Key Points
This study explores how a platform owner’s market entry—by leveraging a complementary firm’s open-source technology—affects the external knowledge sourcing of the complementary firm, focusing on the willingness of GitHub developers to contribute. Using the staggered rollout of Amazon AWS’s Elasticsearch as a natural experiment, the analysis shows that the platform owner’s entry reduces contributions from existing contributors but substantially increases contributions from new contributors, leading to an overall increase in contributions to the open-source technology. This finding provides a new perspective: contrary to common concerns that platform owners’ entry harms open-source startups, from a technology development standpoint, such entry may not necessarily be detrimental.
Background
New contributors are individuals who made their first contribution to the open-source project in a given period. Unlike existing contributors, they have no prior investments or ties to the project, and thus hold different reference points. From a prospect theory perspective, it was hypothesized that new contributors may perceive the platform owner’s entry as an opportunity for potential gains—such as enhanced professional reputation or career opportunities through increased visibility of the technology.
Analysis Method
Dataset
Data was collected from AWS and GitHub. Specifically, AWS official announcements provided information about the date and location of the Amazon Elasticsearch Service launch, while GitHub data provided developers’ contributions to Elasticsearch (contribution volume, personal GitHub experience, popularity, etc.). Commits by Elastic employees were excluded to focus on external developers’ contributions.
Intervation / Explanatory Variable
- AWS’s market entry with Amazon Elasticsearch Service.
- Entry is a dummy variable equal to 1 if AWS entered the country where the contributor resides, and 0 otherwise.
- After is a dummy variable equal to 1 if AWS had already entered the contributor’s country during or before a given period, and 0 otherwise.
- The interaction term Entry × After was used to measure the treatment effect.
Dependent Variable
- OSS contributions by new contributors(the number of commits, lines of code changed/added, and files of code changed/added)
- Contributions by new contributors were measured as the natural logarithm of the total number of commits by all new contributors in each period.
- Additionally, the natural logarithm of the number of new contributors (extensive margin) and the average contribution per new contributor (intensive margin) were measured.
- As robustness checks, the natural logarithm of lines of code and files changed/added was also included.
Identification Strategy
- AWS’s staggered market entry was treated as a natural experiment and stacked difference-in-differences analysis was applied.
- The analysis was conducted at the country-week level with 5,635 observations across 16 treatment countries and 13 control countries.
- Control countries were matched to treatment countries using PSM.
Results
- The analysis strongly supports the hypothesis that the platform owner’s entry increases contributions by new contributors.
- On average, the number of commits increased by about 7.27%.
- This increase was driven by both a rise in the number of new contributors (awareness effect) and an increase in the average contribution per new contributor (reward effect). Moreover, after the platform owner's entry, new contributors tended to show stronger extrinsic motivations, suggesting a selection effect in the types of new contributors.