In 21th century, the importance of software(SW) industry that is a key infrastructure for accumulating and utilizing knowledge has been recognized by many organizations. Today’s SW industry creates not only a higher value-added business, but also strengthening the competitiveness in software industry. In addition, the demand for SW has been consistently increased for many parts of industries. Among various types of software used in many organizations, open source software(OSS) becomes a hot strategy for organizational software deployment and development. OSS opens its source code for public usage with free of fee. Thus, anyone can use, duplicate, distribute and modify OSS. The value of OSS, particularly in business industry, is dominant in terms of cost-saving. Unlike commercial SW, OSS does not require any fee related with licence, and technical supports and services. In addition, if IT professional installs and optimize OSS for its usage, performance and stability of OSS can be promised even in large organizations. In security matter, OSS assures transparency, offering much higher level of security than commercial software that does not open source code to users. Advantage of cost and security provided by OSS results in more organizations adopting this technology than others. Despite of a high interest and benefits of OSS, empirical research examining various aspects of OSS has been limited because of the critical point of awareness toward OSS. Thus, the research related to OSS assimilation and diffusion should be extensively examined with various industries. However, some of prior studies focused on motivation of individuals participating in OSS project(Hars et al., 2002) and OSS as specific solution to organization(Federman, 2006). There is no study investigating determinants of OSS assimilation and diffusion at organizational view point. Therefore, this study proposed and empirically tested the research model examining factors influencing OSS internal assimilation and external diffusion, which then affects operation development and performance of organization. In addition, this study examined the moderating effect of organizational readiness consisting of management capability and software knowledge. To induce the research results, 361 responses were collected from employees of domestic companies in various industries and size that are currently use OSS for their business activities. Structural Equation Modeling(SEM) approach was used to verify both measurement and structural model. The results showed that all constructs in Technology Push and Need Pull with exception of government regulation and presence of champions had a significant effect on internal assimilation and external diffusion, which then had a significant effect on operation development and performance. In addition, the moderating effect of organizational readiness was indicated to have significant impact between constructs in Technology Push and Need Pull, and internal assimilation with exception of one interaction effect(government x organizational readiness). The implications of the findings suggest the theoretical and practical implication for assimilating and diffusing of OSS.