Open-source software development is the next stage in the evolution of product development, particularly software products. Compared with the prevailing proprietary approaches, open-source software products are developed by co-opting external developers and prospective users. Although a core group of developers might still play a key role in the initial design and development, a notable aspect of the open-source software paradigm is the role of peripheral developers in the enhancement and popularization of the product. Peripheral developers are not formal members of the core development team. They voluntarily contribute their time and creative talent in improving the quality of the product or in popularizing the product through word-of-mouth advocacy. As volunteers, they are not subject to the traditional hierarchical controls, nor are they contractually obligated. Peripheral developers represent a novel and unique aspect of open-source software development, and there is a greater interest in tapping their potential. However, there has been limited evidence about how and when their participation has beneficial impacts. We examine how peripheral developers contribute to product quality and diffusion by utilizing longitudinal data on 147 open-source software products. Hierarchical linear modeling analysis indicates that peripheral developers make significant contributions to product quality and diffusion, especially on projects that are in the more mature stages of product development.
Virtual communities are a significant source of information for consumers and businesses. This research examines how users value virtual communities and how virtual communities differ in their value propositions. In particular, this research examines the nature of trade-offs between information quantity and quality, and explores the sources of positive and negative externalities in virtual communities. The analyses are based on more than 500,000 postings collected from three large virtual investing-related communities (VICs) for 14 different stocks over a period of four years. The findings suggest that the VICs engage in differentiated competition as they face trade-offs between information quantity and quality. This differentiation among VICs, in turn, attracts users with different characteristics. We find both positive and negative externalities at work in virtual communities. We propose and validate that the key factor that determines the direction of network externalities is posting quality. The contributions of the study include the extension of our understanding of the virtual community evaluation by users, the exposition of competition between virtual communities, the role of network externalities in virtual communities, and the development of an algorithmic methodology to evaluate the quality (noise or signal) of textual data. The insights from the study provide useful guidance for design and management of VICs.