Software Piracy in the Presence of Open Source Alternatives

We develop a model to investigate the manner in which the pricing, profitability, and protection strategies of a seller of a proprietary digital good respond to changing market conditions. Specifically, we investigate how product piracy and the presence of open source software alternatives (such as Open Office) impact the optimal strategy of a seller of proprietary software (such as Microsoft Office). In contrast to previous literature, we show that firms may make more (rather than less) effort to control piracy when network externalities are strong. In addition, we show that the level of network externalities amplifies losses incurred by an incumbent due to high-quality pirated goods. Therefore, for products characterized by high network externalities (such as software), sellers need to try to maintain a large perceived quality gap between their product and illegal copies. Further, we demonstrate that the appearance of an OSS alternative leads the incumbent to reduce both price and the level of piracy control. Although high-quality pirated goods are detrimental to profits in the absence of OSS, they may actually limit the incumbent’s losses and the need to adjust price and protection strategies due to the introduction of an OSS alternative. Thus, an incumbent may find it easier to compete with OSS in the presence of product piracy. Finally, highly correlated intrinsic valuation between an incumbent and OSS products require smaller adjustments to price and piracy controls and leads to muted impact on incumbent profit

An economic analysis of software piracy in a competitive cloud computing market: A product bundling perspective

In the cloud computing era, incumbent vendors are offering both on-premises software and cloud-based software service. Simultaneously, they are facing competition from new entries who just offer cloud-based software. However, piracy exists in on-premises software for incumbent vendors. Therefore, incumbent vendors are facing pressure from piracy and new entries at the same time. Using the framework of product bundling, this study builds a stylized analytical model to investigate the optimal product bundling strategies for software vendors in the presence of software piracy. The research found that the pure bundling strategy is the best choice for existing software vendors in the market in most cases because of the more flexible bundling price. Pure component strategy can be more profitable than pure bundling strategy when piracy costs are at the medium level

Is Information Systems a Science?

Some researchers have compared the information systems discipline with the physical and biological sciences, which suggests that information systems sits in the same academic space as the physical and natural sciences. Indeed, the language and perceptions expressed in journals such as the Transactions for Replication Research, which refer to “scientific consensus” and the involvement of information systems researchers in “the quest for scientific advancement”, supports this suggestion. In this paper, I argue that the view that information systems is a science in which general laws can be developed by applying statistical surveys and running laboratory experiments has negatively affected the development of the discipline. I argue that the discipline’s nature is such that one cannot pitch it as a science. After briefly discussing the motivation and philosophy that might underlie the perception of information systems as a science, I offer an alternative view of information systems as a deep, complex, and multi-layered discipline in the humanities. I propose dance studies as an appropriate discipline to twin with information systems

Decision-making Processes in Community-based Free/Libre Open Source Software-development Teams with Internal Governance: An Extension to Decision-making Theory

Community-based free/libre open source software (FLOSS) teams with internal governance constitute an extreme example of distributed teams, prominent in software development. At the core of distributed team success lies team decision making and execution. However, in FLOSS teams, one might expect the lack of formal organizational structures to guide practices and reliance on asynchronous communication to make decision making problematic. Despite these challenges, many effective FLOSS teams exist. We lack research on how organizations make IS development decisions in general and on FLOSS decision-making models in particular. The decision-making literature on FLOSS teams has focused on the distribution of decision-making power. Therefore, it remains unclear which decision-making theories fit the FLOSS context best or whether we require novel decision-making models. We adopted a process-based perspective to analyze decision making in five community-based FLOSS teams. We identified five different decision-making processes, which indicates that FLOSS teams use multiple processes when making decisions. Decision-making behaviors remained stable across projects even though they required different types of knowledge. We help fill the literature gap about which FLOSS decision mechanisms one can explain using classical decision-making theories. Practically, community and company leaders can use knowledge of these decision processes to develop infrastructure that fits FLOSS decision-making processes