Internal Development and Open Source Strategies as Methods for Driving Technological Disruption in the Software Industry

This thesis explores the strategic dilemma that companies in the software industry face when deciding between Open Source or Internal Development strategies to drive innovation and technological disruption. The main problem that was addressed is how each approach influences innovation and competitive advantage, underscoring the complexity involved in choosing between leveraging community contributions and maintaining proprietary control. The main research questions examined what conditions lead the approaches towards greater innovation and market disruption and what the drawbacks of selecting one strategy over the other are. We employed a qualitative comparative case study methodology, through the examination of real-world cases of software companies in the Observability, cloud native and Artificial Intelligence space that are employing either Open Source, Internal Adoption or a combination as methods to drive innovation. This study allowed to get an in-depth analysis of the impact of each strategy on the speed of innovation, scalability, operational efficiency, security, trust, market and customer adoption, cost and resource investment and customer satisfaction. The findings demonstrated how Open Source strategies can help accelerate innovation, improve adoption rates, and through community contributions reduce development costs. On the other hand, Internal Development offers control over intellectual property and product roadmaps, ensuring high quality and security for enterprise needs. The analysis found that hybrid strategies are common in the software industry, with many organizations choosing to blend Open Source and Internal development to leverage the combined benefits of both approaches. In Conclusion this thesis, presents a decision-making framework to assist decision makers and leaders to make a strategic choice between the two innovation models. The final recommendation is context-based, flexible and suggests that companies opt for open source or hybrid models based on their goals, resources and market.