IPOs and Innovation in Open Source
Li, Yuping; Litan, Huiyi. IPOs and Innovation in Open Source. Academy of Management Annual Meeting Proceedings. 2024, Vol. 2024 Issue 1, p1-6.ÌýÌýÌýÌý
While a prominent stream of research has studied how going public affects firm innovation, research on how it affects firm employees' innovation activity remains scant. We address this gap by examining how going public affects where employees' innovation activity is being directed—toward their firm's projects (internal innovation) versus external entities' projects (external innovation)—post-IPO, and the mechanisms driving such changes. Applying an instrumented difference-in-differences technique to granular, activity-level data on employees' contribution to their firms' open source software projects and to the projects of other entities pre- and post-IPO, we show that going public decreases employees' internal innovation activity but increases their external innovation activity. Further, these effects are moderated by employees' internal and external collaboration ties, and are mainly driven by those who eventually depart the firm post-IPO. However, open source contribution from third-party nonemployee developers to the firm increases post-IPO, which may compensate for the reduced internal innovation by firm employees.ÌýÌýÌýÌý
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