Location
Level 0, Open Space, Owen G. Glenn Building
Start Date
12-15-2014
Description
In this paper, we address the following two research questions: (1) Under what circumstances will firms prefer internal SaaS development to external sourcing; and (2) how does the SaaS development mode affect firm performance? We examine the SaaS development actions in the computer industry (SIC code 737) from 2003 to 2012. Preliminary analysis results demonstrate that firms with large amount of working capital can consider developing SaaS application in-house. However, if firms have high level of R&D capability, they may have better absorptive capability of technology innovation. Firms can grasp SaaS innovation through external sourcing. Firms shall also take into account the market characteristics when making the development choice. Our results indicate that the strategic decision of SaaS development mode will have short-term impact on firm performance (i.e., gross margin and market share), but not for the long-run performance (Tobins’q).
Recommended Citation
Chen, Yuanyuan and Huang, Yuxin, "An Empirical Analysis of Software-as-a-Service Development Mode and Its Impacts on Firm Performance" (2014). ICIS 2014 Proceedings. 17.
https://aisel.aisnet.org/icis2014/proceedings/EconomicsandValue/17
An Empirical Analysis of Software-as-a-Service Development Mode and Its Impacts on Firm Performance
Level 0, Open Space, Owen G. Glenn Building
In this paper, we address the following two research questions: (1) Under what circumstances will firms prefer internal SaaS development to external sourcing; and (2) how does the SaaS development mode affect firm performance? We examine the SaaS development actions in the computer industry (SIC code 737) from 2003 to 2012. Preliminary analysis results demonstrate that firms with large amount of working capital can consider developing SaaS application in-house. However, if firms have high level of R&D capability, they may have better absorptive capability of technology innovation. Firms can grasp SaaS innovation through external sourcing. Firms shall also take into account the market characteristics when making the development choice. Our results indicate that the strategic decision of SaaS development mode will have short-term impact on firm performance (i.e., gross margin and market share), but not for the long-run performance (Tobins’q).