software Entry by Start-up Firms

We examine whether a firm’s intellectual property (IP) strategy in support of the open source software (OSS) community stimulates new OSS product entry by start‐up software firms. In particular, we analyze the impact of strategic decisions taken by IBM around the mid‐2000s, such as its announcement that it will not assert its patents against the OSS community and its creation of a patent commons. These decisions formed a coherent IP strategy in support of OSS. We find that IBM’s actions stimulated new OSS product introductions by entrepreneurial firms and that their impact is increasing in the cumulativeness of innovation in the market and the extent to which patent ownership in the market is concentrated. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2015.2247. This paper was accepted by Lee Fleming, entrepreneurship and innovation.