Does Software-as-a-Service (SaaS) has a role in IT-enabled Innovation? - An Empirical Analysis

Software-as-a-Service (SaaS) models are gaining acceptance but their business value has largely been conceptual or anecdotal. In this paper, we empirically examine the role of SaaS in IT-enabled innovation of the firms and the role of organizational complementarities in augmenting the impact. We argue that SaaS can support IT-enabled innovation and that complementarities like learning from past sourcing experience, IT architectural flexibility and process management maturity reinforce the benefits. Using a large cross-sectional dataset of U.S. firms, we empirically establish an association between SaaS adoption and ITenabled innovation. We find that complementarities like organizational learning, IT architecture flexibility and process management maturity enhance the value further. This study is one of the first to our knowledge to empirically show the business value of SaaS in general and the potential for innovation related benefits in particular. It further highlights the role of organizational assets in value maximization.