From Code to Commerce: Open Source Software Firms as Double Agents of Collective Innovation Strategy

Abstract

This study develops a grounded theory of collective innovation strategy, explaining how open source software (OSS) firms, enterprise clients, and developer communities collaboratively shape OSS innovation. Drawing on a year-long participant observation, 46 interviews, and document analysis, we identify four interrelated constructs: collective strategy impact, client effect, OSS firm’s dual fiduciary obligation, and community holistic leadership. We show that enterprise clients, while often latent, can enhance innovation process when two enabling conditions are met: fiduciary mediation by the OSS firm and holistic leadership within the community. The OSS firm’s double-agency role reduces resources and information asymmetries between online developer communities and arm’s-length clients, enabling joint decision-making that balances technical and commercial priorities. In addition, holistic community leadership further sustains alignment and engagement across distributed actors. Our findings extend relational view of the firm and resource-based theories by revealing how external actors become strategic resources only when mobilized through situated practice.