ABSTRACT

Internet Entrepreneurship: Linux and the Dynamics of Open Source Software

CRIC Discussion Paper No. 44

Maureen McKelvey

This paper examines the development of the Linux operating system, in order to examine from where the initial investment of ideas which resulted in the software structure emerged. Linux is taken as one example of open source software, and the analysis focuses on the reasons for software development, particularly in terms of the underlying dynamics of incentives, skills and entrepreneurship for open source software.

In fact, one could say that this paper about Linux and open source software examines a much broader question, namely, How do modern entrepreneurs innovate? Is the firm passé in certain areas of the economy? Are firms being replaced by networks of users linked through the internet? Or does the internet simply provide new means of innovating, which later becomes part of the economy? Linux and open source software may be leading edge examples of how and why processes of knowledge-intensive innovations occur.

In the modern economy, knowledge-intensive activities seem to create more economic value than other types of activities, for various reasons having to do with the pecularities of knowledge. That is why, a technical area like software may make visible new ways of innovating. In this perspective, software development is not seen as a unique phenomena but instead as an early leader case for identifying trends in knowledge-intensive sectors.

The concept 'Internet Entrepreneurship' is therefore introduced here in order to try to capture characteristics of modern innovation processes. It is argued that internet entrepreneuship is a new means of innovating, and that the emergence of this phenomena can be seen in Linux, as a knowledge-intensive innovation. The basic questions to address here are whether internet entrepreneurship is indeed an emerging phenomena, and whether it has the potential to beat, or at least seriously threaten, high tech firms which invest much internal resources in research and development (R&D) and also appropriate the profits from their innovations.

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