Impact of absorptive capability on software process improvement and firm performance

Software process improvement (SPI) is a continual organizational learning process with the goal of obtaining and sustaining competitive advantage in rapidly developing business and software environments. However, no research has focused on a firm’s capability to increase effective external SPI knowledge acquisition and utilization. Thus, this study uses dynamic capability theory in order to investigate empirically the capability of a firm to absorb external knowledge and achieve SPI. Specifically, we propose a research model and examine the relationships among a firm’s potential absorptive capability (PAC), realized absorptive capability (RAC), SPI success, and firm performance. In this regard, we surveyed 108 respondents in 56 SPI-certificated Taiwanese firms. We then tested our model using a partial least squares structural equation modeling technique. The results indicate that SPI success is significantly influenced by PAC through RAC. The results also suggest that absorptive capability is critical to SPI success and that the latter ultimately influences firm performance.