Software Process Improvement (SPI) aims to understand the software process as it is used within an organisation and thus drive the implementation of changes to that process to achieve specific goals such as increasing development speed, achieving higher product quality or reducing costs. Accordingly, SPI researchers must be equipped with the methodologies and tools to enable them to look within organisations and understand the state of practice with respect to software process and process improvement initiatives, in addition to investigating the relevant literature. Having examined a number of potentially suitable research methodologies, we have chosen Grounded Theory as a suitable approach to determine what was happening in actual practice in relation to software process and SPI, using the indigenous Irish software product industry as a test-bed. The outcome of this study is a theory, grounded in the field data, that explains when and why SPI is undertaken by the software industry. The objective of this paper is to describe both the selection and usage of grounded theory in this study and evaluate its effectiveness as a research methodology for software process researchers. Accordingly, this paper will focus on the selection and usage of grounded theory, rather than results of the SPI study itself.