Shows external contributions enhance firm value in IT firms, indicating strategic benefits.
In recent years, many firms, especially those in information technology (IT)-related industries, are increasingly hosting open source software (OSS) projects to garner external contributions from unaffiliated developers. This study is a pioneering investigation into the impact of external contributions to firm-hosted OSS projects on firm value as well as the moderating effects. Using a panel dataset of 536 publicly listed firms hosting OSS projects on GitHub, we employ an instrumental variable (IV) approach to address potential endogeneity issues. Our findings show that external contributions to firm-hosted OSS increase firm value, measured by Tobin’s q. Moreover, this beneficial effect is strengthened when firms and their external contributors operate in more distinct technological domains, or when there is increased comment activity within the firm-hosted OSS projects. Our study contributes to a more nuanced understanding of how firms can strategically leverage external contributions to enhance market-based firm value and provides valuable managerial insights for both the broader OSS community and firms navigating this domain.
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Hu et al. (2026) studied this question.
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