Internationalization models of software product firms

Abstract

This research focuses on internationalization models of firms whose business is based on value derived from creating and marketing software products in the context of small, open economies. Prior research in the area, on which we build herein, has been conducted in Finland. As Finland’s domestic market is limited in its support for large-scale business for software product firms, it is essential for these firms to be able to conduct a successful internationalization program, cognizant of the applicability of relevant software business models that support the process. The Finnish software industry is limited in the number of firms with extensive internationalization experience. Software is distinct from physical and information goods. It is intangible, embodies a large amount of intellectual content, and its development process is labor-intensive. In many decision contexts, traditional business models and best practices are not valid. The present paper delivers a literature review of the stateof-the-art of internationalization models and best practices in software firm internationalization in the context of small open economies. 1. Current Interests The authors’ current interests central for this work are to develop and validate internationalization models that take into account the specific contexts of software business and small, open economies. The aim is to define the most critical phases and to relate internationalization models with software business models. Their other research interests include other aspects of international software business and economics, especially software product development, internationalization of software firms, and strategic management in the software industry. The contribution of the internationalization research is in building understanding of which parts of earlier internationalization models are applicable to the context of software business and the proposition of a model for internationalization that takes into account the different dimensions that are relevant for different software firms. The authors are employed by the Software Business and Engineering Institute (SoberIT, http://www.soberit.hut.fi), Helsinki University of Technology.