Emerging Capabilities and Firm Performance in the Cloud Computing Environment

Abstract

New capabilities required to succeed in the new Cloud environment represent a radical change for software companies, which have to transition from selling on-the-premises software products to providing subscription-based cloud services (aka Software-as-a-Service or SaaS). While emerging SaaS vendors have led the exponential growth of the market, the traditional software industry has been disrupted. The purpose of this dissertation is to analyze which capabilities are driving the performance of software firms in today’s cloud-computing environment by drawing upon the resource-based view (RBV) of the firm. What is the optimum spending across the primary firm capabilities (e.g., service delivery, R&D, marketing and sales) to maximize financial performance? This dissertation focuses on publicly-traded SaaS companies using publicly-available information from financial databases, corporate investor relations materials, and industry research. It is comprised of two essays. The first essay is a quantitative study based on secondary data. The second essay includes an extensive literature review, an analysis of in-depth interviews of practitioners, and mini case studies. Together, the essays contribute to RBV theory and provide useful insights to help assess the quality of execution of SaaS growth strategies and improve financial planning and performance in the software industry for the cloud computing environment. Although the results come from firms in the SaaS industry, the findings from this study could cautiously generalize to firms in other emerging technology industries. The dissertation concludes with a detailed agenda for future research.