Free Resources and the Resource-Based View

In 1991 nobody really expected to discuss the question, if the real threat for the future of Microsoft will be an OS created by a student, distributed freely and developed by thousands of unknown helping hands. Thirteen years later, the question is no longer if Linux is a threat to Microsoft. Now, the question aims in a different direction. Today many great ICT-Players discuss how to use the “free resource” Open Source to generate yields and a sustainable competitive advantage. Vanguards of this evolution are Linux distributors. As the “commercial face” of Linux, it will be discussed, why and how these companies can create values and competitive advantages using “free” resources under a resource-based perspective. 1 Open Source and Strategic Management Looking back on the evolution of Linux and other Open Source software projects it is obvious, that this is no longer software of minor quality or even a hobby-project [AM02; Dah04]. Open source software has grown up. Today Open Source is big business, but in comparison to proprietary software still small. As an economist, many subjects are worth keeping an eye on. In this short paper the focus lies on strategic management, especially on the question, if free resources can be the basis for sustainable competitive advantage. There are two well-established “views” for that question: The market-based view, created by Porter [Por99a; Por99b; Por01] and the resource-based view [Pen59; Wer84; Bar91; Gra91]. Both perspectives can help to find an answer to the research question. For example, is it shown by Porter how useful the market-based view is to explain many questions regarding the Internet bubble with the five-forces-scheme [Por01]. In another paper I figured out, how effective this perspective is to learn about new kinds of flexible strategic management from Linux distributors. I showed, how media corporations can learn using free resources to create value by bundling or reinventing their business models [Mue04]. Here, the advantage of the resource-based perspective is the new connection between non-rare even “free” resources and the classical theory. The paper is structured as follows: First, there is a short introduction to the resource-based view theory. Secondly, the extraordinary role of Linux distributors for open source software will be presented. Here, the question of strategy will be answered in a discussion about the use of free resources to create sustainable competitive advantages. Finally, the conclusions offer a short outlook on open research fields and possible transfer options.