Determinants of Software as a Service (SaaS) Adoption

ABSTRACT

The extant literature on software as a service (SaaS) adoption has largely leveraged traditional and general factors identified in existing information system literature to examine determinant factors that affect firms’ adoption decisions. Anchoring our study in the technological-organizational-environmental (TOE) framework and following insights from information technology (IT) outsourcing literature, we examine determinants of SaaS adoption through a contextualized lens of technological, organizational, and environmental contexts. In particular, we hypothesize that firm performance and IT department size negatively affect SaaS adoption, while competitor adoption positively affects SaaS adoption. Our empirical analysis using a sample of 1,062,128 small and medium firm observations over 9 years supports the hypotheses. We discuss the implications that our findings have for research and practice.

KEYWORDS:

• SaaS adoption
• IT outsourcing literature
• firm performance
• IT department size
• competitor SaaS adoption

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

i This category also includes firm size. We excluded firm size in this study as we focus on small and medium-sized firms. From a size perspective, these types of firms often have been treated the same.

ii For the Firm performance, we first obtained the log-transformed of the industry level of firm performance and then standardized it. In doing so, it becomes consistent with our independent variable, Log firm performance.