Factors that influence the decision to adopt software upgrades in Australian small and medium sized businesses

Abstract

Despite the substantial contribution to the software industry by small and medium sized businesses 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 mixture of qualitative and quantitative methods was used to further explore the factors that influence the decision to upgrade software in small and medium sized Australian businesses. The responses to ten in-depth interviews were used to develop a questionnaire which was mailed to a five thousand small and medium sized Australian businesses. A number of factors were identified through exploratory factor analysis and these were further examined using structural equation modelling to determine which factors contributed significantly to the decision to upgrade software. The analysis concluded that innovativeness of the decision maker, the perceived lack of control in the upgrade decision and the complexity of the upgrade decision had a small but significant influence on the likelihood to upgrade software.