Factors Influencing the Decisions of SMEs to Purchase Software Package Upgrades

Despite the substantial contribution to the software industry by small and medium enterprises purchasing software package upgrades, to date there has been minimal research on the topic. Most businesses rely on packaged software for administrative and many core business functions. The practitioner press reports that managers experience frustration due to the frequency of software upgrade releases. After reviewing the diffusion of innovation literature, factors thought to influence the likelihood to purchase software upgrades were identified: business characteristics, innovativeness, relative advantage, external influences, complexity of purchase decision, and compatibility. A multi-method approach explored these factors. Although the analysis demonstrated that innovativeness, and to a much lesser extent, potential relative advantage and complexity influenced the likelihood to upgrade software, the fit of the resultant model accounted for much less variation than expected. The inconclusive analysis has called into question the efficacy of diffusion of innovation theory to explain software upgrade behaviour.