Capabilities Enabling Product Orientation and Service Orientation: A Study of Canadian Software Firms
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This thesis identifies the unique capabilities that characterise product-oriented vs. service-oriented firms in the software industry. Firms in the software industry have very different business models from other industries. Some firms rely entirely on earning revenue from services provided on an hourly basis, while others build and sell software once and earn revenue from it for years to come. There are even successful firms in the industry with a variety of revenue sources and models resulting from planned or unplanned transitions across orientations. The unique characteristics of this industry offer an opportunity to study the development of organisational capabilities that support contrasting strategic orientations. There is substantial literature on strategic orientations (e.g., Roberts 1990; Lynn et al. 2000; Pelham 2000; Voss and Voss 2000). There is also substantial literature on organisational capabilities (e.g., Nelson and Winter 1982; Leonard-Barton 1992; Day 1994; Teece et al. 1997; Winter 2003; Ethiraj et al. 2005). However, few studies empirically identify organisational capabilities that are developed to support an orientation. This study identifies the capabilities that enable product orientations and service orientations in the software industry. Moreover, the research tests the hypothesis that product orientations and services orientations are distinguished by different organisational capabilities. The study tests this hypothesis by eliciting capabilities and measuring the maturity of these capabilities in different firms. The findings of this study make unique contributions to the literature pertaining to strategic orientations and capabilities through further definition of both constructs. This research also utilises a previously untested approach for identifying capabilities. The method approaches the research problem using a two-step approach. The first phase focuses on eliciting the capabilities that characterise both service and product orientations. Interviews with key informants support the elicitation of capabilities. The second phase of the research study involved the collection of data using a survey to validate the existence of and identify the maturity of the capabilities from the first phase. The findings indicate that there are significant differences between productoriented and service-oriented firms, the capabilities that distinguish them and their perspectives on transition between orientations. The key result of the research is the identification of the capabilities that distinguish between software firms of three different orientations: product orientation, service orientation and a hybrid orientation. This research study contributes to advancement in the literature pertaining to strategic orientations and capabilities (e.g., Morgan and Strong 2003; Venkatraman 1989; Duhan et al. 2005; Winter 2000; Teece 2007). The results of the study further define what it means for software firms to have product, service and hybrid orientations, resulting in advancement of these constructs. The approach used to elicit and capture capabilities is novel and contributes to advancement in the literature pertaining to capabilities by applying a previously untested methodology. The results of this research are of particular interest to software firms that aspire to build or strengthen a product, service or hybrid orientation.