Software Startups Research Articles

THE MEDIATING EFFECT OF OPPORTUNITY RECOGNITION ON INCUBATED — ENTREPRENEURIAL INNOVATION

Opportunity recognition plays a central role in the emergence of nascent ventures in entrepreneurship research. The main purpose of this study was to present the mediating effects of opportunity recognition on incubation resources and human capital. Moreover, the study scrutinises the complex inter-relations between opportunity recognition and entrepreneurial product innovation. The data were collected from 389 incubated software start-ups in Thailand and statistically performed by Partial Least Squares Structural Equation Modelling (PLS-SEM). The analysis revealed a persistent impact of the opportunity recognition on the incubation resources and human capital. Opportunity recognition also serves as a significant driver in enhancing entrepreneurial potential to boost new products/services. Interestingly, the study found that the human capital of incubated software entrepreneurs has no significant effect, statistically, on product innovation, against the better judgement of business empires worldwide.

Evaluation and Evolution of Diabetes Mobile Applications: Key Factors for Health Care Professionals Seeking to Guide Patients

In Brief Diabetes management has evolved with the presence of smartphones, offering a plethora of applications, or “apps,” to assist technologically savvy users. This rapidly growing field of mobile apps has hosted a multifarious selection ranging from novice startup software to programs designed for professional use. This article reviews some crucial factors for consideration when seeking to optimize diabetes management via smartphone.

Forced to go virtual? Distributed cooperation of small software firms

Within the service sector, the software industry has been among the prime movers in the process of offshoring work to new destinations. This is facilitated by the immaterial character of the products and their components and by the industry's inclination to use new technical opportunities for its own purposes as well. This paper investigates practices of virtual cooperation and team work in small and start-up software companies based in Austria. Evidence indicates that because of their niche strategies and the related conditions of their national context, these companies often depend on international cooperation which, in turn, often takes on a ‘virtual’ form.

Network Externalities, Incumbent’s Competitive Advantage and the Degree of Openness of Software Start-Ups

This paper proposes a formal model that analyzes the degree of openness chosen by start-ups when entering the software industry. In line with the literature, we label as degree of openness the extent to which software start-ups mix open source (OS) and proprietary solutions in the portfolio of software products they offer. We relate the choice of the degree of openness to two key characteristics of the market segments in which software start-ups operate: the strength of the network externalities and the competitive advantage of the incumbent. Specifically, by modelling (price) competition between an incumbent and an entrant in two ways, i.e., the entrant is price-setter or price-taker, we derive the necessary condition(s) in terms of the strength of network externalities for observing the adoption of a business model that comprises the offering of both proprietary and OS solutions by the entrant (i.e., hybrid business model). Then, we highlight that, if a hybrid business model is the choice, the degree of openness chosen in equilibrium increases along with both the strength of the network externalities and the competitive advantage of the incumbent. This result holds indifferently whether the software start-up is modelled as a price-setter or a price-taker. An empirical test run on a sample of European start-ups in the software industry supports these theoretical predictions.

Brief of Software Innovators, Start-Ups, and Investors as Amici Curiae in Oracle v. Google

How Limitations on Copyright in Computer Programs Are Critical to Software Innovation and Investment. This case raises critical questions about how far copyright extends into the basic communication tools -- Application Programming Interfaces (APIs) -- that are presently ubiquitous in the Web environment and software development generally. APIs establish basic interoperability between systems, between applications and systems, and between applications themselves. This kind of interoperability between programs and systems is foundational to software innovation, as well as to computer systems and ecosystems themselves. Because of this, how copyright's default rules affect interoperability is central to how innovation happens on the ground. These rules have been stable for many years. Baker v. Selden, which was decided in 1879, established that copyright law extends only to creative expression and not to ideas; section 102(b) of the 1976 Copyright Act makes clear that copyright does not cover methods of operation, procedures, processes, or systems; and courts, especially in the Ninth Circuit, have explained how these concepts apply directly to interoperability needs. In the case, Oracle is arguing that high-level aspects of the Java APIs are copyrightable, and so that Google has infringed its copyrights in the Java APIs by using some of them to create a Java implementation for Android. The district court ruled that the elements of the Java APIs at issue are not copyrightable, and that Google had therefore not infringed. The Federal Circuit is now reviewing the case on appeal. In this amicus brief, a wide range of start-up companies, their investors, and innovators, including those who were involved in the similar Lotus v. Borland case thirty years ago, ask the court to consider the impact changing copyright boundaries would have on innovation and investment. It explains how innovators rely on APIs, and how limitations on copyright undergird innovation and competition in the software and Internet spaces. The brief argues that the district court's ruling was correct, and urges the court to preserve the longstanding limitations on copyright in computer programs. It explains that doing otherwise harm what is presently a vital and robust industry, chilling both innovation and the investment that supports it.

Optimal Consumer Network Structure Formation Under Network Effects: Seeds Controllability and Visibility

Understanding the process of software adoption is of paramount importance to software start-ups. We study a monopolistic seller’s optimal consumer network structure formation (seeding, segmentation, sequencing, and pricing strategies) under network effects. We demonstrate the importance of adoption sequencing as well as controllability over the seeding process to seller’s profit, consumer surplus, and social welfare. Under multi-pricing, full information, and full control over the seeding process, with both multiplicative and additive forms of network effects, we show that all segments contain only paying customers except the first one, which contains both seeded and paying customers; and segments are opened in order of the customer valuation. Further, the seller’s optimal strategy is socially optimal. Under single-pricing and limited seeding control, worst case seeding (where all seeds go to the high-valuation customers) leads to higher social welfare and consumer surplus than uniform seeding, as the former covers a larger portion of the market while charging a lower price. In the case of random seeding with limited control, we identify an optimal strategy and conditions under which the optimal price is not affected by the randomness of seeding.

Why do software startups patent (or not)?

Assessing the controversial results of a recent empirical study of the role of intellectual property in software startups.

Abstract CN11-03: Designing sustainable cancer prevention interventions for populations of low socioeconomic status

Abstract CN11-03: Designing sustainable cancer prevention interventions for populations of low socioeconomic status

Question of software start-up finance: system dynamics simulation analysis

Frequently, software start-up success is explained with operational excellence of a company and pure technological right choices. However, in this research, we try to shed a light, how different amounts of completed venture capital investments could improve software start-up success. Our research results show that operational software company performance is behaving like a platform in venture capital improvement efforts, but positive performance could be improved considerably with right magnitude of financing. On the basis of our preliminary analysis, correct amount of finance will increase Net Present Value (NPV) of an investment from 17% to 74%. We also noticed that very large scale lump-sum financing in the very beginning will also yield significantly better performance. However, low operational performance will only destroy more capital, and larger investment amounts will turn into considerable disadvantage.

Experience report

Bluespec is a hardware-design tools startup whose core technology is developed using Haskell. Haskell is an unusual choice for a startup because it adds technical risk to the inherent business risk. In the years since Bluespec's founding, we have discovered that Haskell's purity is an unexpected match for the development needs of a startup. Based on Bluespec's experience, we conclude that pure programming languages can be the source of a competitive advantage for startup software companies.

Constructing a market domain model for start-up software technology companies: A case study

The market for a complex technology product is sometimes called reference business because references are emphasized by corporate customers. A first customer reference is especially important for a start-up technology company attempting to enter the business-to-business market with complex products. Topics relating to customer references have received scant attention from scholars although they embed substantial business relevance. This case study concentrates on evaluating concepts that are central to customer references from the viewpoint of the start-up technology companies. Of concepts prevalent in current literature, those concerning the use of the first customer references, in particular, form an inadequate base for research and are often vague. The purpose here is to introduce a domain model that describes the key concepts and the relationships between them concerning the focus of this present article. The domain modeling technique is a well-known and widely used tool for defining concepts for large-scale information systems. Domain modeling increases understanding of the present problem domain by structuring knowledge into classes, attributes, and relations. This case study approaches the identification of concepts via an illustrative example from software business. Previously known concepts, close to the topic of this present article, are then re-evaluated based on our literature review. Redefinitions of the customer reference and related concepts are introduced.

Size Really Matters—New Insights for Start-ups’ Survival

This paper presents new evidence regarding a firm’s probability for survival, based on the network structure of the firm’s managers. We found that start-ups that have larger informal communication networks increased their chance to survive external shock. Original data have been collected from Israeli software start-ups during the dot-com economic growth. About eight years later, we added information about their ability to survive the burst of the dot-com bubble. From a theoretical point of view, this paper highlights the power of the classic social networks approach in explaining organizational performance. From a practical point of view, these findings offer some guidelines for managers of start-ups. Our results show that the size of informal interfirm networks really matters.

Patents, venture capital, and software start-ups

This paper analyzes the relation between the patenting behavior of startup firms and the progress of those firms through the venture capital cycle. Linking data relating to venture capital financing of software startup firms with data concerning the patents obtained by those firms, we find significant and robust positive correlations between patenting and several variables measuring the firm's performance (including number of rounds, total investment, exit status, receipt of late stage financing, and longevity). The data also show that (1) only about one in four venture-backed software firms acquired even one patent during the period of the study; (2) patenting practices very considerably among the sub-sectors of the software industry; and (3) the relationship between patent metrics and firm performance depends less on the size of the patent portfolio than on the firm's receipt of at least one patent.

A Comment on 'Do Patents Facilitate Financing in the Software Industry?'

'Do Patents Facilitate Financing in the Software Industry?' by Ronald J. Mann contributes empirical evidence to our understanding of how software startups use patents. However, a close examination of the actual empirical findings in this paper points to rather different conclusions than those that Mann draws, namely: few software startups benefit from software patents and patents are not widely used by software firms to obtain venture financing. Indeed, among other things, the paper reports that 80% of venture-financed software startups had no acquired any patents within four years of receiving financing.

Just say no to Microsoft: how to ditch Microsoft and why it's not as hard as you think

Just Say No to Microsoft begins by tracing Microsoft's rise from tiny software startup to monopolistic juggernaut and explains how the company's practices over the years have discouraged innovation, stunted competition, and helped foster an environment ripe for viruses, bugs, and hackers. Readers learn how they can dump Microsoft products--even the Windows operating system--and continue to be productive. The book also shows how to work successfully and seamlessly with computers and people who are still hooked on Microsoft software. Includes full explanations of alternate operating systems, such as Linux and Mac, and outlines various software applications that can replace the familiar Microsoft products.

A Conversation with Roger Sessions and Terry Coatta

In the December/January 2004-2005 issue of Queue, Roger Sessions set off some fireworks with his article about objects, components, and Web services and which should be used when (“Fuzzy Boundaries,” 40-47). Sessions is on the board of directors of the International Association of Software Architects, the author of six books, writes the Architect Technology Advisory, and is CEO of ObjectWatch. He has a very object-oriented viewpoint, not necessarily shared by Queue editorial board member Terry Coatta, who disagreed with much of what Sessions had to say in his article. Coatta is an active developer who has worked extensively with component frameworks. He is vice president of products and strategy at Silicon Chalk, a startup software company in Vancouver, British Columbia. Silicon Chalk makes extensive use of Microsoft COM for building its application. Coatta previously worked at Open Text, where he architected CORBA-based infrastructures to support the company’s enterprise products.

The Rise and Fall of a Software Startup

Omni-Vista, Inc., an IT startup based in Colorado Springs, Colorado, was born in 1998 and died in 2002. This is the story of how events surrounding this company unfolded. The paper describes the business opportunity targeted by the company, how the company positioned itself relative to the competition, and the evolution of the IT product/service it intended to provide to its growing client base. It also shows how tightly coupled the IT product must be relative to marketing, finance, and personnel. The objective is to help better understand the intricacies of managing a software startup, and hopefully enable readers to lead a startup and make fewer mistakes than were made at Omni-Vista.

A Comment on 'Do Patents Facilitate Financing in the Software Industry?'

“Do Patents Facilitate Financing in the Software Industry?” by Ronald J. Mann contributes empirical evidence to our understanding of how software startups use patents. However, a close examination of the actual empirical findings in this paper points to rather different conclusions than those that Mann draws, namely: few software startups benefits from software patents and patents are not widely used by software firms to obtain venture financing. Indeed, among other things, the paper reports that 80% of venture-financed software startups had not acquired any patents within four years of receiving financing.

Gear-up your software start-up company by the first reference customer—nomothetic research study in the Thai software industry

In this research the meaning of the first reference customer for the start-up companies, which produce complex software products has been studied. Which factors are important to gain the most out of the first reference have been also studied. The study has been done using nomothetic research methodology: hypotheses have been created and a survey was executed among Thai companies. One of the results indicates that it is important to utilize the first reference for finding sales arguments. However, only some of the start-up companies do that. Instead, 40% of the investigated companies used the first reference to verify technology, although this type of technology verification correlates negatively with the sales growth. Evidence that the market value of the reference customer has significant meaning in the sales growth has not been found. This might mean that the first reference, as such, seems to have value for further sales. This research complements the model, which was created previously by Ruokolainen and Igel, by creating a specific set of variables to help succeed with the first reference customer.

The value of product development lead time in software startup

AbstractThis article uses system dynamics simulation to enhance current understanding of the effects of product development lead time improvement in situations where a software company itself is not able to finance its operations with its own cash flow. In these situations, capital markets will provide some rounds of financing for startup at the very beginning, but after a while the company itself should be able to enlarge its operations with its own operational cash flow. However, the delay in the product development process, as well as the decline of R&D productivity within the final product markets, will have their effects. On the basis of the results of this article, it is suggested that the improvement of product development lead time is one of the most important parameters in the software startup environment. In some situations, not only will slightly improved lead time performance require fewer rounds of financing, but also expansion of the company's operations will become less troublesome. Copyright © 2003 John Wiley & Sons, Ltd.