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Despite extensive investigation of the Indian software industry, knowledge about small software firms is inadequate. This knowledge is important as many developing countries are contemplating the software industry as a means of national growth along the lines that India has taken. This paper provides a descriptive analysis of small software firms in India. It shows that small software firms that are located in software clusters; quality certified; low product oriented; and slightly larger tend to be more productive than others. Small software firms are defined as firms that have fewer software employees than the national median size. The paper used firm level data available in the Indian IT Software and Services Directory 2003, whose members contribute 95% of the industry revenue.

We develop and test a model of how a software firm's business strategy (product scope and market scope) interacts with the firm's network position (alliance degree and structural holes) to impact performance. We test the joint-effects hypotheses on a sample 359 packaged software firms that have entered into 5,489 alliances involving 2,849 distinct firms during the time period, 1990–2002. While prior studies have demonstrated the importance of network positions as a determinant of firm strategy and performance, this chapter begins to examine the performance effects of how a firm's business strategy and network positions interact. We find support for three of the four hypotheses lending empirical support for our theoretical model. We develop implications for network-based perspectives of strategy and outline areas for further research.

Research on international experience notes its positive influence on subsequent international expansion by firms. We test this relationship in the context of the Indian software industry whose offerings, unlike many other services, are storable implying that delivery can be separated from production.

We analyzed the domestic expansion of a sample of publicly listed Indian software firms over the period 2000–2009 with help of Poisson regression.

We find that even internationally experienced Indian software firms might prefer to expand domestically because of limited financial and managerial resources and concerns about diluting their cost advantage. The storable and separable nature of software services will support this strategy of serving clients remotely. The domestic expansion of assets will, however, be slower for firms with the highest level of industry accreditation. It will also be slower if there are institutional pressures in the form of rivals locating development centers near clients in developed countries.

Our results demonstrate that international experience alone is not sufficient for firms to expand overseas.

Software has become increasingly important in business. However, the value of aggregate in-house and packaged software investments and the influence of an industry's software investment opportunities (SIOs) are poorly understood in the literature. This study addresses this research gap and proposes that an industry's SIOs play an essential role in the economic impacts of industry in-house and packaged software investments.

A model of the economic impacts of in-house and packaged software investments at the industry level under different SIOs is developed and empirically tested based on a panel dataset of private industries in the USA between 1998 and 2020.

The results show that with the increase in the number of SIOs in an industry, the economic performance of in-house software investments increases, while that of packaged software investments decreases.

By highlighting the role of SIOs in moderating the economic performance of in-house and packaged software, this study shows the critical role of the information technology (IT) environment in understanding software's economic value.

Nowadays, an increasing number of firms choose to develop proprietary software, instead of buying packaged software. What factors will affect different types of software investments? According to the environment-strategy alignment research, environment should be an influential factor. However, environment's role has received scarce attention in the literature. The authors' study addresses this research gap by investigating how industry environment affects different types of software investments. The study identifies three types of software investments (software insourcing, outsourcing, and buying) and examines how the characteristics of the industry environment (including industry munificence, dynamism, and concentration) influence each software investment.

The generalized least squares (GLS) model and the ordinary least squares with panel-corrected standard errors (OLS-PCSE) model are applied to test the hypotheses, based on industry-level panel data from the US Bureau of Economic Analysis (BEA).

The analysis shows that industry munificence, dynamism, and concentration have different impacts on software insourcing, outsourcing, and buying, respectively.

This study classifies software investment into three types – software insourcing, outsourcing, and buying and investigates how the industry environment affects them. The findings suggest that research should distinguish among software insourcing, outsourcing, and buying due to their different characteristics.

The purpose of this study is to explore the human capital (HC) value creation practices of knowledge‐based software and service exporter industry in India.

The study used HC disclosure attributes as a tool to the contents of the annual reports for the year 2003‐2004, to evaluate the type and amount of HC disclosed by the software firms. The study also conducted semi‐structured interviews with the heads of human resources (HR) of 14 software firms to obtain a greater understanding of the similarities between reporting and managed HC practices.

The study identified most reported and least reported attributes of HC using content analysis and explained their reporting of value creation using interviews and resource‐based view. The findings suggest that the HC reporting practices were consistent with interview findings. The frequency of HC attributes reported followed the extent of the management's perception of HC value creation to the firm.

The limitations of the study are: first, it is a cross‐sectional study; second, the findings may be applicable exclusively to the software and service industry in India and cannot be generalised to other industries in India or software industry in other countries; third, the assertions by the HR heads are assumed to faithfully reflect the firm's HC practices; fourth, the study assumes that annual reports are the primary documents available to public (stakeholders) requiring information on the firms.

This study provides an insight into the HC reporting practices of the nascent software and service exporter industry in India that is experiencing an economic boom that is positively influenced by the information technology software industry. This study throws light on the utilization of HC for value creation by the top software firms. This may help countries having tie‐up with Indian firms to understand the value creation process of these firms to sustain growth. The study would enable other software firms to understand HC reporting practices of the industry, and could use a framework that is similar to the framework used in this study.

The purpose of this paper is to analyse the possibility for firms to consider institutional settings to systematically direct dispersed individual efforts of discovery and invention towards objects (products or processes) of their interest in order to enhance their value creation capacity.

The authors conduct a comparative analysis of the different institutional settings within which software products are invented and produced – closed producer-centred model, open user-centred model, and hybrid interactive producer-user model.

The authors draw indications regarding the possibility to design institutional settings for value creation and the potential pitfalls tied to these strategic tools.

A theoretical framework is elaborated in order to understand the different ways in which institutional contexts influence and direct value creation processes. The model analysed shows the firms’ deliberate attempt to stimulate a dynamic process of social interaction and communication which may foster higher levels of creativity and innovation. In order to guarantee the necessary accessibility and to sufficiently motivate external programmers towards the perception of a new code, the firm has to surrender the traditional source through which it appropriates value: barriers to the accessibility of the code developed through IPRs. The adoption of an institutional setting which facilitates dynamic value creation processes suggests, therefore, the need to turn to dynamic mechanisms for value appropriation in parallel.

With the rapid development of cloud computing, most software firms face the significant choice of whether they should change the versioning strategy of enterprise software from releasing the on-premise version to the software-as-a-service (SaaS) version. Data being generated and hosted on SaaS vendors' servers brings multiple effects. It enables customers to enjoy the flexibility of accessing data and using the software remotely, named the “portability” effect. However, on the other hand, the cumulative data resources on the cloud also provide a clear target for external attacks, leading to the concern of information security. Considering these, the authors hope to offer insights for software firms by exploring the strategy selection problem.

Taking the portability effect and security risks of the SaaS licensing model into account, the authors develop a two-period model to figure out the market segmentation and identify the feasible conditions for employing three alternative strategies. Comparative statics analyses are conducted to explore the influencing mechanism of exogenous factors on strategy selection. The authors also discuss the strategy selection in the presence of the network effect and the security loss faced by users of on-premise software.

One significant finding is that the on-premise strategy can be excluded when the potential loss from security risks is small. Under this circumstance, the dual version strategy is optimal provided that the increase of customer valuation caused by portability effect is below a threshold. Otherwise, the SaaS strategy generates the highest profit. When the potential loss from security risks turns large, the on-premise strategy, the dual version strategy and the SaaS strategy are the optimal options in order as the portability effect on customer valuation gets stronger.

Previous literature has insufficiently addressed the versioning issue of enterprise software. In this paper, the distinctive features of the SaaS model are considered, and differentiated results compared with previous work are obtained. The research results provide guidelines for software firms in deciding their product releases in the future.

The purpose of this paper is to detail how the adoption of enterprise resource planning (ERP) systems creates major distortions in the corporate decision‐making process.

The approach is to focus on the distortion in the capital – budgeting process of corporations emanating from the rigidity of ERP software. The rigidity negatively influences decision‐making because ERP software often dictates that the firm must change its core business procedures and processes to fit the software.

Lack of flexibility limits the introduction of new products, or targeting a new customer segment by increasing costs and imposing delays in implementation.

Firms would benefit from performing detailed analysis of the impact of ERP systems on their ability to make operational decisions.

This paper focuses on the problem of decreased flexibility in making changes in the production and accounting components of the firm when purchasing and installing ERP systems that cannot accommodate minor or major changes in the corporation.

The emergence of internet-enabled technology has led to the software service model in which the software firm, instead of the consumer, maintains software ownership. This model can curtail software piracy more effectively than the traditional on-premises software model. However, software firms are not abandoning traditional on-premises software but embracing both models simultaneously. In this study, the authors consider a firm’s software bundling decision in combination with its piracy deterrence strategy. The paper aims to discuss these issues.

The authors build three stylized models to analytically compare the bundling strategies under three scenarios: no piracy, piracy is present and piracy is present while the firm applies digital rights management (DRM).

The authors find pure bundling (PB) to be the optimal strategy due to the combination of competition and cannibalization effects in mixed bundling (MB). Simultaneously, consumers may enjoy greater surplus in PB than in MB, making PB the preferred strategy for both the firm and consumers. Interestingly, the win-win outcome coexists with some degree of piracy in the market.

The results provide important insights for firms and policy-makers and contribute to the literature on piracy and product bundling. First, the authors show piracy could be another driver for product bundling, which has never been discussed in prior literature. Second, the authors suggest an alternative perspective; that PB may be a desirable outcome for both firms and consumers when considering piracy and DRM. More surprisingly, this desirable outcome occurs with some level of piracy in the market. The presence of piracy leads to competition and cannibalization effects in MB, which eventually results in the win-win outcome in the software market for both the firm and the consumers.