Abstract

Community source development has emerged as a new way of developing enterprise applications, leading to a unique type of open source practice involving partnership and investments from multiple organizations. A critical research question in community source development is concerned with the rationale and the economic incentives behind investments from partnering organizations. In this paper, we examine a real world case, the Kuali community source project, and propose a cooperative decision framework to analyze investment decisions made by various types of organizations involved in community source. We analyze joint investment decisions and adopt the Black-Scholes model to capture individual organizations’ decision-making in risky environments. Our analytical results are able to explain an array of observed investment behavior from community-source partners and reveal useful insights to help these organizations make decisions. Our results also facilitate a general understanding of the emerging community source development landscape.

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