brs final proposal with title page

BRS Research Proposal 1

Running head: BRS Research Proposal

Research Proposal

Innovation-to-Internationalization: Small and medium cloud-based software firms’ communication strategies and needs

Bridget Reynolds Sheffer

University of Waikato

A Proposal Submitted as Partial Fulfilment of the Requirements for the PhD Degree At Waikato Management

Supervisors: C. Kay Weaver, Chief Supervisor

Mary Simpson, Supervisor Alison Henderson, Supervisor

Waikato University Hamilton

New Zealand 2014


Working Title

Innovation-to-Internationalization: Small and medium cloud-based software firms’

communication strategies and needs

Statement of Research

The purpose of this research is to conduct a grounded theory analysis of the external

communication needs and strategies of small and medium software organizations

attempting to internationalize.

Introduction

High-technology firms are organizations that deal with cutting-edge technological

developments. Nestled within the high-technology economic sector are cloud-based

software firms, or software development firms that operate off the Internet’s infrastructure.

According to the IDC (2013, Sep 3), global spending on public IT cloud services peaked at

$47.4 billion dollars in 2013 and is forecasted to reach $107.2 billion by 2017. Cloud

computing—Internet-based networks and services—were originally intended to assist IT

professionals with their daily workloads. The purpose of cloud computing is changing. It is

the next phase of innovation in cyberspace, and the innovation occurring is primarily in the

Software-as-a-Service industry, or SaaS. The SaaS subsector of cloud-based innovations are

projected to acquire 59.7% of the cloud-based revenues by 2017 (International Data

Corporation, 2013, Sep 3). Beyond the economics of these organizations are their social

influences (Castells, 2013). In Castells (2013) book, Communication Power, he argues these

types of organizations are affecting the ways in which we act, think and feel. They are

effecting the ways in which we connect with one another individually and in our businesses

(Turkle, 2011; Weick, 2001).

Considering the economic and social impact of SaaS organizations, this study seeks

to explore growing SaaS firms from a communication perspective. Karl Weick (1967/2001)

argued organizations materialize and are perpetuated due to communication. The literature

has established a primary criterion for success in these organizations is strategic

communication strategies (Badir, Büchel, & Tucci, 2012; Valencia-Garcıa, Garcıa-Sánchez,

Castellanos-Nieves, Fernández-Breis, & Toval, 2010). Entrepreneurs and managers unaware

of the necessity of communication strategies can cause organizational developmental

problems (Heavin & Adam, 2012). The literature is silent on the specific communication


strategies of SaaS firms and how they help or hinder organizational growth. While some

research focuses on the day-to-day communication challenges of practitioners in this field

(Badir et al., 2012; García-Morales, Matías-Reche, & Verdú-Jover, 2011; Kukko, 2013), the

research has not comprehensively explored the communication challenges facing these

organizations and their practitioners.

Much of the research about software firms in the organizational communication

discipline is antiquated and typically focuses on organizational culture (Compton, White, &

DeWine, 1991; Isenhart, 1987; Kelly, 1985; Mangrum, Fairley, & Wieder, 2001; Russell, 1997;

Tapia, 2004; Taylor & Carlone, 2001). Because communication is central to a high-tech firms

success, communication studies in high-tech firms are needed (International Data

Corporation, 2013, Sep 3; Mangrum et al., 2001; Weick, 2001). Innovative software

organizations are no different, they need strategic communication practices (Valencia-

Garcıa et al., 2010).

In the literature on software organization firms, little is written about the

communication needs and strategies of cloud-based software organizations as they grow

from an innovative idea to an international organization. In other words, the literature is

silent on the holistic communication needs and strategies of SaaS firms during their growth

cycles (Bernroider, 2002; Downing, 2005; Ubeda, Gieure, de-la-Cruz, & Sastre, 2013). Even

less is written about the communication needs and strategies from the perspective of the

individuals, who create, operate and sustain these organizations, or the practitioners. While

it is apparent high-tech organizations apply a plethora of communication strategies to form

alliances, engage with policy makers, to sale and innovate their products and manage their

organizations; it is unclear how the organizations engage in external communication

practices. It is also unclear how the current organizational communication strategies of SaaS

firms impact their ability to meet organizational goals. With such limited research, this

grounded theory study proposes to examine the external communication trends and needs

in small and medium cloud-based software enterprises.

The proposal contains the following: a literature review examining the definitions of

organizational communication, high-technology organizations and their characteristics, and

defines software small and medium enterprises. The proposal explores communication

literature of SaaSs firms from a multidisciplinary perspective. At the conclusion of the

literature review, the research questions will be stated. Following the research questions


will be the methodology and methods section, the thesis outline, the time table for research

completion and an ethics statement.

Rationale

The growth in cloud-based software development firms and cloud-based software

products continues to increase (OECD, 2013), an understanding of these organizations and

their communication strategies and/or needs will assist new or existing firms as they seek to

grow their organizations through the process of innovation-to-internationalization.

Additionally, like tangible technology, cloud-based software organizations are intriguing

because of the ways in which they push the boundaries of social norms; they change the

ways in which we communicate and perceive the world around us (Castells, 2013; Turkle,

2011). These organizations are more inclined to organic growth and innovative management

styles (Kukko, 2013; Strategic Direction, 2013). Their products affect the ways in which we

have historically connected to one another; for example, Facebook(Turkle, 2011). SaaS

organizations also work on the fringes of technological development and change rapidly;

and, in some cases, they defy historical patterns for organizational growth (Armbrust et al.,

2010; Colombo & Grilli, 2010; Feitelson, Frachtenberg, & Beck, 2013).

Weick (2006) argues it is the responsibility of organizational communication

researchers to understand the communication practices specifically concerning technology

(p. 172). He encourages research on topics in technology for several reasons. Reflecting on

the random variability of technology and their innovative organizations, Weick (2006)

suggests the consistent ambiguity of these organizations ought to appeal to the academic

for purposeful clarification. He states, technological organizations and their products are

“fascinating because of their complex equivocality” (p. 172). Finally, Weick (2006) also

suggests that in order to evaluate the central issues of these organizations we need to

understand the fundamental paradoxes that exist within and around them. Paradoxes such

as developing organizational cultures concerned about stakeholders (Büschgens, 2013 #91),

yet having a difficult time managing organizational reputation (Abimbola, 2007 #88).

When reviewing current trends and issues in software firms--according to news

sources and government documents—several initial strategic communication problems

were identified: a) the difficulty of finding and keeping talented employees; b) difficulties in

engaging, communicating and educating potential investors; and c) the need to


communicate and engage with policy makers on a variety of issues (Ministry of Business

Innovation & Employment, 2013b; OECD, 2013; Radio New Zealand News, 2013, Feb 15,

2013, Oct 25; Ryan, 2013, Nov 28; Utah Business, 2013, Nov 5). Indeed, it could be argued

that the essence of the problems facing these organizations may be persuasion; that is,

finding and convincing new talent to work for the organization; convincing current

employees to stay with the organization; finding and convincing investors to finance the

organization; or convincing policymakers to support policy and public funding to assist

emerging software organizations. These challenges are underscored with the tensions of

growing from innovation-to-internationalization (OECD, 2013). The ways in which high-tech

organizations persuade, communicate, and negotiate organizational alliances and networks

are limited in the literature. In the words of Downing (2005), the literature lacks a holistic

communication analysis, or a comprehensive external communication audit, to understand

the strategies, needs and processes involved as the organization grows. In other words, the

literature does not address the external communication strategies and challenges of cloud-

based software firms as they grow from innovation-to-internationalization.

Through a grounded theory approach, this study will seek to: a) identify and verify

the external communication strategies of software firms; b) scrutinize the ways in which

cloud-based software firms explain their organizations and products to organizational

alliances, potential employees, potential investors and policy makers; and c) analyse how

the external communication strategies impact these firms as they move from innovation-to-

internationalization. In order to evaluate the communication needs and strategies of cloud-

based software firms, the study will interview practitioners in SaaS firms and engage

organizations which have grown through innovation-to-internationalization. In other words,

the purpose of this study will be an exploration into the communication needs and

strategies of cloud-based software firms, and will contribute to the literature on cloud-

based software organizations, organizational communication, and management

communication needs and strategies. The following literature review will establish and

define the current research areas on SaaS firms from a multidisciplinary, communicative

perspective.


Literature Review

The literature review will be comprised of several key topics to give context to the

research questions. To begin, it will briefly define organizational communication and explore

the characteristics of a high-tech organization. For the reader, further explanation will be

given to cloud-based software and the term SaaS. This will be followed defining software

small- and medium-enterprises. Once the general terms have been established and

explained, the literature review will provide research specifics concerning software firms,

such as: knowledge management, networks, alliances, organizational tensions, factors in

organizational growth, policy needs, and current literature on communication practices. The

literature review will be followed by the research questions.

Defining Organizational Communication

At the inception of the currently robust organizational communication discipline

(Putnam & Boys, 2006), Barnard (1968) foresaw the importance of communication in future

organizational theory. Barnard (1968) stated, “In an exhaustive theory of organization,

communication would occupy a central place, because the structure, extensiveness, and

scope of organizations are almost entirely determined by communication techniques” (p.

91). While Barnard’s (1968) observations remain salient, it would have been difficult to

discern the changes technology would bring to society and organizational life. Organizations

can be difficult to define when considering the changes brought about by the Internet and

web. Internet-based software such as, social media like Facebook, LinkedIn, and YouTube—

have altered our ability to communicate, interact and organize (Miller, 2012 #150;Turkle,

2011 #147;Weick, 2001 #149;Shirky, 2009 #171). As a result, defining organizational

communication can be difficult.

Traditionally, organizational communication and management communication

would have been synonymous (Miller, 2012). However, with the advent of the Internet,

organizing and organizational communication may happen outside the realm of historical

“organizational” structure (Shirky, 2009). Modaff, Butler, and DeWine (2012) explain

organization communication as a “communication-centerd approach to the study of

organizations” and it seeks to “understand the central nature of communication in all

aspects of organizational functioning” (p. 2). Communication enables the purposes for


which organizations exist (Weick, 2001). Organizational communication is a continual and

dynamic process, and can lead to misunderstandings as the organization interacts with the

world around it (Modaff et al., 2012). This study seeks to understand Software-as-a-Service

firms from an organizational communication perspective.

Defining High-tech Organizations according to the Literature

Software high-tech firms can be defined according to their organizational purpose

and their unique organizational characteristics. In this literature review, the distinct features

of high-tech organizations and the ways in which they relate to stakeholders, the market

and the general external environment will be compiled. In the review of the literature, high

technology organizations may be defined by several primary characteristics: their

specialization (Gilman & Edwards, 2008); their connections to entrepreneurship (Odorici &

Presutti, 2013); their capacity and drive for innovation (Chandrasekaran, Linderman, &

Schroeder, 2012; Cho & Pucik, 2005); their knowledge- and high-velocity-intense

environments (Chandrasekaran et al., 2012); and their organizational cultures (Kelly, 1985;

Taylor & Carlone, 2001).

Specialization. Specialization is the purpose of the organization. It defines the

arena in which the high-tech organization engages and their short-term and long-term goals

(Nunes, Gonçalves, & Serrasqueiro, 2013). Specializations in high-tech organizations could

include, but are not limited to the following: energy, artificial intelligence, biotechnology,

semiconductor development, information technology, electrical and material engineering,

photonics, nanotechnology, robotics and telecommunications (OECD, 2007, 2013). While

each high-tech organization may be specialized, being able to communicate the

organizations’ unique specialization is central to increased growth and organizational

development (Cheney & Christensen, 2001). The opportunities created by innovative

technological specialization, mobilize entrepreneurs to action to create new organizations

(Nunes et al., 2013; Odorici & Presutti, 2013).

Entrepreneurship. Entrepreneurship is a consistent theme in the literature

defining high-tech organizations. The definition of entrepreneurship and entrepreneurs is

vast and may include a host of characteristics (Filion, 2011). For this study, an entrepreneur

is an individual or group of individuals who build a new organization “in the face of risk and

uncertainty for the purpose of achieving profit and growth by identifying opportunities and


assembling the necessary resources to capitalize on them” (Scarborough, 2011, p. 4).

According to Downing (2005), successful entrepreneurs are typically skilled at influencing

the public sphere and use communication as a tool for business building. Downing’s (2005)

work on entrepreneurship begins the dialogue on communication strategies of

entrepreneurs, but it does not address the holistic communication methods of high-tech

organizations as they grow. That is, the literature is silent on what communication strategies

entrepreneurs are using to grow their organizations.

Entrepreneurial organizations may fall into two categories: commercial and social.

Commercial entrepreneurship is a process of taking an innovative idea or product to create

a for-profit company. Social entrepreneurship attempts to change social practices and may

or may not be associated with a political agenda (Ruebottom, 2013). Each entrepreneurial

type is associated with a willingness to risk and challenges the current market or social

structure. Cloud-based software firms may engage in either social or commercial

entrepreneurship or both. Given the broad motivations and definitions of

entrepreneurship, for the sake of this study, I will use Ubeda, Gieure, de-la-Cruz and Sastre’s

(2013) definition of technology entrepreneurship and organizations. These organizations

have:

high growth potential; a promotional team linked to university research,

technology centers or organizations in the scientific-technical environment; a

focus on the global market (high internationalization potential); their own

technology, intellectual or industrial property, patents that provide

competitive advantages; creation of high qualified jobs and high scalability

(strong operational leverage)(pp. 616-617).

Underlying this comprehensive definition is the need for innovation, i.e. the organization’s

“own” technology or intellectual property.

Innovation. Innovation is central to the definition of high-tech organizations, and

communication is central to innovation (Strategic Direction, 2006). Innovativeness is the

“tendency to engage in and support new ideas, novelty, experimentation, and creative

processes that can lead to new products, services, or technological processes” (Odorici &

Presutti, 2013, p. 270). Software firms tend to be multifaceted innovators affecting both the

marketplace and the social landscape (Castells, 2013; Feitelson et al., 2013; Turkle, 2011),

and they are the primary employment sources and the strongest sector of growth in


developed countries (OECD, 2013). To keep the market advantage, high-tech firms must

innovate and communicate to retain economic sustainability and their unique knowledge

niche (Adler et al., 2009; Cheney & Christensen, 2001). Innovation, in relation to software,

is twofold: a) the innovation of software to support services specific to new hardware

technology developments; and b) innovation in software for general organizational

development and support. Innovation is the essence and excitement of the industry and it

can be the greatest cause of industry tensions (Adler et al., 2009). Innovation also

underscores the greatest need to communicate with others for growth (Colombo & Grilli,

2005). Due to the constantly changing environment in which the high-tech industry works

and thrives, the need for communication is underscored (Kukko, 2013; Strategic Direction,

2006).

High-velocity and knowledge-intensive. Due to the demands and roles of a

high-tech organizations as outlined by Ubeda and colleagues, innovation—or perpetual

development (Feitelson et al., 2013)—for market advantage defines these organizations as

“high-velocity” and “knowledge intensive” (Piva, Rossi-Lamastra, & De Massis, 2013, p. 110).

High-velocity environments are “rapid, discontinuous and simultaneously changing in

[market] demand, in competitors, in technology and in regulation” (Wirtz, Mathieu, &

Schilke, 2007, p. 296). In high-velocity environments, time and space are blurred and

market players consistently change. In essence, these environmental characteristics are

Castells’ (2000) networked theory materialised which argues that time and space are

compressed due to the massive global network of the Internet where many can access any

information at any time. Fluctuating economic markets are both globalised and

internationalised as a result of the Internet, and the perpetual development evolving out of

high-tech organizations enables the perpetual cycle of the high-velocity and knowledge-

intense environment (Feitelson et al., 2013; Stohl, 2001).

High-velocity and knowledge-intensive environments are complex, hypercompetitive

environments (Wirtz et al., 2007). In addition, they are typically associated with knowledge

intensive products or services (Colombo & Rossi-Lamastra, 2012). Knowledge intensive

firms are organizations where knowledge is the primary asset of the organization in contrast

to the traditional conceptualization of selling a product (Alvesson, 1993). “High-tech

organizations operate in fast industry, clockspeed characterized by frequent changes in

product/process technologies and increased competitive intensity” (Chandrasekaran et al.,


2012, p. 134). High-tech organizations are defined by the products and services they offer

and the knowledge they possess (Heavin & Adam, 2012; Nunes et al., 2013; Piva et al., 2013).

Hence, high-tech organizations are high-velocity, knowledge-intensive organizations and are

subject to consistent changes. In the organizational communication literature there are

numerous studies on organizational change, yet rarely addressed are the high-velocity,

knowledge-intensive environments found in innovative organizations and the potential

stressors this creates for communicative practices (Weick, 2001). If the high-velocity,

knowledge-intensive environments are mentioned, it is within the realm of organizational

culture.

Organizational Culture. Several key factors lend to unique organizational cultures

in high-tech SMEs such as how they handle high-velocity environments or how the manage

their knowledge (Büschgens, Bausch, & Balkin, 2013; Chandrasekaran et al., 2012; Kelly,

1985). In the seminal study on high-tech organizational cultures, the following was observed:

emphasize innovation, risk taking, frequent changes in assignments, and a relative

low degree of job structure. An emphasis on employee retention and development

is characteristic; in order to maintain a ‘cutting edge’ position, the organization

manages employees in a non-traditional way, stressing teamwork and cooperation

on innovative projects. Employees value autonomy and often identify more with

professional groups than employing organizations; as a result, turnover rates are

high. . .high tech organizations [are] distinct from traditional organizations (Van

Maanen & Barley, 1984 as cited in Isenhart, 1987, p. 36)

When combining the unique characteristics of high-tech organizations, varied and

distinctive perspectives on organizational communication develop. Specifically, the ways in

which high-tech organizations engage in internal and external communicative practices

(Badir et al., 2012; García-Morales et al., 2011; Heavin & Adam, 2012; Henderson, 2004;

Isenhart, 1987; Leonardi & Jackson, 2004; Mangrum et al., 2001; Russell, 1997). The process

of building organizational culture is inherently communicative and is a predominate area of

research in the organizational communication literature. A current trend when developing

organizational culture is enabling a culture of internationalization because of globalization

(Herbsleb & Moitra, 2001; Stohl, 2001). With a globalized mindset the way in which an

organization internationalizes affects their organizational communication strategies

(Kushnirovich & Heilbrunn, 2013; Shamir & Melnik, 2002).


Internationalization. A paramount consideration of the high-tech industry is

internationalization (D’Angelo, 2012). As with innovation, internationalization requires

effective communication strategies (Herbsleb & Moitra, 2001). The New Zealand Ministry of

Business, Innovation and Employment (2013b) perceives cloud-based software firms as a

new opportunity for export and growth in the New Zealand economy. A defining

characteristic of the “cloud” is the lack of barriers. Any barriers are typically technical

barriers (Armbrust et al., 2010). While national economic tariffs and laws apply, software-as-

a-service businesses readily allows for internationalization (Odorici & Presutti, 2013). In

Bell’s (1995) influential work on software internationalization, he noted three key areas

which affected internationalization and are indicators of high scalability (Ubeda, 2013 #32).

The three key areas are: a) client followership, the software developed was needed for a

similar industry in another country; b) sectoral targeting, or expanding the software in

specialized niche no matter the geographic location; c) computer industry trends, meaning it

was easier to internationalize into markets where there were heavy consumers of software.

Bell’s work demonstrates the long curiosity of tracking software firms and their expansion.

During the time of Bell’s (1995) research, internationalization was typically a gradual

process with pre-packaged software as the product. However, since 1995 Internet use has

increased by businesses, specifically small businesses, enhancing the rate at which

internationalization occurs (Cannone & Ughetto, 2014; Moen, Gavlen, & Endresen, 2004;

Sinkovics, Sinkovicx, & Jean, 2013). Advances in technology and consistent use of the

Internet have emerged as a new growth strategy. Some SMEs are developed as born global

SMEs; that is, they are intended to be global from the inception of the organization. Born-

global organizations are entrepreneurial-oriented, the organization, and its leadership, are

“innovative, proactive, and risk-seeking and cross-national boarders” (McDougall & Oviatt,

2000, p. 903). For example, in 2012 Jade Software Corporation, a New Zealand software

corporation based in Christchurch, launched an international business called the Wynyard

Group. The Wynyard Group’s specialization is software which works to combat criminal

activity and is marketed to potential international clients (Jade Software Corporation, 2012,

March 25).

Internationalized software firms are increasingly influencing economies worldwide

and are an area of new economic growth. Because SaaS firms operate in the innovative

edges of business and knowledge development (Baride & Dutta, 2011), they are needed for


economic sustainability in a knowledge economy (OECD, 2013). The process of

internationalization and communication is typically analyzed from the intercultural

communication perspectives as corporations expand into other nations (Kushnirovich &

Heilbrunn, 2013); yet, the literature lacks application to the general organizational

communication discipline. Despite the organizational communication literature on the topic,

internationalization is a novel opportunity when considering cloud-based technologies.

Cloud-based Software Organizations as Defined by the Literature

Defining cloud-based software firms. Cloud-based software organizations and

their capabilities are testing the paradigm of technology (Baride & Dutta, 2011). As stated,

cloud-based software firms are substantial contributors to the innovation and the changes

of current cyberspace technology (International Data Corporation, 2013, Sep 3; OECD, 2013).

They are new technology based firm (NTBF) and are subject to the expansive management

literature on NTBFs. The rapid change in technology over the last several decades has

generated considerable literature on NTBFs in an attempt to understand how they negotiate

high-velocity environments (Wirtz et al., 2007); how they manage financial and human

resources (Colombo & Grilli, 2009, 2010); how they communicate with their clients by using

other NTBFs (Ubeda et al., 2013); how they negotiate growth through alliances with other

high-tech organizations (Colombo, Grilli, & Piva, 2006); and how, or if, they strategically

manage development and growth (Cho & Pucik, 2005; Colombo & Grilli, 2010). A

subcategory of NTBFs are cloud-based software firms and need to be defined in two parts;

that is, defining cloud-based and defining software.

Cloud-based. Cloud-based comes from the term cloud computing and is connected

to the concept of “the cloud.” The cloud is a data center of hardware and software

(Armbrust et al., 2010, p. 51) that effectuates the Internet as we currently understand it.

Cloud computing “refers to both the applications delivered as services over the Internet and

the hardware and systems software in the data centers that provide those services”

(Armbrust et al., 2010, p. 50). They are applications of remote servers available for access at

any time and in any place (Ministry of Business Innovation & Employment, 2013b). This

definition could be delineated into further specifics about what cloud computing is and how

it functions. However, there are many disagreements on how to define these

differentiations (Armbrust et al., 2010) and they are beyond the scope of this study. For the


sake of this research, cloud computing will focus on one section of the definition, that is, the

application services, or software, available through and sustained by the Internet while

acknowledging cloud computing also consists of behind-the-scenes maintenance. “Cloud

computing is a next revolution of distributed computing paradigm which can support on-

demand service sharing with a higher level of flexibility and dynamic scalability” (Baride &

Dutta, 2011, p. 1). Due to the flexibility and scalability, using the cloud or cloud computing

can be an advantageous tool for growing organizations, and the services provided may be

used for a fraction of the cost (McNee, 2007).

Software. Software is a series of machine-readable codes executed through

hardware, like a computer (Osterweil, 2008). Software development may be divided into

two categories: front-end, i.e. what the user sees and interacts with, and back-end, i.e. what

the user does not see, but is necessary for smooth functionality for the user and for the

functioning purposes of the software application as whole (Feitelson et al., 2013). Simply

said, software is the intangible part of a computer. “Software can be difficult to describe

because it is ‘virtual’. . .it consists of lines of code written by a computer programmer that

have been complied [or processed] into a computer program” (Techterms.com, 2006) which

allow the user to perform certain functions such as play music, write a paper, or access the

Internet. When speaking of software, the term “includes pre-packaged software,

customized software and software developed in-house” (OECD, 20130, p. 86). Cloud-based

software, unless it is a hybrid program, does not download to the computer.

As mentioned, there are diverse configurations of application services, or software.

Cloud-based software comes in two forms: pure cloud software and hybrid software. Hybrid

software may be downloaded on to hardware to work in an interrelated nature with the

cloud. That is, it uses the customer’s computer, tablet or hand-held device to function with

the company’s server (Colombo & Grilli, 2010). Hence, cloud-based software is software on

the cloud which may or may not have a hybrid option where it utilizes both the customer’s

computer, tablet or mobile device—their operating hardware—and the Internet. With pure

cloud software, the code stays on the servers of the company which programmed the

application and is accessible through an Internet browser.

Defining Software as a Service (SaaS). Software-as-a-Service is a broad term

incorporating many concepts and processes. Generally, SaaS is defined as “applications

delivered over the Internet” (Armbrust et al., 2010). McNee (2007) defines SaaS as


“software provided and used in a utility computing context where the service provider

delivers the functionality of the application or utility infrastructure software over a network,

through a services interface” (p. 209); in other words, it combines IT services with business

or personal needs and exists on the Internet. Generally, cloud-based software is cheaper

than purchasing software at a retailer (Armbrust, 2010 #73). Cloud computing and SaaSs are

interdependent. Software-as-a-Service is another way of saying cloud-based software. SaaS

firms are growing and their possibilities are endless; (McNee, 2007) hence, it would be well

to study these organizations, given their potential influence on the economy and society

(Castells, 2013; Turkle, 2011) and their unique ability for rapid growth from small start-ups

to large organizations (Li, 2010 #114) .

Defining Software Small- and Medium-Enterprises according to the Literature

Comparing New Zealand and the United States. This research project will be a

comparative analysis of two knowledge-based economies (OECD, 2013). The purpose of the

comparative analysis is to add validity and to tease out the communication strategies used

and needed for high-tech firms which are situated in different locations in the world. It is

also to explore how globalization and internationalization affects these organizations in

emerging and established technology markets (Ministry of Business Innovation &

Employment, 2013b, p. 10). To date, there is no literature concerning the organizational

communication practices of the SaaS firms in these geographic locations.

The United States is the largest knowledge-based economy in the world with the

highest number of SaaS organizations (International Data Corporation, 2013, Sep 3; OECD,

2013). However, within the US economy are emerging technology centers similar to Silicon

Valley and comparable to emerging economies in smaller countries (The Economist, 2013,

Aug 31). When comparing the GDP of other emerging technology markets in the United

Sates, most state’s GDPs were 200 billion or more. Utah’s GDP was closest to New Zealand’s

GDP (Jones Lang LaSalle, 2013; Ministry of Business Innovation & Employment, 2013b; The

Economist, 2013, Aug 31). Both industries are nestled in economies with comparable gross

domestic product sizes; Utah’s GDP is 105.7 billion USD and New Zealand’s GDP is 139.8

billion USD. Both economies are dependent on the success of small and medium enterprises.

The challenges faced by both emerging high-tech industry organizations are similar. Both

industry sectors are seeking a way to connect with and retain talent; connect with and


educator investors; and, to seek strategies for communicating with policy makers (Ministry

of Business Innovation & Employment, 2013b; Radio New Zealand News, 2013, Oct 25; Utah

Business, 2013, Nov 5).

New Zealand. Many of the SaaS firms in New Zealand meet the criteria of

technology organizations established by Ubeda et al. (2013) research. According to the New

Zealand Ministry of Business and Innovation (2013), cloud-based software firms in New

Zealand are typically highly innovative and research intensive, necessary characteristics of

high-technology companies. They also see these organizations as “hav[ing] the potential to

be significant exporters and build large international businesses;” and they note that “in

many cases these firms are developing products based around cloud computing and the

software as a service model” (2013b, p. 10). The observations made by the NZ Ministry of

Business, Innovation and Employment may be exemplified with growth in internationalized

companies such as Xero, Eventfinda or ShowGizmo.

Government initiatives and private investors are also an important part of the

innovative-to-internationalization cycle. The New Zealand Government has established

investment funds such as the New Zealand Venture Investment Fund (Ryan, 2013, Nov 28)

or have encouraged groups such as Callaghan Innovation (Ministry of Business Innovation &

Employment, 2013b). The government has also made a concerted effort to develop the

infrastructure required for SaaS growth (Ganesh & Zorn, 2011). There appears to be

increasing numbers of local and international investors interested in aiding in the growth of

the technologies in New Zealand (Ryan, 2013, Nov 28). Also important are the innovative

centers which exist at universities in New Zealand and aid in the growth of the SaaS sector.

Another reason to look at cloud-based software development in New Zealand is the

proactive push of the CloudCode by the Institute of IT Professionals NZ, Inc. The cloud code

is an ethical obligation to provide trustworthy cloud-based services to the New Zealand

population and abroad (Institute of IT Professionals NZ Inc, 2013). The CloudCode was

developed by incorporating the input of over 250 business, individuals, and other

stakeholders (Institute of IT Professionals NZ Inc, 2013). The CloudCode provides an

insightful look into developing cloud-based technologies in New Zealand through the

Institute of IT professionals, New Zealand as well as revealing the concerns of cloud-based

technology from a practitioner’s perspective.


USA, Utah. While New Zealand and Utah’s GDPs are similar in size, Utah is part of

the United States which means the high-tech organizations in this location must abide by

national laws as well as state laws. It also means the high-tech organization can have access

to national and state government initiatives; however, one of the biggest challenges of the

Utah high-tech environment is getting the attention of private investors (Utah Business,

2013, Nov 5). Like New Zealand, there are government initiatives and organizations which

encourage innovation and investment funding, such as USTAR, Utah Science Technology

Research Initiative (USTAR, 2013). There are several notable universities in Utah which aid

in the innovation and growth of the SaaS sector and which partner with USTAR, but do not

necessarily partner with developing Utah high-tech businesses (Utah Business, 2013, Nov 5).

Utah is unique in its SaaS landscape. It has multiple start-ups and SMEs that operate

in cloud-based software development, but it is also called “Silicon Slopes” (The Economist,

2013, Aug 31). Silicon Slopes means several of the large Silicon Valley companies like Ebay,

Adobe and Microsoft all have significant investments and organizations in Utah. Of all the

technology growth areas in Utah, software development has the highest growth rate (Jones

Lang LaSalle, 2013) like New Zealand. High-tech organizations in this area, like New Zealand,

also have consistent characteristics previously established through the Ubeda et al. (2013)

definition of a high-tech organizations. As in New Zealand, the state of Utah’s economy is

dependent on small and medium enterprises. Although absent of a “Cloud Code,” the

developers in the USA would subscribe to the Association of Computer Machinery Code of

Ethics (Association of Computer Machinery, 1992).

Table 1

General Economic Statistics for New Zealand and USA, Utah

New Zealand USA, Utah

GDP 139.8 Billion USD 105.7 Billion USD

Percentage of SMEs 97.2 % 96.8 % 76.9% 20 or less employees

Hardware Infrastructure for Cloud-based growth

Improving Yes

Venture Capitalism Present Present

Innovative Partnerships Available Yes Yes

Ethical Codes Explicit; CloudCode Implicit; ACM Code of Ethics


Defining SMEs. The definition of a small and medium enterprise (SME) varies

drastically from nation to nation and is generally defined by the number of employees

(Scarborough, 2011). In New Zealand, a SME is defined as an organization having up to 20

employees (Ministry of Business Innovation & Employment, 2013c). In Utah, a SME is

typically referred to as a small business. Small businesses in the United States are defined as

500 employees or less (Small Business Administration Office of Advocacy, 2012a). However,

in Utah, most of the small businesses are defined as “very small” meaning employers have

fewer than 20 employees which is more consistent with the New Zealand definition of an

SME (Small Business Administration Office of Advocacy, 2012b). Small businesses in Utah

and SMEs in New Zealand make up 75% or more of the respective local economy (Ministry

of Business Innovation & Employment, 2013c; Small Business Administration Office of

Advocacy, 2012b). For the sake of this study, and in an attempt to create a unifying,

multinational definition of small or medium enterprises, the OECD (2005) definition will be

used since both New Zealand and the United States are members of the OECD. The OECD

defines small firms with 50 employees or less. Medium sized firms are 50 to 249 employees,

and large firms are 249 employees or larger. Hence, small and mediums sized firms may

have more than 10 employees (10 or less is a micro-enterprise), but less than 249

employees. For the sake of the research project, this definition will be represented in table 2.

Table 2

OECD firms sizes

Small 50 employees or less

Medium 50-249 employees

Large 249 employees or more

Characteristics of high-tech SMES

While this study will use large firms for data collection, the importance of the

research will be for small and medium enterprises. To understand the value and

contributions of this research, the characteristics of high-tech SMEs need to be defined

given their differences and their distinctive characteristics with the general SMEs category.

“It is well established that SMEs differ from larger firms on the basis of available resources

such as human and financial capital, management experience, and organizational

procedures” (Chang & Hughes, 2012, p. 2). High-tech SMEs are prone to adapt quickly to


high-velocity environments and have notable innovation output (Bernroider, 2002; Nunes et

al., 2013). Because of size, these organizations have distinct management styles,

organizational structures, and reactions to the environment; they also face greater tensions

(Chang & Hughes, 2012). The age of the SME also affects its function and organizational

goals. Unexplored in the research are the communication processes which occur in SME

SaaS firms, particularly as they continue to grow from innovation-to-internationalization.

SME age. The age of the SME determines the structure, constraints and tensions the

organization experiences (Nunes et al., 2013). There is no research evaluating how age

effects communication. Yet, “age is of greater relative importance for the survival of young

SMEs than the survival of old SMES” (Nunes et al., 2013, p. 265). Young SMEs have the

challenge of developing to a point of efficiency. Old SMEs, on the other hand, have already

developed equilibrium; that is, they have developed a balance of the constraints and

tensions required for survival, and they understand the intensity of their focus needs to be

on innovation (Nunes et al., 2013). Another element of the SME experience is the financial

resources available to the organization.

Financial needs. High-tech SMEs have a different set of financial needs than

general SMEs (Nunes et al., 2013). “Venture capital is an important source funding,

especially for young technology based-firms” (OECD, 2013). Whether it’s venture capital or

business loans, these organizations also need a notable cash-flow to develop (Nunes et al.,

2013). Attainting financing for a young SME is largely a communication issue (Colombo &

Grilli, 2009; Downing, 2005; Nunes et al., 2013). To increase capital, high-tech SMEs may

take on business loans. The debt incurred through a business loan can assist young high-

tech SMEs, but is dangerous for older high-tech SMEs (Nunes et al., 2013). A lack of

sufficient funding in a high-tech SME largely determines the success or failure of the

organization. Attracting the funding needed is largely determined by the reputation of the

organization and/or the individuals running the organization.

Organizational reputation. Reputation is a notable factor in any organization.

Reputation is the perception the public has about “the organization’s qualities,

trustworthiness and reliability” (Abimbola & Kocak, 2007, p. 423). In young high-tech SMEs,

reputation is crucial and primarily a communication issue. It plays a critical role in high-tech

SMEs for funding sources (Nunes et al., 2013). Reputation and exposure also affect the

ability to find the needed employees (Utah Business, 2013, Nov 5).


Employment. Over the course of the last decade, high-tech SMEs have played a key

role in employment creation (OECD, 2013). Yet, employees for high-tech SMEs is difficult

(Ministry of Business Innovation & Employment, 2013a; OECD, 2013; Ryan, 2013, Nov 28;

USTAR, 2013; Utah Business, 2013, Nov 5) because software development is a specialized

knowledge-based industry (Heavin & Adam, 2012; Herbsleb & Moitra, 2001; Jasinski, 2005;

OECD, 2013). Labor is central to the output needs of these organizations and to their long-

term success (Colombo & Grilli, 2005; Nunes et al., 2013; OECD, 2013). Attracting employees

and keeping them loyal to a specific organization is a challenge (Gionfriddo & Dhingra, 1999).

As explained in Isenhart (1987) seminal research, individuals with the skills needed in the

high-tech industry are more loyal to their skill set than they are to an organization. The

fluctuating nature of employees through high-tech organizations has become part of the

industry culture (Lewis, 2002). While employment issues appear separate from the

objectives behind the communication discipline, the process of attracting and keeping

employees in an organization is a communication challenge. It is the essence of the

management communication discipline.

Organizational Culture. “Organizational culture is both a product and a process, a

being and becoming” (Kelly, 1985, p. 46). Organizational culture in high-tech SMEs is

bounded by the knowledge-based, high-velocity nature of the industry (Goodall, 2010;

Taylor & Carlone, 2001). Organizational culture in high-tech organizations can be inspiring

due to minimalist management and heightened creativity (Strategic Direction, 2013), and is

perpetuated through communication (García-Morales et al., 2011; Kelly, 1985; Miller, 2012;

Taylor & Carlone, 2001; Weick, 2001). Organizational culture in innovative companies has

been extensively researched and was recently complied into a meta-analytic review which

comprised 6,341 articles on the topic (Büschgens et al., 2013). Büschgens et al. (2013) noted

that innovative organizations consistently and proactively develop externally-oriented and

flexible cultures. In the vast amount of literature covered, Büschgens et al. (2013)

concluded organizational culture developed was specific to the industry subsector in which

the organization primarily engaged; that is, software organizational cultures slightly varied

from hardware organizational cultures. While the literature is extensive, Heavin and Adam

(2012) note the importance of organizational culture in high-tech SMEs and argue that

organizational culture is directly connected to knowledge management in these firms.


Table 3 Summary of Small and Medium Enterprises

Defining Features General SMEs High-tech SMEs SaaS SMEs Size 10-250 employees

(OECD, 2005) 10-250 employees (OECD, 2005)

10-250 employees (OECD, 2005)

Specialization Beyond size, the characteristics and specializations are so diverse it is difficult to generalize (Scarborough, 2011).

Any specialization dealing with technological developments: eg., energy, artificial intelligence, biotechnology, nontechnology, information technology, robotics, telecommunication (OECD, 2002)

Software as a service, or Internet-based software available for home or business use (Armbrust et al., 2010)

Organizational Growth potential

Varies; depending on industry, sector and current market status (Hatten, 2012)

High (OECD, 2013) High (OECD, 2013)

Unique Financial Needs

None Venture Capital (Nunes et al., 2013)

Venture Capital (Nunes et al., 2013)

Market focus (local, regional, or international)

Local, regional and international; depending on industry, sector and current market conditions (Hatten, 2012)

Initially, local or regional ; Increasing numbers beginning with an international focus (Cannone & Ughetto, 2014; Lopez, Kundu, & Ciravegna, 2009)

Initially, local or regional ; Increasing numbers beginning with an international focus (Cannone & Ughetto, 2014; Lopez et al., 2009)

Competitive Advantage

Flexibility and customer service (Hatten, 2012)

Innovation and knowledge management (Dalkir, 2013)

SaaS (McNee, 2007) and knowledge management (Li, Shang, & Slaughter, 2010)

Ability to generate employment

Varies; depending on industry, sector and current market status (Hatten, 2012)

High (OECD, 2013)

High (OECD, 2013)

Scalability Varies; depending on industry, sector and current market status (Hatten, 2012)

High (Ubeda et al., 2013)

High (Ubeda et al., 2013)

Note: Defining features derived from Ubeda et al. (2013)


Software Firms and Knowledge Management in the Literature

Knowledge management and communication skills are required to develop, maintain

and grow a cloud-based organization (Kukko, 2013 #105). Generally, knowledge

management is defined as strategies which assist organizations in gathering, organizing and

disseminating knowledge in an attempt to improve the financial and time effectiveness of

an organization (Dalkir, 2013). Considerable research has been done on the knowledge

management aspects of high-tech organizations (Adler et al., 2009; Alvesson, 1993;

Andriopoulos & Lewis, 2009; Bouhnik, Giat, & Sanderovitch, 2009; Büschgens et al., 2013;

García-Morales et al., 2011; Heavin & Adam, 2012; Herbsleb & Moitra, 2001; Jasinski, 2005;

Odorici & Presutti, 2013; von Krogh, Rossi-Lamastra, & Haefliger, 2012). As defined by

Bernroider (2002), “the software industry is a knowledge industry. Its major product is

knowledge itself and its major output is research which translates into new products and

services” (p. 562). Knowledge management is pivotal to software SMEs and a contributor to

their success. The transfer of the organizations’ knowledge, i.e. product development,

through unrefined communication channels is a consistent communication challenge in SaaS

firms (Heavin & Adam, 2012).

In a seminal management article, Hansen, Nohria and Tierney (1999) began

delineating the importance of knowledge management for all organization, particularly

knowledge-based industries like software development (Adler et al., 2009; Alvesson, 1993;

Andriopoulos & Lewis, 2009; Büschgens et al., 2013; García-Morales et al., 2011; Heavin &

Adam, 2012; Herbsleb & Moitra, 2001; Jasinski, 2005; Mathiassen & Pourkomeylian, 2003;

Odorici & Presutti, 2013; von Krogh et al., 2012). Knowledge management may be divided

into two categories: explicit knowledge and tacit knowledge (Mathiassen & Pourkomeylian,

2003), or personal and codified knowledge (Hansen et al., 1999). An example of explicit, or

codified, knowledge is software engineering knowledge, or how to code a software

programme. Tactic, or personal, knowledge is the personal knowledge “embedded in

individual experience and it involves intangible factors such as personal beliefs, perspectives

and underlying values” (Mathiassen & Pourkomeylian, 2003, p. 66). Since knowledge

management is fundamental a communication practice and concern, both explicit and tactic

knowledge need to be managed in a software development organization through strategic

communication strategies (García-Morales et al., 2011).


Explicit knowledge. As Mathiassen and Pourkomeylia (2003) explain, “knowledge

is extracted from the persons who originally created it, made independent of those persons

and reused for various purposes” (p. 67). It may be saved in word documents, sound bites,

images or other graphic representations (Dalkir, 2013). In many business models,

computing hardware is perceived as a medium to transfer and store “extracted” knowledge.

In the software development industry, this is no different. Having codified knowledge on a

database allows for anyone in the organization to “search for and retrieve the same

knowledge without having contact with the person who originally developed it” (Mathiassen

& Pourkomeylia, 2003, p. 67). Explicit knowledge is used to teach or train new employees

(Dalkir, 2013). It is the tangible form of knowledge, like a policy and procedures manual,

that assists in the standardization process of the organization.

Tactic knowledge. In contrast to explicit knowledge, tactic knowledge is intangible

and can be more difficult to identify. It tends to reside in “the heads of the knowers” (Dalkir,

2013, p. 8) and is communicated through face-to-face or interpersonal communicative

practices (García-Morales et al., 2011; Mangrum et al., 2001). Mathiassen and Poukomeylia

(2003) combined the importance of implicit knowledge management and the software

industry, by explaining that tactic knowledge in the industry is created in brain storming

sessions and person-to-person conversations. Dalkir (2013) explains tactic knowledge as: a)

the ability to be flexible in a fluid environment; b) the ability to collaborate, share a vision or

transmit culture; c) the one-on-one, face-to-face transfer of experiential knowledge; and d)

the know-how, know-why and care-why (p. 8). Explicit and tactic knowledge management is

needed and important for growth in a cloud-based software organization.

Knowledge Management in the software firms. For a decade, the literature has

established the need for anticipatory knowledge management strategies for software firms

and for software process improvement (Mathiassen & Pourkomeylian, 2003). Since

software development is primarily a social activity (Valencia-Garcıa et al., 2010), a

considerable amount of research has been explored on teamwork. Knowledge management

strategies in organizations have been explored by different disciplines, including effective—

and needed—spontaneous face-to-face problem solving among employees in high-tech

organizations to share valuable tactic knowledge to create resolutions (Mangrum et al.,

2001). Knowledge management is central to global software developing organizations

(Herbsleb & Moitra, 2001; Odorici & Presutti, 2013). Darroch and McNaughton (2003) argue


that knowledge-management-oriented organizations are more successful than market-

oriented organizations. Darroch (2005) also argues that innovative firms with knowledge

management strategies are more effective in resource allocations, and as a result, will be

more innovative. Knowledge management implies advanced communication skills which

generally develop over time.

Kukko (2013) claims that small software firms grow organically which requires

increased attention to knowledge management. Kukko (2013) also exposed the barriers of

tactic knowledge sharing in software development organizations. Kukko (2013) divided the

knowledge barriers into three categories: individual, organizational and technological. The

individual knowledge barriers: lack of time, language problems, lack of trust, low awareness

of the value of the knowledge, lack of social networks and tension of power relationships (p.

22). At the organizational level, the barriers included: disconnection between knowledge

sharing and organizational goals, neglect of managerial communication encouraging the

benefits of knowledge sharing, lack of network connections, and competition between

teams (p.22). The technological barriers included a lack of training, a lack of time and a lack

of communication concerning the technologies chosen (p.22). Replete, yet implied, in

Kukko’s research are internal and external communication problems. Yet, these

communications problems are a subset of the knowledge sharing paradigm and are

minimally addressed (García-Morales, 2011 #22).

In the rest of the vast knowledge management research concerning software firms,

most of the literature can be categorized into a few topics. The literature that focuses on

teamwork (Valencia-Garcıa et al., 2010); how knowledge management creates a competitive

edge (Darroch, 2005; Darroch & McNaughton, 2003); how knowledge management affects

technology implementation in an organization (Mathiassen & Pourkomeylian, 2003); or,

how knowledge management aids in internationalization (Piva et al., 2013; Shaw & Darroch,

2004; Ubeda et al., 2013). Lacking in the knowledge management literature is the

connection between the variety of communicative practices and they ways in which they

affect software firm development. Yet, prominent in the literature in management is the

need for networks and alliances.


Software Firms and Networks and Alliances in the Literature

Networks and alliances are necessary for a high-tech firm’s success and primarily a

communication issue (Badir et al., 2012). These collaborative relationships, their

communicative purposes, and their contribution to innovation and organizational

development have long been established (D’Angelo, 2012; Gulati, 1998). “Firm alliances and

strategic networks potentially provide firm’s with access to information, resources, markets

and technologies” (D’Angelo, 2012, p. 397). Maintaining these organizational relationships is

pivotal and requires refined communication skills (Badir, et al., 2012). Correspondingly, it is

important to review the literature on networks and alliances as related to software firms.

Networks. The word “networks” can have a number of definitions when referring to

software organizations. However, in this study, networks are the relational connections in

an organization with other organizations or individuals outside the organization which will

benefit the organization’s success. It is not the hardware interconnection typically referred

to in the IT industry. Gilman and Edwards (2008) argue the importance of networks and

evaluate the ways in which they affect software firms success. They noted that isolation

from networks leave the organizations vulnerable when they needed assistance during their

growth processes. Kushnirovich and Heilbrunn (2013) note the importance of informal

networks, suggesting that an organization’s formal networks are often enhanced by the

informal, social networks of the employees in the organization. Johansen and Vahlne (2009)

suggest that an organization is made up of social networks and these networks affect the

fundamental functioning of the organization.

The fundamental functioning of organizations can be enabled through networks.

Networks directly affect growth, specifically internationalization (D’Angelo, 2012; Kyvik,

Saris, Bonet, & Felício, 2013; Moen et al., 2004; Nunes et al., 2013; Ubeda et al., 2013).

Organizational networks are taken to an entirely differently level when considering ‘social

networking’ which may be used by an organization to legitimize and connect with clients

(Ubeda et al., 2013). Networks and alliances differ in the purpose of the relationship, yet are

similar in their value to the organization. They also require a similar set communication skills

to build and maintain the relationships central to networks and alliances.

Alliances. An alliance refers to the organization’s formal business connections

(Colombo et al., 2006). Alliances allow for development and innovation beyond the


company’s boundaries (Badir, et al., 2012). Badir and colleagues (2012) analyzed new

product development in high-tech organizations within the framework of alliances and

discovered the functionality and benefit of such relationships. D’Angelo (2012) also

highlighted the importance of alliances by noting the financial benefits and knowledge

sharing which develops among organizations when alliances occur. Colombo and Piva (2012)

acknowledge the value of alliances, but they also note the organization’s human and social

resources have an effect on future alliance formation. This is also the case with

internationalization (Moen et al., 2004). Alliances typically center around three institutions.

The institutions with which SaaS SMEs interact are: other software or high-tech firms

(Badir et al., 2012), government-funded or -created organizations, such as universities

(Colombo & Rossi-Lamastra, 2012; D’Angelo, 2012) and investors (Colombo & Grilli, 2009).

Alliances with each of these organizations can enable growth in the high-tech firm. Alliances

among software firms are crucial to their success and often function collaboratively. It is

also a well-studied area of the literature (Badir et al., 2012; Colombo & Rossi-Lamastra,

2012; D’Angelo, 2012; Herbsleb & Moitra, 2001). High-tech organizations’ alliances with

government communities are in the interest of the government and the high-tech

organization (OECD, 2013). Considerable research has noted these relationships, but few

studies explore the ways in which these relationships work together (Chang & Hughes, 2012;

Colombo & Grilli, 2009, 2010; D’Angelo, 2012; Ganesh & Zorn, 2011; Gilman & Edwards,

2008) and they ways in which communicative practices impact these relationships (Weick,

2001). Also of interest are the alliances among high-tech organizations and universities.

University alliances with high-tech organizations seem to exhibit the greatest amount of

strain despite their potential success (Colombo & Piva, 2012; D’Angelo, 2012; Wright,

Lockett, Clarysse, & Binks, 2006). The final alliances in review are the alliances with financial

organizations or venture capitalists. Venture capital is vital to the development of high-tech

SMEs, yet little research has been done on how high-tech SME engages in these alliances.

While alliances are central to SaaS SME growth, they can also cause organizational tensions.

High-tech Firm Tensions in the Literature

High-tech SMEs are subject to different challenges and tensions (Chang & Hughes,

2012; Nunes et al., 2013). A plethora of research has explored the tensions which exist in

resource allocation among high-tech organizations under the guise of ambidexterity.


Ambidexterity, in the management literature, is a concept explaining the tension which

exists between exploration and exploitation. Exploration refers the organization’s activities

which are “characterized by research, discovery, experimentation, risk taking and innovation”

(He & Wong, 2004, p. 481). In contrast, exploitation refers to the organization’s activities

which are characterized by “refinement, implementation, efficiency, production” of an

already existing product or service (He & Wong, 2004, p. 481). High-tech organizations

need to balance exploitation and exploration to flourish in high-velocity environments

(Chandrasekaran et al., 2012, p. 134). Gibson and Birkinshaw (2004) claim the ambidexterity

tension exists beyond the product and is part of the context of high-tech organizations.

Other tensions exist in high-tech organizations. Andriopoulos and Lewis (2009) argue three

additional tensions emerge out of the ambidexterity challenges. These tensions appeared as

challenges with strategic intent, customer orientation and personal drivers of the

organizational members.

In an ethnographic study, Ribes and Finholt (2009) developed nine organizational

tensions that exist in long-term development of high-technology projects; they included

typical tensions such as research and development. They also noticed unusual tensions such

as inclusion versus readiness. Inclusion versus readiness referred to the implementation of a

technology project in a specific geographic area. When it was time to implement the project,

the community was not ready for project implementation. Following Ribes and Finholt’s

example, Kee and Browning (2010) did a dialectical analysis of one high-tech organization.

Their dialectical analysis centered on the important issue of funding and noticed tension

emerged on institutional, individual (employees of the organization) and ideological levels.

The scholars exploring the tensions in high-tech organizations noted the importance of

communication in the process of negotiating each of the tensions throughout the growth of

the organization. Other tensions have been researched in high-tech organizations.

Tensions can be heightened depending on the high-tech SME and the age of the

organization (Chang & Hughes, 2012; Heavin & Adam, 2012; Nunes et al., 2013). Additional

tensions include financing, knowledge management and human resources (Chang & Hughes,

2012; Nunes et al., 2013). Further tensions will emerge depending on the experience of the

entrepreneur. If the entrepreneur is experienced or an novice entrepreneur will determine

the underlying tensions in the organization (Odorici & Presutti, 2013). The only way to

resolve these issues is through experience, cooperation and communication (Badir et al.,


2012; Barnard, 1968; García-Morales et al., 2011; Henderson, 2004; Odorici & Presutti, 2013;

Russell, 1997). In other words, organizational growth and communication is part of the

reconciliation of the tensions experienced by small high-tech organizations (Fairhurst &

Putnam, 2004; Leonardi & Jackson, 2004).

Factors of High-tech Organizational Growth according to the Literature

Growth encompasses a number of planning strategies, including but not limited to,

image management, innovation strategies, knowledge management, age, financial

management, internationalization and failure strategies. Defining growth is challenging

(Chang and Hughes, 2012). For the sake of this study, growth will be defined as increased

sales (Chang & Hughes, 2012; Cho & Pucik, 2005). Colomobo and Grilli (2005, 2009) provide

a comprehensive economic analysis of the many factors which do and do not lead to growth

in high-tech firms, such as the size of the founding team. Of all the literature on how to

grow a small high-tech business, the communication literature focuses on SaaS firms on

alliances and networks.

Beyond singular organizations is the growth of the industry. The OECD (2013),

Organization for Economic Co-operation and Development, state there are many areas of

growth in the high-tech sector which includes information technology. Information

technology, which includes software development, is san area anticipated with further

future economic growth. During 2008-2011, in nearly all OECD (2013) countries, information

services [such as SaaSs] saw gains in employment while employment in other sectors fell

significantly. Overall, the need for software development firms is consistent across the globe.

Yet, how an organization grows, or if it grows at all is dependent on the factors listed below.

Networks and alliances. Networks and alliances are needed for high-tech firm

growth (Badir, 2012 #12). Networks and alliances aid the growth process by allowing the

firm to access resources and information which they would not have access to alone

(D’Angelo, 2012 #89). As a company grows to internationalization, networks and alliances

become central to the process (Kyvik, 2013 #107;Moen, 2004 #106;Nunes, 2013 #30;Odorici,

2013 #31). Another communication practice needed for firm growth is image management.

Image management. Abimbola and Kocak (2007) note that a strong brand can

create attributes difficult for competitors to mimic. Strong brands also provide an

“immutable association represent[ing] a strong source of intellectual property as well as a


source of sustainable growth for SMEs” (p. 422). Nunes et al. (2013) argue the inability to

create sufficient financing is connected to organizational and entrepreneurial reputation

and image. As Salazar (2009) claims, the inability to engage in external communication

practices, like branding and marketing, can lead to detrimental organizational outcomes.

Image management is one of many factors including innovation strategies.

Innovation strategies. The comprehensive research on ambidexterity theory is an

explanation of how to innovate and grow an organization simultaneously in the high-tech

industry. To summarize, research and development is necessary for growth in a highly

innovative industry. In other research, Cho and Pucik (2005) found innovation and product

quality as drivers of growth and market value. Yet, private innovation and public innovation

organizations, such as universities, have different success rates. As much of the literature

argues, innovation is demanded for sustainable growth (Chang, 2012 #11;Cho, 2005

#38;Colombo, 2005 #45;D’Angelo, 2012 #89;Darroch, 2005 #103). Innovation strategies

require knowledge management which is also needed for organizational growth.

Knowledge Management. Knowledge management, increasing and sustaining, is

considered the key to long-term sustainable growth for many firms and governments (OECD,

2013). Hansen, et al. (1999) claim knowledge management is central to growth in

knowledge industries such as software development. Colombo and Piva (2012) explain the

nature of knowledge in a growing high-tech firm is tactic knowledge and is one way in which

the organization sustains its competitive edge. Another way to maintain competitive

advantage is the firm’s age.

Age. The most positive growth has come out of young firms (five years old or less)

(OECD, 2013). “Young firms with fewer than 50 employees represent only around 11% of

employment [in this sector], but they generally account for more than 33% of total job

creation in the business sector” (pp. 13-14). While a firm may be young, the experience of

the entrepreneur beginning the firm has a different effect. Colombo and Grilli (2005, 2009)

noted that prior work experience and educational level of an entrepreneur in a high-tech

firm is a key, positive influence of the growth of the organization. Despite an entrepreneur’s

education and work experience, she or he also needs capital.

Financial management. Capital is central for growth, especially for young

innovative firms (Nunes et al., 2013; OECD, 2013). Furthermore, venture capitalism is an

important funding source for these firms and is essential for their growth (Colombo & Grilli,


2009). Venture capitalism is private lending to young—typically technology based—firms.

Depending on the country in which the SME is developing will determine accessibility of

venture capitalist funding (OECD, 2013). For some, venture capital does not matter. If the

entrepreneur is well-educated and has prior work experience in the desired technology, his

or her success in growing an organization is not dependent on venture capital, but is

connected to alliances and networks instead (Colombo & Grilli, 2009). Financial capital is a

factor in internationalization as well.

Internationalization. The literature on internationalization as a growth factor is

conflicting. Some contest internationalization is central to many SaaS growth plans (Ubeda

et al., 2013). Others claim it happens unintentionally (Cannone, 2014 #167;Lopez, 2009

#166). According to the OECD (2013), internationalization of technology and software

organizations has outpaced the growth of GDPs. This is significant because it demonstrates

the interconnectedness of the global economy, and the need to make sense of this highly

networked global economy (OECD, 2013). In the sense-making process, software firm failure

needs to be taken into account.

Software firm failure. Business failure is a necessary topic when discussing SME

growth (Hatten, 2012 #170). In an analysis of why software firms fail, Li, Shang and

Slaughter (2010) noted the greatest reason for failure in the software industry was an

inability to manage resources. Resource management, financial or human, is critical to

growth success. (Salazar, 2009 #179@@author-year) noted seven factors: 1) poor

management; 2) inability to balance ambidexterity challenges; 3) lack of marketing

experience; 4) inability to appropriately manage finances; 5) unanticipated problems with

technology development or intellectual property; 6) ethical issues, e.g. fraud; and 7)

government regulations and policies. It should also be noted that the innovation process

can determine the long term success of the organization. Colombo and Piva (2012) noted in

an analysis of university developed innovative firms that they were “not well equipped to

implement a high-growth business model” (p.90) and the expertise to succeed with

experienced entrepreneurs left them needing higher levels of management expertise. They

lacked the business and management knowledge needed to grow. The growth literature, it

becomes evident software firm growth is a multifaceted challenge.

In conclusion, many factors contribute to the growth for high-tech SMEs. Yet, little

research has been done to evaluate how SaaS firms communicate their growth needs,


internally and externally. While it is clear resource management is a primary success factor,

what isn’t clear is how communication plays into resource management. It is also explicit in

the literature that factors such as reputation or organizational image management—

communication needs—affect the ability of the organization to get funding; it is unclear

which communication strategies these organizations are using to develop their

organizational identity. The same observation could be made for the knowledge

management literature. The knowledge management literature and the organizational

communication literature is silent on what communication strategies are being used to

manage knowledge. Of further interest, are the policy needs unique to innovative

organizations and the ways in which innovative organizations communicate with governing

bodies for support.

Software Firms and Policy Needs and Management in the Literature

Since the 2008-2009 economic downturn, overall technology and science growth has

declined, but has become a global priority for policy makers. Despite the decline, OECD

countries invest, on average, .8% of the country’s GDP on research and development in

technology (OECD, 2013, p. 13). The OECD claims this is important since global policy makers

perceive global economic growth as central to “productivity and job creation” and because

technological advances “encourages sustainable [economic] growth” (p.13). While the

information system sector has grown at a steady rate, there is still a need for engagement

with policymakers on encouraging and supporting new technology innovation.

Typically, universities are the cross-section between new technology research and

government policy (Colombo & Rossi-Lamastra, 2012; Wright et al., 2006). In a seminal,

cross-national study on university spin-outs and venture capitalists, Wright, Lockett,

Clarysse and Binks (2006) outline policy suggestions for high-tech SMEs. They encourage

governments increase the exposure of spin-out organizations from university settings. They

also suggest governments encourage venture capitalist firms to create stronger alliances

with universities. This research is valuable for university spin-outs, but can also apply to all

high-tech start-ups because university alliances can be beneficial (Colombo, 2012 #48).

Additional legal and policy issues need to be taken into account such as: intellectual

property rights (OECD, 2013), licensing negotiations (Armbrust et al., 2010), patents

(Colombo et al., 2006; OECD, 2013), trade secrets (Hannah, 2005), and conflicting cross-


national laws on privacy, patents, intellectual property rights (Kushnirovich & Heilbrunn,

2013; OECD, 2013; Wright et al., 2006) as a software company grows to internationalization.

Legal issues specific to the cloud may be liability of the software once properly placed ‘in the

cloud’ (Armbrust et al., 2010) or, when dealing with social software, privacy. It is clear

software firms need to aware of legal issues and policymakers to forward their innovative

needs and assist in growing their organizations. As previously stated, it is unclear how

policymakers, governing bodies and innovative organizations communicate.

Communicating in Software Firms according to the Literature

Communicating in software firms has been viewed from a number of perspectives.

Management communication research readily recognizes communication as part of the

success formula for high-tech organizations. Badir, Buchel and Tucci (2012) state that

“effective communication and information processing are essential to a [high-tech] firm’s

success” (p. 914). In their 2012 case study, they analyzed the ways in which organizational

boundaries are negotiated in order to develop products and improve communication with

strategic partnerships. During their research, however, we are not informed on the

negotiation process. Interpersonal communication appears to be the most explored

communication phenomenon in high-tech firms. Mangrum et al. (2001) suggest “that

informal, face-to-face interactions are . . .critical to achievement of collaborative work” in

high-tech industries (p. 316) to manage their communication needs. Precise internal

communication, where one-on-one or in teams, is central to organizational success in high-

tech firms (García-Morales et al., 2011).

Outside of the vast literature on knowledge management—fundamentally a

communicative practice—much of the management and human resources literature

concerning communication in software firms is focused on teamwork in high-tech

organizations. Teamwork is essential for productivity and communication processing

(Andriopoulos & Lewis, 2009; Büschgens et al., 2013; Layman, Williams, Damian, & Bures,

2006), and is needed for innovation and alliance successes (Darroch, 2005). An individual’s

personal ability to engage in teamwork is seen as necessary for company growth,

particularly when considering the need to internationalize (Kyvik et al., 2013). Teamwork is

considered to be of “critical importance” in software development success (Valencia-Garcıa

et al., 2010). Webster and Wong (2008) noted the importance of teamwork not just in the


office, but in virtual environments as well. While internal organizational communication has

been researched, there is little information about the external communication strategies

and patterns of these organizations.

A genre of communication research is rhetoric, or the ability and strategies to

persuade. In the literature, one rhetorical analysis of high-tech organizations emerged. It

centered on the internal organizational challenge: exploration and exploitation, or

ambidexterity, and its effects on organizational legitimacy. Organizational legitimacy is the

socially perceived value of the organization (Ruebottom, 2013). This discourse analysis

concluded that an organization with either exploration or exploitation, and their

organizational communication strategies centered around these identity orientations (Salge

& Barrett, 2012). While an interesting orientation to high-tech ambidexterity, the study does

not evaluate the external legitimacy of the organizations.

When searching for research on external communication and software SMEs or

software start-ups in the vast academic databases, few results are generated. When

reviewing interviews of software entrepreneurs and investors by journalists, several

strategic communication problems appear to exist. First, these organizations struggle with

finding talented employees; second, there is a disconnect in these organizations in engaging

and educating potential investors; and third, these organizations need to communicate with

policy makers on a variety of legal and financial issues (Ministry of Business Innovation &

Employment, 2013b; OECD, 2013; Radio New Zealand News, 2013, Feb 15, 2013, Oct 25;

Ryan, 2013, Nov 28; Utah Business, 2013, Nov 5). The research analyzed in the literature

review has stated the fundamental need for wise management in human resources,

financial resources and with policy awareness for organizational success. Each resource

needs to be managed correctly for software firm growth from innovation-to-

internationalization (Li et al., 2010). Yet, if an organization cannot secure the human or

financial resources—whether through alliances, venture capital or experience—growth is

stunted before it begins. There is no communication literature to contribute to the

discussion on organizational growth for these types of organizations or their external

communication strategies.

Notable organizational scholar, Karl Weick (2001), argues that “organizations are

built, maintained, and activated through the medium of communication” (p.136). In light of

Weick’s evaluation, the lack of research on communication in high-tech SMEs needs to be


reconciled. When reviewing the literature, it is evident a more holistic approach could be

taken to evaluate the communication needs and strategies of SaaS firms. A holistic approach

includes a communication audit of the needs and strategies of the organizations as it moves

through various stages of growth with an analysis of the communication challenges facing

the organization.

Research Questions

Parker and Clegg (2006) claim the literature on SaaS SMEs tends to focus on end-

results and products rather than processes. Missing from the characteristics of high-tech

organizations, according to the literature, is the process of how they meet their

organizational goals through communicative processes. Weick (1969) argues

communication is central to the process of organizing. Similarly, Downing (2005) claims

organizations developed by entrepreneurs are socially constructed through narrative

communication strategies. Yet, as Downing (2005) acknowledges, there is a gap in the

literature addressing the holistic communication experience of high-tech organizations; and,

as Weick (2001) encourages, organizational theorists need to “grapple with” the power of

technology in organizations as well as the organizations which produce the technology to

clarify the organizational experience (p. 172).The research questions below attempt to

enhance the suggestions made by Weick (2001) and Downing (2005).

The questions are informed by grounded theory methodological practices and a

broad in nature (Birks, 2011 #141). Furthermore, the questions below were influenced by

research conducted on SaaS practitioners. In an attempt to bridge the practical and

theoretical, the researchers surveyed SaaS practitioners for research areas interesting to

them and their organizational needs. Their finding suggested that the practitioners

encouraged academic exploration on processes and practices which would help their

organizations, instead of focusing on training, values properties and tools (Andersen, 2013

#177). The following research questions are proposed to examine the communication needs

and strategies of SaaS SMEs.

Primary Research Question:

What are the external communication challenges in Software-as-a-Service (SaaS)

small and medium enterprises (SMEs) as they grow from innovation-to-

internationalization?


Supporting Research Questions:

How does the communication strategy of SaaS SMEs impact their organizations

as they grow?

During what transitional moments in a SaaS SMEs’s growth do external

communication practices become a priority?

What communication strategies support alliance and network development and

maintenance?

How do the internal communication patterns in a SaaS firm affect external

communication?

What communication strategies are employed in the decision to internationalize

a SaaS firm?

Methodology, Methods and Data Collection

Methodology

To answer the research questions proposed, and given the unique nature of

software organizations, a constructivist grounded theory methodology will be employed

(Charmaz, 2006). Grounded theory will be used as a research design because there is little

research on the external communication practices of software organizations. This will assist

in extracting the communication needs and challenges facing these organizations. It also

allows for the incorporation of a diversified group of organizations. Lehmann and Quilling

(2011) encourages the use of grounded theory for studies analysing information systems

organizations, of which SaaS firms are a part, because of their dynamic nature. Consistent

with the findings from the literature for this proposal, Lehmann and Quilling (2011) claim

that theories in information systems organizations are limited. As a result, the need for

stronger theory development about SaaS organizations is encouraged. They claim grounded

theory methods meet the needs of theory development research design (Lehmann and

Quilling, 2011).

Grounded theory is a qualitative methodology. The purpose of grounded theory is

theory building where no medium range theory exists to generalize a specific situation (Birks

& Mills, 2011; Creswell, 2009). As qualitative research, it “emphasizes ‘deep,’ ‘thick,’ and

‘rich’ descriptions of the human experience and perception. Thus one strength of qualitative

methods is providing the initial discovery, understanding and documentation” of the


organizational experience (Compton et al., 1991, p. 24). Qualitative research occurs in a

natural settings. It relies on multiple data sources; it engages in inductive data analysis; it is

dependent on participants’ meanings; it requires a lens through which to organize the data;

it is interpretative and holistic (Creswell, 2009). Qualitative research is best suited for

research questions which ask “what?” and “how?” (Silverman, 2013). As a qualitative

methodology, grounded theory requires research before hypothesis building, a common

qualitative research attribute. This section of the proposal will define grounded theory,

explain what grounded theory is not and discuss the methods which accompany grounded

theory development.

Defining Grounded Theory

Grounded theory is not a theory; it is a method for discovering theory. In the original

work on grounded theory, Glaser and Strauss (1967) claimed the purpose of grounded

theory was to discover theory “from data—systematically obtained and analyzed” (p.1).

Glaser and Strauss (1967) explained that in order to develop theory from the data, a series

of methods needed to be followed which require constant comparative analysis. Since

Glaser and Strauss’s original work on grounded theory, the processes and the ways in which

those methods are employed to materialize theory have been supported and contested

(Birks & Mills, 2011; Bryant & Charmaz, 2011b). While it is still a viable option for theory

development, the methods and philosophical orientations have been debated and require

explicit declarations (Bryant & Charmaz, 2011b; Glaser, 1978, 1992; Strauss & Corbin, 1998).

The epistemology of grounded theory can be diverse (Birks & Mills, 2011; Bryant &

Charmaz, 2011b). For the purpose of this study, the grounded theory epistemology will be

rooted in a socio-psychological tradition; that is, we make sense of the world around us and

our organizations through communicating and interacting with others (Weick, 1969). Karl

Weick’s (1969) conceptualization of organizational sense-making is centerd around the

epistemological issues of knowing and learning (Westwood, 2009 #178). He argued

organizations are created and maintained through communication and acknowledges the

power in communication when he writes, “The interpretation process [of communication] is

shaped by shared language, authority relationships that assign rights of interpretation,

norms of communication and communication. The meanings that actors co-construct are

not self-created” (Weick, 2001, p. 136). For this study, grounded theory will be defined as a


set of methods which engage in constant comparative analysis under the guidance of

Weick’s definition that organizations generate and evolve through communication.

What Grounded Theory is Not. Grounded theory is not a general interpretivist

analysis of a phenomenon; it is an arduous process intended for understanding and

developing theory from a practical lens (Bryant & Charmaz, 2011b). Sceptics of grounded

theory express concerns about the correctness and depth when engaging in the constantly

comparative method (Birks & Mills, 2011). To ensure correct analysis in synthesization and

theory development, this study will follow the grounded theory methods as outlined by

Strauss and Corbin (1998) and enhanced by other prominent grounded theory researchers,

such as Glaser (Glasner, 1992; Strass & Glaser, 1967) and Charmaz (2006). This study will

also be instructed under Weick’s (2001) work on communication as an organizing, sense-

making process.

The Process Defines the Theory. According to Birks and Mills (2011), three

factors influence quality grounded theory: 1) researcher expertise; 2) methodological

congruence; and 3) procedural precision. These factors emerge in the process. In order to

conduct this research, each of these factors will be taken into account and amplified for

quality work.

Grounded theory method requires multiple stages of data collection and rigorous

refinement of codes and categories to build theory (Creswell, 2009). It also requires limited

access to current literature on the topic, or to use current research as data, allowing the

practitioners in the field to ‘speak for themselves’ and their challenges (Birks & Mills, 2011;

Glaser, 1992; Strauss & Corbin, 1998). In addition to the research as data, grounded theory

also requires “the constant comparison of data with emerging categories and theoretical

samplings of different groups to maximize the similarities and differences of information”

(Creswell, 2009, p. 13). Grounded theory occurs in a multiple stage process, some of which

may be repeated for full saturation of the material and for validation (Birks & Mills, 2011).

Listed below are essential grounded theory terms which define the process (Birks & Mills,

2011; Bryant & Charmaz, 2011b; Glaser, 1992; Glaser & Strauss, 1967; Strauss & Corbin,

1998).

Coding. Coding is a way of identifying specific words and phrases important to

participants in the study. From coding, themes and typologies are grouped into categories.

Categories “are referred to as theoretically saturated when new data analysis returns codes


that only fit in existing categories, and these categories are sufficiently explained in terms of

their properties and dimensions” (Birks & Mills, 2011, p. 10). Coding will happen in at least

two more settings: during intermediate and advanced coding. Intermediate coding allows

the ambiguous initial coding to reconnect into sense-making material. Advanced coding is

needed for theoretical integration. It is a process to verify data saturation, solidify

categories, and bond all collected and analyzed data into the theory.

Data Collection. Data collection is central to all research. During grounded theory, data

collection and analysis happen simultaneously. The initial data is collected, coded and

analyzed before additional data is collected. Charmaz (2006) claims the credibility of a

grounded theory study is directly connected to appropriate data. Appropriate data,

according to Charmaz (2006), “captures a range of contexts, perspectives and timeframes;

provides rich detail in respect of the view and actions of participants; looks beneath

superficial layers of data; and considers the value of data for the purpose of comparison and

category development” (Birks & Mills, 2011, p. 66). As Birks and Mill (2011) define, in

grounded theory, the following could be considered viable data:

Transcripts of interviews and

focus groups

Field notes and memos

Journals, diaries, and log books

Questionnaires and surveys

Policy documents

Scholarly research and books

Photographic images and

videos

Artwork, artefacts and

architecture

Music

Memos and Diagrams. Writing memos is another component to grounded theory.

Strauss and Corbin (1998) define memos as “written records that contain the products of

analysis or directions for the analyst” (p.217). Strauss and Corbin (1998) also encourage the

use of diagrams to visual represent the relationship among evolving concepts, codes and

categories. Memos and diagrams are central to data analysis and assist the researcher in

abduction, unique logical synthesization (Birks & Mills, 2011).

Theoretical sampling. Theoretical sampling is used to focus and feed the constant

comparative analysis of the data (Birks & Mills, 2011). The process of theoretical sampling is

to verify saturated categories and to create additional depth in the analysis. It is the

“process of identifying and pursuing clues that arise during analysis” (Birks & Mills, 2011, p.


176). Theoretical sampling is accomplished through accessing additional interviewees, texts,

field notes, artefacts or literature (Birks & Mills, 2011; Charmaz, 2006; Glaser, 1992; Glaser

& Strauss, 1967).

Constant comparative analysis. Constant comparative analysis has been previously

mentioned. Constant comparative analysis is unique to grounded theory; that is, analysis

happens while data is being collected and is not delayed until all the data has been received.

Two important terms are associated with constant comparative analysis: induction and

abduction. Since the process of grounded theory is building theory from the data, it is

considered an inductive process. Abduction is the process of finding consistent patterns in

the collected data(Bryant, 2012). Reichertz (2007) calls abduction an art and a break from

the social scripts of the researcher. Abduction “brings together things which one had never

associated with one another: a cognitive logic of discovery” (Reichertz, 2007, p. 220). It is

the process of abduction that makes grounded theory a valuable and viable tool for theory

development.

Theoretical sensitivity. Theoretical sensitivity is the way in which grounded theory

accounts for the researcher (Bryant & Charmaz, 2011a; Creswell, 2009). Since grounded

theory is an interpretive process, interpretation exists in both the individual engaging in the

experiences as well as the researcher when collecting, categorizing and coding it. “We

influence what we see and find, even if only in the most mundane ways” (Bryant & Charmaz,

2011, p. 223). The researcher in this method is actor as well as observer. Birks and Mills

(2011) claimed the more engrossed the research becomes in the data, the more sensitive

the researcher will become to the abductive possibilities of the material.

Many of the described processes will be repeated to generate a theory specific to the

organizations being studied. To summarize, this research will analyze the communication

needs and strategies of Software-as-a-Service firms as they grow from innovation to

internationalization. Using grounded theory allows for a holistic perspective (Downing, 2005)

of the communication needs of these organizations while they develop. It also responds to

the call of Lehmann and Quilling (2011) to engage in grounded theory to develop methods

specific to the organizations engaging in the information technology sector.

Scope and Methods

Scope. The purposeful focus of the research will be for SaaS SMEs. Accordingly, the

organizations in this research project will be, Software-as-a-Service organizations. The


organizations’ software product may be entirely in the cloud, or they may be hybrid

software product developers. Hybrid software products are software which exists on the

cloud but part of the software may be downloaded onto the customers’ computer for

functionality (Armbrust et al., 2010). Grounded theory methods require simultaneous data

collection, coding and analysis (Glaser & Strauss, 1967). This study will access cloud-based

software firms in three tiers: small start-ups, medium organizations, and large,

internationalized software firms. In order to saturate the categories required by grounded

theory, start-ups and internationalized software firms will also be explored.

Grounded theory methods are data driven. Hence, the initial organizations listed in

this proposal will be textually analyzed, and—depending on interviewing access—

organizational practitioners will also be interviewed through a stratified purposeful sampling.

Stratified purposeful sampling allows for interviews with individuals in the organization that

hold contrasting roles. Once interviewed and networks are established, I will interview other

participants in the organizations. As the method requires, other organizations may emerge

as research viable and will be pursued for data collection. Pursuing these organisations will

allow for depth in coding and saturation of categories (Bryant & Charmaz, 2011b; Glaser,

1992; Strauss & Corbin, 1998). As these organizations emerge, the same data collection

pattern will be followed as outlined in the methods section.

It should be noted that many organizations could qualify as SaaS and would be suitable

for this study. However, in order to create manageable parameters for the researcher, the

following criteria, taken from the Ubeda and colleagues (2013) definition, will be used to

evaluate viable organizations.

1. The organization is internationalized or attempting to internationalize.

2. The organization’s primary product is cloud-based software.

3. The organization is dependent on networks and alliances.

4. The organization is developing their own technology or possesses their own

intellectual property.

5. The organization’s product is highly scalable.

In New Zealand, organizations will be initially drawn from Rabble.com. Rabble.com is a

website dedicated to promoting new software organizations in New Zealand. In USA, Utah,

organizations will initially be drawn boomstartup.com; a website in Utah dedicated to the

development and growth of software organizations.

The organizations for initial analysis will be:


Table 4

Proposed SaaS Firms for Research

New Zealand

Tier One Innovation or Start-

up

Twingl

Thunder Maps

Tier Two Middle-aged SMEs Wynyard

Results.com

Tier Three Internationalized Xero

Vend

Other Supportive Organizations Rabble

USA, Utah

Tier One Innovation or Start-

up

MapitTrackit

Screenie

Tier Two SMEs Tale Spring

Steton Technology Group

Tier Three Internationalized atTask

TopVue Defense

Other Supportive Organizations GrowUtahVentures

Method. To begin the grounded theory analysis, twelve primary software

development firms will be chosen: four in tier one, four in tier two and four in tier three.

Included in the analysis are organizations that promote growing SaaS firms and their

external communication needs, please see table 4.Grounded theory method follows a

coding and category development process with constant comparative analysis after each

data collection phase (Glaser & Strauss, 1967). For this study, the researcher will use the

following as data: current multidisciplinary research on SaaS firms, observations, websites,

news articles, and other contextually important artefacts. Data collection will also occur

through stratified purposeful interviews which will be determined by accessibility to the

organizations. Data needs to be time sensitive and supportive of category development.


Initially data collection will include text and artefacts from and about SaaS firms. The

data will be generated from the organizational websites, possible news organizations or

magazine articles, and other publicly available artefacts relevant to the study. After

collecting textual and artefact data, the first series of analysis will be done to generate initial

thematic codes of the communication challenges and strategies used by SaaS firms. Once

the data collection and subsequent analysis is complete, interviews will be conducted.

Intermediate coding will occur following a series of interviews. Interviews will be

semi-structured and conducted with the firm’s senior managers. For a list of potential

questions, please see appendix A. Once the data from the interviews have been collected

and transcribed, they will be coded to expose and saturate additional themes and

communication needs (Birks & Mills, 2011; Charmaz, 2006; Glaser, 1992; Glaser & Strauss,

1967). The transcribed interviews will be cross-coded, or axial coded, with the codes and

categories which emerge out of the first coding analysis. Axial coding is “the process of

relating categories to their subcategories . . . occur[ring] around the axis of a category, liking

categories at the level of properties and dimensions” (Struass &Corbin, 1998, p. 123).

Advanced coding is part of theoretical integration and is the most complex of the

coding stages (Birks, 2011 #141). Advanced coding will conclude after further data collection

for categories which lack saturation. The data collection at this phase is comprised of a

combination of follow-up interviews, textual analyses, and new interviews (if necessary), to

verify category saturation. This phase is coupled with theoretical coding. According the

Glaser, theoretical coding are codes and categories drawn from current research and

existing theories (Birks, 2011 #141). Theoretical coding enhances the final product of the

grounded theory method and facilitates stronger explanatory power (Birks, 2011 #141).

Table 5

Method Summary

Research Phase Data Collection Sources

Initial Coding Thematic analysis of publicly available texts and artefacts

on SaaS firms

Intermediate Coding Semi-structured, stratified purposeful interviewing with

communication professional in the chosen firms, or


interviews with the individuals responsible for external

communication

Advanced Coding Combination of follow up interviews, textual analysis,

and interviews with new firms to verify category

saturation

Theoretical Integration Integration and synthesization of all data and analyses

Method of Analysis. Bryant and Charmaz (2011) explain “the method and the

research process are intractably intertwined because grounded theory is an emergent

method that develops as the research unfolds” (p.223). The investigation of the data will

follow a strictly grounded theory structure; that is, constant comparative analysis (Bryant &

Charmaz, 2011a; Conrad, 2011; Silverman, 2013). The cyclical nature of analysis and data

collection generates a credible theory based on recurrent data across different

environments and under different conditions (Charmaz, 2006 #157)

The process of developing codes and categories may be through the following

strategies: seeking themes, storylines, mappings and conditional matrices (Birks & Mills,

2011). Themes are repeated ideas and words which emerge out of the data (Glaser &

Strauss, 1967). The storylines draw out metanarratives for situating the codes and themes

and enables theoretical saturation (Strauss & Corbin, 1998). Mapping assists the researcher

in developing the larger context wherein the phenomenon is occurring, and may take form

in three shapes: situations, social networks and ideological positions. Working with

conditional matrices is a process of developing relationships between codes and analysis in

order to verify the work of the researcher (Strauss & Corbin, 1998). After coding, the

properties and typologies of the codes will be developed to form categories and sub-

categories (Birks & Mills, 2011). Once the categories are generated, the purpose of the

research is categorical saturation. In other words, category saturation is evaluating new data

against the current codes and categories to see if they will generate new perspectives. If not,

categorical saturation occurs and theoretical integration begins (Bryant, 2011 #148).

Underlying each of these analytical strategies is inductive and abductive reasoning which

will be recorded through memos and diagrams for analysis and synthesis. Nvivo will be used

to complete this process.


Thesis Outline

Grounded theory methods are different than other research design models and

requires a different presentation structure (Birks & Mills, 2011; Charmaz, 2006; Glaser, 1992;

Glaser & Strauss, 1967; Strauss & Corbin, 1998). The following outline is recommended by

Birks and Mills (2011, p. 136) as a guide for the researcher to stay true to grounded theory

method. It is a compilation of recommendations made by influential grounded theorists:

Glaser, Strauss, Corbin, Charmaz, Bryant and Clark (Birks & Mills, 2011). Significant to most

thesis outlines are two chapters: the literature review and the theoretical background.

Grounded theory methods encourage limited exposure to the literature allowing the

researcher to distance him/herself from the ideas of academe and to allow the reality of the

participants to emerge (Birks & Mills, 2011; Charmaz, 2006; Glaser, 1992; Glaser & Strauss,

1967; Strauss & Corbin, 1998). However, this overlooks the benefits of a literature review. In

this thesis, the literature will be explored allowing the researcher to develop an emerging

theory notably different from, yet connected to, the previous research and theories on the

topic (Alvesson, 2011 #176). Glasner also encourages theoretical coding which requires

analysis of theories and research on the topic for full theoretical development. The chapter

on theoretical underpinnings will transpire differently than traditional thesis. Since the

purpose of grounded theory is theory development; theoretical perspectives are currently

unknown and are anticipated to emerge from the data(Birks & Mills, 2011; Charmaz, 2006;

Glaser, 1992; Glaser & Strauss, 1967; Strauss & Corbin, 1998).

Table 6

Thesis Chapter Summary

Chapter One Introduction

Research Problem Rationale and Objectives Research Questions Methodological positioning Thesis Overview

Chapter Two Background and Context

History of SaaS organizations Background of SaaS development in NZ Background of SaaS development in Utah Thorough explanation of applicable technology Current technology climates in each geographical location Projected technological advancements

Chapter Three Literature Review Evaluation of relevant literature

Chapter Three Methodology Establishment of Methodological and


Philosophical underpinnings of the research Rich description of Grounded Theory Precise description of methods used for data collection and analysis Rational and defense for grounded theory

Chapter Four Findings Research finding presented as a storyline Theory elaborated

Chapter Five Discussion Significance of findings discussed

Chapter Six Conclusion Limitations Recommendations for application Potential areas of further study

Timetable and Resources Required

Table 7

Research Timetable Summary

Timeframe Objectives Accomplished

Jan - Mar 14 Complete conditional enrolment period

April – July 14 Write Background and Context chapter Begin collection of artefacts and text of SaaS firms Begin Literature Review

Complete Literature Review Write Methodology Apply for full ethics approval

July – August 14 Complete textual analysis Begin field data collection through interviews in New Zealand

Sept – Oct 14 Open-ended, stratified purposeful interviewing in NZ

Nov – Dec 14 Intermediate coding and categorizing of NZdata

Jan – Feb 15 Open-ended, stratified purposeful interviewing in USA, Utah

Mar – April 15 Intermediate coding of USA, Utah data

May – June 15 Resynthesize all collected data; begin finds chapter

July – Dec 15 Complete category saturation in New Zealand and USA, Utah; engage additional interviews and textual data, if needed.

Jan – Mar 16 Theoretical development and final analysis; conclude findings chapter

May – July 16 Write literature review and discussion

Aug 16 Write conclusion

Sept 16 Write introduction

Oct 16-Nov 16 Final editing and preparation for publication

Nov 16-Dec 16 Thesis publication and oral exam

Resources. In New Zealand, SaaS firms appear centralized in several primary locations,

Auckland and Wellington with some major organizations established in Christchurch. In USA,


Utah, the SaaS organizations are centralized to Salt Lake City and surrounding suburbs. As a

result, travel expenses will incur for with the firms’ practitioners. Additional financial

resources will be needed for the coding software, Nvivo; and, as expected, academic

resources, such as the library, are needed to complete the thesis.

Ethics Statement

Grounded theory method and analysis is a continual verification of findings from

collected data. In order to find the communication needs of software firms, interviews will

be required. In compliances with ethical research practices, preliminary ethics approval was

granted on 20 Feb 2014 for this project, please see attached letter.


Appendix A

Potential trigger questions for open-ended interviews:

What are your responsibilities in the organization pertaining to external

communication?

What would you describe as the biggest communication challenges of the

organization?

What tools or resources do you feel the organization needs to address the

communication challenges you mentioned?

During the life of the organization, have you noticed changes in communication

challenges?

What processes are used to communicate with the public or other stakeholders?

Does this organization intend to internationalize? OR How did this organization

internationalize?

How would you describe the external communication practices in this organization?

Will you share a story with me that you feel exemplifies the external communication

patterns in the organization?

Where do you feel like the organization could improve in the way it communicates

externally?

Would you describe the communication patterns in this organization as helpful in

achieving organizational goals?

Will you describe to me what type of alliances the organization has with other

organizations, and how those alliances were created?

Do you have any other comments you would like to make?

Follow-up and clarification questions will be asked when appropriate.


Appendix B

List of Acronyms

FOSS Free/open source software

GSD Global software development

ICT Information and Communication Technology

NPD New product development

NTBF New technology based firm

SaaS Software-as-a-Service

SME Small- and medium-entrprises

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