THE EFFECTS OF CUSTOMIZABILITY AND REUSABILITY ON PERCEIVED PROCESS AND COMPETITIVE PERFORMANCE OF SOFTWARE FIRMS

This study addresses the broad research issue of how software firms ca n manage their software development efforts in order to compete effect ively under intensified competition. Based on recent research in manuf acturing strategy and software process engineering, a research model a nd six hypotheses were derived. Reusability and customizability were e xpected to positively affect process flexibility and predictability. I n turn, these perceived process performance dimensions were expected t o positively influence perceived competitive performance, assessed in terms of market responsiveness and product cost efficiency. Using a su rvey design, responses were obtained from a random sample of 100 softw are firms. Two kinds of respondents were used: the senior manager in c harge of software development (58% response rate) and the marketing ma nager (36% response rate). The model and hypotheses were assessed usin g EQS, a structural equations modeling package that can be used for pa th analysis. The results from both the marketing manager and developme nt manager responses suggested that process flexibility was an importa nt determinant of perceived competitive performance. However, process predictability was an important determinant of perceived competitive p erformance in the development manager, but not the marketing manager, responses. Finally, while customizability had a significant positive e ffect on the perceived process performance dimensions, reusability did not. The research model is a potentially useful contribution to an im portant new area of MIS research concerning the performance of softwar e firms, which draws from manufacturing strategy and software process engineering.