Too much of a good thing? Entrepreneurial orientation and the non-linear governance effects of SaaS platforms

TL;DR

This paper explores how entrepreneurial orientation influences SaaS platform governance in SMEs, revealing non-linear effects on strategic alignment and long-term performance through empirical multi-study analysis.

Contribution

It introduces SaaS as a hybrid governance model and uncovers non-linear relationships between SaaS use, strategic alignment, and performance in SMEs.

Findings

Inverted U-shaped relationship between SaaS usage and strategic objectives.

Risk-taking amplifies the link between human asset distinctiveness and strategic alignment.

Excessive SaaS dependence may negatively impact governance and strategic outcomes.

Abstract

This study investigates how entrepreneurial orientation (EO) affects governance of SaaS platforms in SMEs, including strategy alignment and long-term governance performance. This study uses SaaS as a hybrid governance model to examine how transaction cost variables affect strategic alignment and how EO moderates these associations. The research uses multi-study design. Study 1 examined 180 UK and US entrepreneurs' survey data using PLS-SEM with reflecting constructs. Study 2 used a quasi-experimental approach using a secondary dataset from 238 European start-ups to operationalize variables using industry-based indicators. The study found an inverted U-shaped association between human asset specificity, SaaS usage frequency, and SMEs' strategic objectives. Risk-taking deepens the link between human asset distinctiveness and SaaS strategic alignment, while proactiveness strengthens the link to long-term success. Both studies show that SaaS strategic alignment has an inverted U-shaped connection with long-term performance, suggesting that excessive SaaS dependence may harm governance-enabled strategic outcomes. This paper introduces SaaS as a hybrid governance paradigm and examines its strategic influence on SMEs, utilizing transaction cost theory and EO perspectives. It shows the non-linear effects of SaaS adoption on strategic alignment and performance, emphasizing entrepreneurial decision-making in digital technology adoption.