From Entrepreneur to Big Player: A Case Study of a Software Company in Taiwan

From Entrepreneur to Big Player: A Case Study of a Software Company in Taiwan

Ruey-Shiang Shaw (Department of Information Management, Tamkang University, New Taipei City, Taiwan), Sheng-Pao Shih (Department of Information Management, Tamkang University, New Taipei City, Taiwan), Ta-Yu Fu (Department of Management Science, Tamkang University, New Taipei City, Taiwan) and Chia-Wen Tsai (Department of Information Management, Ming Chuan University, Taipei, Taiwan)
DOI: 10.4018/jsita.2013040102
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Abstract

The software industry faces drastic changes in technology and business operations. The research structure of this study is based on the business model for software industries proposed by Rajala in 2003. The researcher employed an ex post facto research design to conduct a case study of the Galaxy Software Service Co., a company that is representative of the software industry in Taiwan. The main research goal of this study is to explore how this particular company developed into a large software company in the Taiwanese software sector, which is characterized by a prevalence of small- and medium-sized businesses, over a period of 25 years. This study employs a case study design and relies on in-depth participation and interviews to acquire a complete data set of the company’s internal operations. The evolution of the business model from the company’s inception until the present day has been divided into four phases: the entrepreneur phase, the growth phase, the stable phase, and the innovative breakthrough phase. The company developed into a major player in the software industry for 3 reasons: it has always insisted on a product differentiation strategy based on the sole reliance on software products, it started out as a software products dealer and gradually developed its own research and development capability, and it built a large-scale project management capability and received CMMI certification. These factors make the company stand out from other System Integrated businesses in the Taiwanese software sector offering both hardware and software products.
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1. Introduction

The focus of development in the information industry in Taiwan is on high-tech products rather than software. Most enterprises are small or medium. Due to factors such as language and environment, most software companies in Taiwan are domestic market oriented. Unlike the hardware industry, the software industry cannot play an important role in the global market (Lee & Wu, 2007). Because the Taiwanese market is small, companies’ resources are often insufficient, limiting forgiveness for mistakes in their growing processes. Newly established medium and small companies are usually eliminated through competition before being able to build a mature operating mechanism. Only a very small number of them can grow into large software companies (Ruokolainen & Mäkela, 2007).

A successful software industry must be closely connected to its main market and develop its management ability through it (Oza, et. al., 2006). The software industry in India is highly dependent on Western markets such as the US, which help it with high-tech talent and management. This helps India respond quickly to the fast growth of the markets, train software talent required in the industry, and develop mature software outsourcing management mechanisms (Arora & Athreye, 2002).

Because it is not difficult to enter the software industry, new companies can easily join the competition. Small companies are more flexible than large ones in adapting to change in the environment. However, it is more difficult for small companies to achieve management efficiency (Hoch et al., 2000). The software industry emphasizes collecting, spreading, and passing down professional knowledge and experiments (Ethiraj et al., 2005). Without an integrated and systematic method, a new company will face more difficulties than expected in transforming from a simple company to a complex one (Ruokolainen & Mäkela, 2007). Software vendors will face challenges such as fast changes in technology, difficulties in presenting software values, high R&D costs, and difficulties in cultivating talent (Ojala & Tyrvainen, 2006). In addition, the competition in the industry is very strong. How to do well in business management, product R&D, and project management, to go international is the issue vendors must face with care (Contractor & Kundu, 2004):

To better understand the current management structure of vendors in the software industry in Taiwan, a case study was conducted of the Galaxy Software Service Co. (GSS). The GSS business model is a suitable proxy for the software industry. This study thoroughly analyzed its business model development over 25 years through in-depth interviews and data collection, from the long-term, in-depth, and dynamic time series viewpoint. This case study provides an overview of the development process of a new software service company and the difficulties it had faced in the industry. This information is very valuable for software vendors in business management and contributes to a certain degree to the development of the industry.

The purpose of this study can be summarized as the following aims:

  • 1.

    To explore GSS's business model from the viewpoint of software business management models, based on four constructs: Product Strategy, Distribution Model, Revenue Logic, and Service and Implementation;

  • 2.

    To understand GSS's stages of development through time;

  • 3.

    To summarize the success factors of GSS based on the research findings and to propose some suggestions for the development of the software industry to help future vendors and researchers.

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