Outsourcing and licensing strategies in small software firms: evolution of strategies and implications for firm growth, internationalisation and innovation

Abstract

Current literature contains extensive results on the possibilities for capitalising different outsourcing strategies. However, previous research suffers from shortcomings on how these overall possibilities and benefits of outsourcing apply to the context of small and medium sized companies in several industries, and in particular, how the outsourcing strategies correlate to a firm's overall strategy during different phases of growth. Through the theoretical structuring and empirical analysis of six small and medium sized software companies and a total of 14 outsourcing or licensing projects, this article provides evidence and further develops the current theory-base on how small computer software companies are able to capitalise on and benefit from using external research-oriented product development related resources during different stages of their growth process. The results of this article are composed into a framework introducing propositions and testable hypotheses for future research.

Keywords:

• information and communications technology
• technology management
• case study

Notes

Although the approach of analysing firms through progressive stages of firm evolution and growth has clear limitations, such as the problematical issue of identifying the stages a firm is currently operating, it provides a useful approach in framing the general processes of firm evolution and continuous change over time – particularly during the dynamic early stages of the firm (Hite and Hesterly 2001).