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 (ValenciaGarcıa 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 cloudbased 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-tointernationalization. In order to evaluate the communication needs and strategies of cloudbased 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 cloudbased 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 knowledgeintense 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-asa-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. Bornglobal 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 ondemand 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
GDP
Percentage of SMEs
Hardware Infrastructure for
Cloud-based growth
Venture Capitalism
Innovative Partnerships Available
Ethical Codes

New Zealand
139.8 Billion USD
97.2 %
Improving

USA, Utah
105.7 Billion USD
96.8 %
76.9% 20 or less employees
Yes

Present
Yes
Explicit; CloudCode

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

10-250 employees
(OECD, 2005)
Any specialization
dealing with
technological
developments:
eg., energy, artificial
intelligence,
biotechnology,
nontechnology,
information technology,
robotics,
telecommunication
(OECD, 2002)
High (OECD, 2013)

10-250 employees
(OECD, 2005)
Software as a service,
or Internet-based
software available for
home or business use
(Armbrust et al., 2010)

Venture Capital
(Nunes et al., 2013)
Initially, local or
regional ;
Increasing numbers
beginning with an
international focus
(Cannone & Ughetto,
2014; Lopez, Kundu, &
Ciravegna, 2009)
Innovation and
knowledge
management
(Dalkir, 2013)

Venture Capital
(Nunes et al., 2013)
Initially, local or
regional ;
Increasing numbers
beginning with an
international focus
(Cannone & Ughetto,
2014; Lopez et al.,
2009)
SaaS (McNee, 2007)
and knowledge
management (Li,
Shang, & Slaughter,
2010)
High
(OECD, 2013)

Specialization

Organizational
Growth potential

Unique Financial
Needs
Market focus
(local, regional, or
international)

Competitive
Advantage

Ability to generate
employment

Varies; depending
on industry, sector
and current market
status (Hatten,
2012)
None
Local, regional and
international;
depending on
industry, sector and
current market
conditions (Hatten,
2012)
Flexibility and
customer service
(Hatten, 2012)

Varies; depending
High
on industry, sector
(OECD, 2013)
and current market
status (Hatten,
2012)
Scalability
Varies; depending
High
on industry, sector
(Ubeda et al., 2013)
and current market
status (Hatten,
2012)
Note: Defining features derived from Ubeda et al. (2013)

High (OECD, 2013)

High
(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 marketoriented 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 hightech 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-tointernationalization (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 endresults 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-tointernationalization?

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, sensemaking 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



Scholarly research and books

focus groups



Photographic images and



Field notes and memos



Journals, diaries, and log books



Questionnaires and surveys



Policy documents

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.
2.
3.
4.

The organization is internationalized or attempting to internationalize.
The organization’s primary product is cloud-based software.
The organization is dependent on networks and alliances.
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

Twingl

up
Tier Two

Innovation or Start-

Thunder Maps

Middle-aged SMEs

Wynyard
Results.com

Tier Three

Internationalized

Xero
Vend

Other Supportive Organizations

Rabble
USA, Utah

Tier One

MapitTrackit

up
Tier Two

Innovation or Start-

Screenie

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.

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