Developing dynamic design capabilities in software product development companies

Abstract

This study employs the theory of dynamic capabilities within the resource-based view (RBV) theory of the firm and introduces a new concept dynamic design capabilities. The concept of dynamic design capabilities in this study is defined as a set of design and development capabilities of a [software] product development firm such as, experiences, skills, metaphors, languages, shared understandings, routines, mutual adjustment, and organizational rules and procedures that is adaptive to the external changes and is creative in delivering superior values to the firm and to the customers. Accordingly, the study introduces a conceptual model, drives hypotheses, and questions whether the development of dynamic design capabilities in software product development firms has significant and positive relationships with the review of similar product designs in the market and the involvement of lead users throughout product design and development processes or not? To address the research question, measure constructs for dynamic design capabilities, review of similar product designs in the market, and the involvement of lead users and lead customers are designed and developed. To collect quantitative data for these constructs, an online survey is conducted on 52 software product development firms in Canada. The target population of the survey is small and medium-sized software product development firms that design and develop software products, intended for a mass-market of individual or organizational end users. To triangulate the findings of the quantitative survey with the findings of a parallel study, 4 case studies are conducted on software product development firms in Canada and Finland. Then, Structural Equation Modeling (SEM) method is employed to assess the scale acceptability and to test the research model and the hypotheses. The statistical analysis on the quantitative data and the findings of the case studies show that the development of dynamic design capabilities has significant and positive relationships with the review of similar product designs in the market and the involvement of lead users throughout the product design and development processes. This study, by introducing the new concept of dynamic design capabilities and empirically testing the implication of the concept to software product development firms, contributes to the body of knowledge in software product business and theory of the firm. The study also provides practical insights to practitioners and product development and project managers.

Keywords: Theory of the Firm, Dynamic Capabilities, Lead Users, Dynamic Design Capabilities, Software Product Development Companies