Our study aims at shedding light on the innovative business strategies in the soft-ware sector and particularly providing a better understanding of the economics underlying the supply of Open Source Software (OSS). We use survey data collected from 170 Finnish software companies to investigate the determinants of the choice of OSS production. Our study focuses on the role of a firms absorptive capacity in its adoption of OSS supply as a business strategy. We find that the quality of a firms human capital indeed matters : those companies that supply OSS solutions also have relatively more highly educated employees. However, our data do not indicate that a firm`s accumulated intellectual property affects in any significant way its choice to apply OSS-based strategy.
