The roots of the "open source" thinking really grew roots after Eric Raymond's insightful essay, The Cathedral and the Bazaar, on the development of the Linux kernel and fetchmail (a.k.a popclient). This really brought home the potential of developing software in this manner. In a few months, Netscape announced that it planned to release the source of Navigator, it's web browser.
According to the OSI web site's history page, the term open source was coined at a meeting held on 3rd February 1998 at Palo Alto in California, just 12 days after the Netscape announcement. The meeting had been called to reassess strategies to position Free software as a credible alternative to commercial software. The decisions taken at the meeting gave rise to what is known as the Open Source Initiative (OSI). These decisions were based on practical considerations, and though the OSI still carries the spirit of the Free software movement, it has evolved into something totally different.
The OSI is much less a movement, and more a methodology to develop Free software. This is really how the OSI differs from the Free software movement. This is very much akin to the "apples and oranges" analogy. It is not surprising then to note that the real contribution of the OSI is to software producers, wherein it gives the opportunity for commercial enterprise to flourish alongside Free software.
The benefits of the OSI (to producers), explained in detail in this paper by Frank Hecker, are in the following areas:
Product line evolution.
Employee retention and recruitment.
Any initiative cannot survive without support. In the case of the OSI, it has recieved tremendous (and in some cases generous) support from software producers due to the major business headaches it takes care of, while allowing them to focus on growth, and increasing their profit margins. However, what really helps the OSI flourish is the tremendous demand for open source (and free-of-cost) software from consumers, that provides the software producers with an instant and world-wide market for their services.
For further study of the OSI, I would recommend the following web sites: