technique at both management and team level in software development VSEs. These methods assisted the researchers in examining the attitude and perceptions of practitioners towards the research issues. The researchers also made use of survey questionnaires in VSEs in order to gain more input and to validate the qualitative data. The findings from the first stage analysis (qualitative analysis), in which the content analysis and grounded theory coding approaches were used, show the pattern and detailed categories that influence and are related with the software process and process improvement in VSEs. These categories are related to each other and allow the researchers to produce and validate the studies theoretical model. Likewise the second stage analysis (quantitative analysis) assisted the researchers in conforming and enhancing the first stage findings. This investigation shows that SPI programmes in VSEs are being undertaken in a very informal manner and also in indirect ways. The primary reasons identified for the informal nature of VSE SPI are due to cost, time, customer and company size, which give a higher priority to the product rather than process. In relation to teams, the small team size coupled with the working and management style have lead VSEs to be more informal in their knowledge management process and team organization. Moreover VSEs are largely ignoring the best practice SPI models. The reasons and acceptance criteria for this are discussed. This research also confirmed that SPI does not solely depend on technology but also the contributions of human aspects have a strong emphasize, especially in VSEs. Therefore a contribution of this research is to provide an extended knowledge and understanding of SPI research area in general and within VSEs domain in particular.