Motivation and sorting of human capital in open innovation

Abstract

This paper studies how business models can be designed to tap effectively into open innovation labor markets with heterogeneously motivated workers. Using data on open source software, we show that motivations are diverse, and demonstrate how managers can strategically influence the flow of code contributions and their impact on project performance. Unlike previous literature using survey data, we exploit the observed pattern of project membership and code contributions-the "revealed preference" of developers-to infer the motivations driving their decision to contribute. Developers strongly sort along key dimensions of the business model chosen by project managers, especially the degree of openness of the project license. The results indicate an important role for intrinsic motivation, reputation, and labor market signaling, and a more limited role for reciprocity.