An Empirical Study On The Growth Path And Key Factors Of Software Companies In China

Software industry is an important industry for the development of Chinese economy. In recent years, the Chinese software companies have increased quickly in term of numbers, but most of them are small and non-competitive. Knowing the nature of software companies' growth will help us promote the development of Chinese software industry and the whole economy. This paper is aimed at improving our understanding of software companies' growth, summarizing the major growth paths of Chinese software companies, and analysing the key factors in different growth paths, especially the internal resources and competencies of companies.This empirical study is based on on-site interviews and case studies. Researchers had interviewed 24 software companies and 6 related organizations in Beijing, Jinan and Xi'an. The results show that there are four major growth paths: fundamental software provider, application provider, system integrator, and professional coder. We designed a growth stage model of software companies, describing the growth paths with three dimensions: product degree (nature of software development activities), service degree (customer-involved degree), and technological nature of software products.There are three groups of factors in the growth of software companies: external environment, strategy, and internal resources and competencies. Due to the difference on technology and market nature, the key factors of companies in different growth paths are not the same. Based on the software company growth stage model, this paper analysed the different technology and market nature of different growth paths, and determined the effects of various factors on software companies. In specific, we analysed the key elements of internal resources and competencies: marketing and sales skills, cooperative skills, human resources management skills, technology management skills, and researched the evolvement process of competencies through case studies.Based on above analysis, we suggest that software companies need to understand the different competencies needed in various growth paths, and allocate resources into the development of the core competencies. In the course of growth, companies need to develop and update capabilities continuously in order to adapt to the changing business natures in stages. In addition, the government should create customized policies for companies in different growth paths to promote the development of the key capabilities.