The purpose of the study reported here was to increase our understanding of the problems in managing software development and the situations in which these problems occurred - all from the perspective of software managers. The qualitative research method used during this study was based on grounded theory, a user-based approach from the social sciences that facilitates the discovery and definition of generalizations and themes about a complex subject, such as software development. Thirty-two managers from 14 companies in the United States and Japan were interviewed. The results of the analysis of the data collected suggest that many interacting technical and nontechnical factors come into play. Two major differences between the development contexts of the managers in the United States and Japan were related to development personnel and constraints placed on the projects. Similar hardware, software tools, and software processes were applied to their development efforts. Examination of the technological aspects of software development showed few distinguishing characteristics between the practices of the two countries. In contrast, examination of management and sociological issues provides insight into the differences, specifically those related to roles managers played with their people, subcontractors, and customers.