Open at the Core: Moving from Proprietary Technology to Building a Product on Open Source Software

Firms are increasingly moving away from proprietary technology to building commercial products on top of open source software. However, it is unclear how such commercialization of open source affects contributions from the community, as well as product quality and firm performance. Web browser technology provides a unique setting to study such questions. The largest open source project is Chromium, led by Google, which serves as the core of various web browsers. Unexpectedly, Microsoft announced a drastic change in strategy in 2018 and adopted Chromium in a complete redesign of the web browser Edge. Unique data lets us compare Chromium to other open source technologies, and Chromium-based web browsers to other web browsers. We find that overall development activity increases after Microsoft adopts Chromium, predominantly because Microsoft starts to contribute to the project. We also see a modest increase in contributions from external developers. We further document an increase in scrutiny, evident from an increase in the number of individuals performing code reviews and a surge in security vulnerability reporting. We also find positive effects for Microsoft. Edge makes a giant leap in functionality, moving it on par with the market leader Chrome. With the adoption of Chromium, Microsoft fixes more bugs, accelerates release cycles, and increases the market share of Edge at the expense of other less popular Chromium browsers. We discuss a number of general implications for managers and policy. This paper was accepted by D. J. Wu, information systems. Funding: This work was supported by Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung [Grant 100013_197807]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.02886 .