Unraveling the determinants of SaaS performance: a dynamic capabilities perspective

Abstract

This study aims to address limited understanding of how multiple organizational determinants work together to explain performance outcomes among software-as-a-service (SaaS) providers. Drawing on Dynamic Capabilities Theory (DCT) and a hierarchical view, it clarifies how these determinants align with sensing, seizing and transforming. An exploratory qualitative case study was conducted with ten small and medium-sized SaaS providers headquartered in South Korea. Interview data were analyzed thematically and interpreted through the sensing, seizing and transforming dimensions of dynamic capabilities. The analysis identifies seven determinants of SaaS performance. Marketing activities and website functionality and interactivity primarily support sensing by generating demand signals and monitoring buyer engagement. Market-led customized innovation, security certifications, B2B partnerships and information sharing support seizing by enabling solution adaptation, legitimacy building and relational coordination. Within market-led customized innovation, firms combined exploration and exploitation as learning orientations. Business model innovation is interpreted as a firm-level expression of transformation that redesigns revenue, scalability and contracting logics and supports longer-term adaptation and performance. The study extends research on SaaS performance by showing how sensing, seizing and transforming are enacted through a reinforcing set of organizational determinants rather than isolated factors. It also clarifies how business model innovation operates as a firm-level expression of transforming, while the other determinants function as organizational mechanisms that support sensing and seizing.