Dynamic capabilities in small software firms

Abstract

In this dissertation we study dynamic capabilities in small software firms. Small software firms find themselves in highly complex and turbulent environments that require dynamic capabilities to build, integrate and configure resources. While the literature describes a portfolio of such dynamic capabilities that can help firms to adapt to changing conditions, we could not find many definitions, models and studies on these capabilities suitable with particular focus on small software firms. Furthermore, there are currently no comprehensive frameworks available that can help small software firms effectively understand and manage dynamic capabilities. In this dissertation several small software firms are investigated with a case study approach to understand the dynamics in the organizations. Firstly, we identify examples of dynamic capabilities with which these firms adapt to changing environment through knowledge input, processes and resulting software. Then, we indicate the potential of dynamic capabilities in improving small firms’ organizational effectiveness. Finally, we present a framework that offers a comprehensive and useful approach to understand dynamic capabilities in small software firms and we suggest on that basis principles for how managers can apply the framework in small software firms.

With this study we have added new knowledge about dynamic capabilities in small software firms. This dissertation makes a contribution to the information systems research by introducing market elements into the software management and development. We suggest that the marketing-related NPD discussion provides valuable insights for developing a new approach of dynamic capabilities to small software firms adapting to changes in their environment. With the help of the suggested approach, we first organized dynamic capabilities offered by the software management and new product development literature into three research streams, which helps outline already existing organizational solutions that help small software firms adapt to changing conditions. Secondly, we provided several illustrative examples of these dynamic capabilities with which small software firms adapt to changes in their environment through knowledge input, modular processes, and resulting software. Finally, one feasible and useful way to understand and manage dynamic capabilities in small software firms was presented