Emerging Capabilities and Firm Performance in the Cloud Computing Environment

58 Pages Posted: 29 Aug 2017 Last revised: 5 Nov 2017

See all articles by Jean-Luc Alarcon

Jean-Luc Alarcon

Temple University

Paul A. Pavlou

Temple University - Department of Management Information Systems; Temple University - Department of Strategic Management

Date Written: September 8, 2017

Abstract

New capabilities required to succeed in the new Cloud environment represent a radical change for software companies, which have to transition from selling on-the-premises software products to providing subscription-based cloud services (aka Software-as-a-Service or SaaS). While emerging SaaS vendors have led the exponential growth of the market, the traditional software industry has been disrupted. The purpose of this research paper is to analyze which capabilities are driving the performance of software firms in today’s cloud-computing environment by leveraging the resource based view (RBV) of the firm. What is the optimum spending among the various capabilities (e.g., service delivery, R&D, marketing and sales) to maximize financial performance? This study focuses initially on publicly-traded SaaS companies using publicly-available information from financial databases, corporate investor relations materials, and industry research. The study contributes to RBV theory and provides useful insights to help assess the quality of execution of SaaS growth strategies and improve financial planning and performance in the software industry. Although our results come from firms in the SaaS industry, we propose that the findings from this study could cautiously generalize to firms in other emerging technology industries.

Keywords: Cloud, Software, SaaS, capabilities, spending patterns, firm performance

Suggested Citation

Alarcon, Jean-Luc and Pavlou, Paul A., Emerging Capabilities and Firm Performance in the Cloud Computing Environment (September 8, 2017). Seventh International Engaged Management Scholarship Conference; Fox School of Business Research Paper No. 17-035. Available at SSRN: https://ssrn.com/abstract=3027061 or http://dx.doi.org/10.2139/ssrn.3027061

Jean-Luc Alarcon (Contact Author)

Temple University ( email )

Philadelphia, PA 19122
United States

Paul A. Pavlou

Temple University - Department of Management Information Systems ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

Temple University - Department of Strategic Management ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States

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