According to Madey et al. (2002) open source software is by definition software for which users have access to the source code. This distinguishes it from the common practice of commercial software publishers who only release the
bina-ry executable version of the software product.Osterloh and Rota (2007) say that in the phenomenon of open source software, software programmers place their software at the free disposal of other users and developers. The software and its source code are published on the internet and anybody interested can down-load them for free. Goh (2005) differentiates open source software from com-mercial software, but says that the models are not mutually exclusive, and that firms are increasingly finding ways to embrace both approaches and allow them to co-exist. His definition of open source software is the following:
“Open Source” is a software-licensing model where the source code of the software is typically made available royalty-free to the users of the software, under terms allow-ing redistribution, modification and addition, though often with certain restrictions.
Open source programs are often, though not exclusively, developed through a col-laborative effort in which a number of persons contribute elements of the final soft-ware. Software companies are also contributing paid programmer time and pro-grams developed in-house to the open source community.
By this definition open source software products are non-commercial products, in contrast to commercial software, which Goh defines as follows:
“Commercial Software” is the model where the software developed by a commercial entity is typically licensed for a fee to a customer (either directly or through chan-nels) in object, binary or executable code.
The source code of the software may be made availableto certain users of the soft-ware through special licensing or other agreements, but is usually not distributed to the general public, and may not be copied or modified except in a manner provided for in such agreements.
Osterloh and Rota (2007) say that open source software is an information product, produced by and for users, with a highly modular design that makes parallel work of many distributed developers possible. According to Lee (1999) the software program must include the source code, and the free distribution of the code must be allowed as well as free distribution of the program in a com-piled form, in order the program to be categorized as open source software. He says that free here means a condition of free from constraints, not necessary free of cost. Madey et al. (2002) say that most open source software is distributed at no cost with limited restrictions on how it can be used, and say that open source software is free and open. They say that free in many context considering open source software means 1) free of cost and 2) freedom to do what you wish with the software, and especially the freedom to read the source code of the program.
Lee (1999) says that the license of open source software must allow modifica-tions to be done and derived works to be produced, and it must allow the free distribution of these modifications and derived works. (Lee 1999, pp. 10-12).
Some license conditions, such a BSD license, also provide the possibility to charge royalties of the distribution of the modified software (Välimäki 2005, Mann 2006). This makes it possible for a commercial software producing firm to use the work of originally free-of-charge software as components of their
com-mercial product. This again makes possible a royalty-free exploitation of soft-ware code as an asset for further developed softsoft-ware products. This is an ex-ample of sharing the fruits of innovation free-of-charge, that is, without paying royalties to the developers of the computer program. The phenomenon has been recognized for example by Harhoff, Henkel and von Hippel (2003). Ku-mar et al. (2011) name this phenomenon as a private features Ku-market, where a firm can freely use any open source features and include them in its software product without restriction. Some license conditions however require the firm to release feature improvements to the public, for free. Kumar et al. (2011) name this phenomenon as shared features market.
According to Lee (1999) the license under which the software is distribut-ed, must explicitly permit the distribution of software built from the modified source code so that the software meets the criteria of open source software. He says that the software program must be distributed under some certain open source license in order to be defined as open source software. (Lee 1999, pp. 10-12). Mann (2006) says that to qualify as an open source license, a license must receive a certification from the Open Source Initiative (OSI). Open Source Initia-tive is a non-profit organization enjoying the trust of the worldwide open source software developer’s community. Mann (2006) says that in order to be-come certified as open source license it must meet a set of minimum require-ments designed to ensure that software is distributed with its source code and that it is reasonably available without constraint to developers and users who wish to use or modify it for their own purposes. OSI (Open Source Initiative 2012) says that its role is to steward and maintain the Open Source Definition, and act as a community-recognized standard body which reviews and ap-proves open source licenses as Open Source Definition conformant. The criteria and definition of Open Source, the Open Source Definition by OSI, is attached as Appendix 1. According to Finnish Centre for Open Source Software, which says it is regarded one of the Europe’s oldest and most active open source com-petence centers, the definition of OSI regarding OSS is the dominant definition and it is used widely in the business contexts.
According to University of Santa Barbara (2012) there exist over 60 differ-ent open source software licenses, each with unique terms. It is not in the scope of this study to explain in detail what kind of detailed terms this vast amount of licenses contains. From the perspective of this study it is enough to realize the fact that there exist such open source licenses which allow the reuse of the source code of an open source software program and allows the other than its original authors to form derivative works out of the source code, and to distrib-ute those derivative works, and charge payment of those derivative works.
Välimäki (2005, pp.151-154) provides examples of such permissive licenses. Ac-cording to him BSD license achieved the status of open source license in 1999 and says that there exists also other permissive licenses such as MIT license, Apache license and Artistic license.
The findings of Haefliger, von Krogh and Spaeth (2008, 185) show that software developers predominantly reuse software components. In many cases
this reuse can be done free of charge and in conditions of minimal constraints, or in conditions where the modifier is free of any constraints. The existence of these distribution conditions of free revealing of innovation have been acknowledged by many authors, for example Allyn & Mishra (2011) and Harhoff, Henkel & von Hippel (2003).