Software Startup growth: the Role of Dynamic Capabities, IT Innovation and Customer Involvement

The rising trend toward entrepreneurism and rapid advances in IT are encouraging many software startups to enter the market place. Software startups contribute to the society by creating jobs and by driving innovation. Research on the business of software development, so far, had concentrated mainly on established firms. This research-in-progress paper seeks to shed light on how software startups develop. IT innovation is considered as the direct source of software startup growth. And dynamic capability, in terms of learning capability, integration capability, and responsiveness capability are posited as influencing IT innovation. Notwithstanding the importance of pursuing IT innovation, software start-ups need to be closely watching market demands and changes. The action of customer involvement is viewed as enhancing the effect of dynamic capabilities on IT innovation. This paper aims to contribute to existing literature by investigating a little-studied phenomenon software startup and formulating a software startup growth model. Furthermore, this paper attempts to advance the understanding of the theory of dynamic capabilities by specifying three types of dynamic capabilities and by examining their effect on IT innovation. Finally, it opens up an avenue of investigating the impact of the alignment between the customer involvement and dynamic capabilities.