Open Source Software and the Economics of Organization

Open source software development has organizational characteristics that are out of the ordinary (e.g., flatter hierarchy, self-organization, self-regulation, and no ownership structure). The study suggests that this organization of work can be explained by combining the recently developed organizational theory of professions with the classic one of clubs. Still, the explanans falls within the broad rubric of the knowledge approach. The claim is in fact that this organization is at least as good as a firm in sharing rich types of information in real time because (a) constituents have symmetry of absorptive capacity, and (b) software itself is a capital structure embodying knowledge. Indeed, in this regard the study goes so far as to suggest that the distinction between input (knowledge) and output (software) is somewhat amorphous because knowledge and software are not only the common (spontaneous) standards, but also the nonrivalrous network products being shared.