’s Thesis Master

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Master’s Thesis

Implementing an ERP system in a hierarchical culture:

The case of Finnish Defence Forces

By

Marco Hardén

S3509796

University of Groningen

Faculty of Economics and Business

MSc BA Change Management

Supervisor: dr. Ileana Maris – de Bresser

Co-assessor: dr. Janita Vos

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2 ABSTRACT

Organizational culture is often times named as one of the “success factors” of ERP implementation. Several modern-day organizations are emphasizing flat, open and flexible environments where agile way of working is valued. In this qualitative case study, we discover the organizational culture of the established shared service center (SSC) which is part of the Finnish Defence Forces (FDF) and see how this culture, as expressed in the management style, affect the success of ERP implementation. The contribution of this research is to understand the existing culture of this newly established SSC and how the ERP implementation was managed in this culture. Contextual conditions in this research are truly unique since our selected department at SSC is totally run by civilians but they are part of the Finnish military organization. This research contributes to existing organization culture and ERP research by explaining the effect of hierarchical culture on ERP implementation in defence context. Our results show that structural hierarchy that derives from the top and is manifested by top management´s actions influence ERP implementation in a supporting manner. There are direct managerial actions that effect not only the culture but also ERP implementation. Elements of hierarchy are embedded on how things are managed and organized but also day to day operations on a certain level. However, the actual culture or social interaction between people is more dependent on actors and their behavior in this environment. Nevertheless, structural hierarchy in its many forms guides the environment.

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1. INTRODUCTION

The implementation of a new ERP system is a widely researched topic due to its strategic importance in terms of an organization´s survival. ERP system is a large integrated software solution package that is designed to meet most needs of organizations and to give a comprehensive view of the business enterprise (Ehie and Madsen 2005; Strong and Volkoff 2010). Successful implementation can create savings in terms of time, money and other resources whereas a failed implementation might lead to some serious financial difficulties and at worst case, bankruptcy. For example, in the case study by Scott and Vessey (2002) two companies with similar circumstances were implementing the same enterprise systems but ended up having very different outcomes. The first company succeeded well in their implementation while the other company failed badly. As argued by Scott and Vessey (2002), organizational culture had the greatest influence on the change process. Organizational culture is essential because it can either encourage or discourage employees to learn to use the new ERP system which will have direct consequences on whether the implementation is successful or not.

Many academic papers are exclusively focused on different factors (organizational culture, structure, strategy etc.) that should be taken into consideration when implementing a new enterprise system. More specifically, determinants regarding successful/unsuccessful implementation is a popular area of research (Bala and Venkatesh 2016, Markus 2004, Chen et al., 2009) Academic literature regarding enterprise systems acknowledges the fact that enterprise system implementation is a complex, expensive and time-consuming process and it should not be treated as a mere IT-project (Markus 2004). ERP implementation is a very risky process and the fact is that many, in some studies, over 50% of the implementations actually fail to meet its actual goals (Chen et al. 2009, Adam and O´Doherty 2003) Therefore, managers should recognize the importance of organizational culture. As stated earlier, culture can play significant role in company´s survival (Scott and Vessey 2002) and it is viewed as the main determinant of organizational performance (Peters and Waterman 1982, Kotter and Heskett 1992, Kotrba et al. 2012).

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an ERP system, which typically is developed in the Western country, is implemented in the Eastern culture (Srivastava and Gips 2009, Avison and Mataurent 2007).

Another way to view the culture in ERP implementation context is to look at it from manager´s perspective. As explained by Ke and Wei (2005) ERP system imposes a great challenge to adopting firm in terms of setting up the right values and desired culture for the organization. Top management´s input is essential since they have the power and authority to execute the change. Alongside organizational culture, top management support has been regarded as one of the key critical factors in ERP implementation (Ehie and Madsen 2005, Sharma and Yetton 2003). Management support has also significant positive moderating effect on job performance and job satisfaction when appraising new IT system because it demonstrates that management is committed to implementation process. (Bala and Venkatesh 2016).

But what if the organization´s whole structure is based on strict rules and regulations? What if the culture is and has always been hierarchical where everyone knows their position? As opposed to many scholars praising open, flat and flexible organizational environments, there are still organizations where hierarchical culture is very much valued and coded in their corporate DNA. There is a lot of empirical evidence about the success of flat, bottom up organizations (Peters and Waterman 1982, Senior 2002, Mintzberg 1994) but a limited knowledge on how hierarchical culture affect the success of change process in ERP implementation. Especially literature regarding hierarchical culture in the managerial style context is an unknown territory. The link between management style and hierarchical culture in an ERP environment is worth exploring due to its potential implications for further theoretical research and innovative solutions that can be used in the future.

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defence context and whether it affects the success of ERP implementation from managerial perspective. We also try to understand how change was managed in presumably a hierarchical culture.

Based on the previous mentioned importance of this research and the related gap in the literature, we can formulate the main question for this research. The missing empirical evidence leads to the research question:

RQ: How does a hierarchical culture as expressed in the management style affect the success of ERP implementation?

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2. LITERATURE REVIEW

In this literature review, an overview of theory and relevant concepts to this study is given. We will introduce the ERP implementation, different types of organizational culture, hierarchical culture and how it has been managed. Finally, our conceptual framework is presented and explained more in detail.

2.1. ERP implementation

ERP system is an integrated software package composed of different modules, such as human resources, sales, finance etc. providing cross-organization integration of data through embedded business processes (Esteves and Pastor 2000). ERP implementation is often motivated by different benefits such as integrated information, streamlined processes and “best practices” (Soh and Sia 2005, Markus 2004). ERP implementation is generally demonstrated as one stage in an ERP lifecycle model. Esteves and Pastor (1999) categorize and describe these stages as following:

• adoption decision • acquisition • implementation • use and maintenance • evolution

• retirement

An ERP lifecycle starts with the adoption decision. It gives the motive to question the need for a new ERP system. This phase analyzes the potential benefits but also requirements of the system. Second phase is acquisition. It involves considering different factors that will lead to product selection. Esteves and Pastor (1999) defined implementation stage as following: “This phase consists of the

customization or parameterization and adaptation of the ERP package acquired according to the needs of the organization. Usually this task is made with the help of consultants who provide implementation methodologies, know-how, and training. (p. 5)”.

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new benefits that are evolving. Final phase according to Esteves and Pastor (1999) is retirement phase which corresponds to the stage when managers decide whether they will substitute the ERP with other software to match organization´s current needs better.

In this study, our main focus is on implementation phase. Implementation as a term is rather problematic because several authors are emphasizing different elements of the implementation. Each author has their own unique view of implementation phase. For example, in the study by Ehie and Madsen (2005), ERP implementation process has been divided to five different stages (Project preparation, business blueprint, realization, final preparation, go live and support). Another study by Markus (2004) describe four different stages in technochange lifecycle (Chartering, project, shakedown and benefit capture). Most of the studies regarding implementation are interested in critical “success” factors of ERP implementation. For example, in the study by Ehie and Madsen (2005) 8 critical success factors were identified that explained 86% of the variances that have an impact on ERP implementation. Markus (2004) wanted to emphasize the fact that successful organizational change requires looking at IT implementation as “technochange” which not only considers new IT functionality but also necessary organizational complementariness.

In our study, implementation phase is essentially considered as the adaptation of the ERP package and relevant adaptation steps before and after it. This phase is an interesting stage in an ERP life cycle because implementation is the first time when users are actually interacting with the system. As explained by Estever and Pastor (1999), this interaction is usually supported by consultants who provide training and other support. Implementation stage is also the most studied phase in ERP lifecycle (Estever and Pastor 2000). However, studies regarding ERP implementation from managerial perspective in hierarchical culture context are not identified.

2.2. Organizational culture

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Organizational culture is very broad and multidimensional. Academic literature has focused on multiple different dimensions of culture. For example, Hoftstede (1980) studied originally four different cultural dimensions (power distance, uncertainty avoidance, individualism-collectivism and masculinity-feminity) in an extensive global study which was based on the survey at IBM corporation. His model helps to explain the cultural differences between different countries by using cultural dimensions. For example, Scandinavian countries tend to be more individualistic compared to Mediterranean countries where collectivistic values such as family, friends etc. are more typical.

Deal and Kennedy (1982) suggested four basic types of culture: the Tough guy, Macho culture, which can be characterized by individualism and risk taking. Second type is the Work-Hard/Play-Hard culture, where low risks and quick feedback are typical. Third type is the Bet-Your-Company culture, which can be characterized by high risks and very long feedback. Final type is the Process culture where low risks and slow feedback are common characteristics.

Jones et al. (2006) divided cultural dimension to three main inventory classifications: constructive, passive/defensive and aggressive/defensive cultures. Constructive cultures encourage members to interact with others and eventually help members to achieve higher order satisfaction needs such as self-actualization and achievement. Passive/defensive cultures are described as cultures in which members must interact defensively so that their security is not threatened. In aggressive/defensive cultures, members should protect their status and security by meeting assignments in forceful ways.

Handy (1989) identified four types of culture (power, role, task and person). A power culture is associated with a web structure with one or more powerful figures at the centre. A role culture is characterized as mechanistic and bureaucratic with rigid structures and rules. Members in a role culture should stick to their roles and follow their job descriptions. A task culture is appropriate for organically structured organizations where flexibility and creativity are encouraged. Lastly, a person culture is emphasizing individuals and their wishes in a minimalistic structure. Handy (1989) believed that role and task cultures are prevailing in Western organizational contexts which adds to Hofstede´s (1980) original view concerning national differences from culture perspective.

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characteristics. However, his study was solely based on one multinational corporation, IBM and therefore has received some criticism (Burnes 2017, p. 230). Since the radical economic development of China, many ERP case studies are focusing on the cultural differences between the Western world and Asia. Srivastava and Gips (2009) found out that Western developed ERP system implementation might require localization in Chinese context in order to be successful.

Communication culture is also playing a significant role in ERP implementation. In the study by Scott and Vessey (2002), the company with open culture succeeded whereas the company with less open culture failed in their ERP implementation. In their study, open culture invited users to be more creative and raise important concerns. Less open culture provided total opposite result where employees did not bring up their concerns and they were less loyal to the company. Srivastava and Gips (2009) made similar kind of observation concerning closed culture and added national cultural element to it. They found out that in Chinese business culture, it is not common to explain the decisions made by the top management and questioning authority is not an option. In both studies closed culture prohibits employees to raise concerns that might escalate later in the post implementation phase.

The common theme in many papers is the fact that organizations need to understand the existing culture before making any significant changes to structures or processes. Nandhakumar et al. (2005) confirms the importance of cultural understanding by arguing that different contextual factors such as manager´s intentions, the affordance of technology and the power and cultural context can provide richer insights into the ERP implementation process. Finally, Zaglago et al. (2013) revised the existing literature in a systematic literature review about the impact of culture in ERP implementation and concluded that “there is a need for further research into cultural aspects and implications of ERP system” (p. 5). Zaglago et al. (2013) argue that better understanding of different elements of culture in ERP context will lead to better choices for ERP system.

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and employees are interacting with their global colleagues daily. But this study is not necessarily as useful in the context of a local grocery store where employees are from the same country with similar background. Therefore, studies related to hierarchical culture were more relevant for this research.

2.2.1. Hierarchical culture.

Cameron and Quinn (1999) introduced an organizational culture framework which is built upon Competing Values Framework. It was originally created from a research that was studying major indicators of effective organizations. This study by Campbell et al. (1974) discovered 39 indicators that represented all possible measures for organizational effectiveness. This study was afterwards analyzed resulting two main dimensions and those dimensions resulted into four main clusters. These clusters are clan, adhocracy, hierarchy and market. These core values define the perceptions that people have on organizations. Each box represents a unique set of organizational effectiveness indicators. We will describe Cameron and Quinn´s (1999) main clusters briefly.

The clan culture is represented in the upper left quadrant in Figure 1. This culture emerged from the studies related to Japanese firms and their unique family-type culture where teamwork, employee involvement programs and corporate commitment to employees were typical and valued. Shared values, goals and participativeness are common characteristics for clan-type firms. As explained in the figure, leaders are typified as mentors, facilitators and team builders.

The market culture is located in the lower left quadrant in Figure 1. This type of culture is externally oriented that is functioning like a market. It is mainly transactions based, meaning that interaction with suppliers, customers, contractors etc. is important. Profitability and market share are main objectives for market culture. Typical leaders should be competitive and result driven.

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Figure 1. The competing values framework (Cameron and Quinn 1999)

Hierarchy culture is represented in the lower left corner in Figure 1. Cameron and Quinn (1999) define the hierarchy culture as following: “A very formalized and structured place to work.

Procedures govern what people do. The leaders pride themselves on being good coordinators and organizers, who are efficiency-minded. Maintaining a smooth-running organization is most critical. Formal rules and policies hold the organization together. The long-term concern is on stability and performance with efficient, smooth operations. Success is defined in terms of dependable delivery, smooth scheduling, and low cost. The management of employees is concerned with secure employment and predictability (p. 66)”.

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and Quinn (1999): “The dominant operational theory that drives organizational success is that

control fosters efficiency (elimination of waste and redundancy) and therefore effectiveness.” (p. 48).

There are many reasons for using Cameron and Quinn´s (1999) competing values framework as a building block in this research. First, although there are numerous different models to assess organizational culture, only few of them addresses hierarchy so clearly as Cameron and Quinn. Secondly, many models might incorporate hierarchy on some level or some elements of it but models regarding hierarchical culture from managerial perspective are very rare and hard to find. Cameron and Quinn´s (1999) framework includes two essential elements of this research: hierarchical culture and leadership types. However, as stated by Cameron and Quinn (1999), it is impossible to find a perfect model to explain organizational culture from all perspectives. There are always new models that can be argued to be more essential than previous ones but there is no right or wrong model. Each research is unique, and some models are more suitable than others.

This model fits well for this study because the competing values framework is well acknowledged and more importantly it is made to measure organizational effectiveness which can be regarded as one of the main success factors of successful organization. Therefore, it is a supportive tool to evaluate successful ERP implementation in our study. In addition, it considers different leadership types in different cultural contexts. Since our focus in this study is on a hierarchical culture, we can use Cameron and Quinn´s (1999) framework as a helpful tool. We can also evaluate their framework´s suitability while doing the research for presumably hierarchical organization and see if there are some dimensions that resonate in our research.

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2.3. Managing ERP from hierarchical perspective

There is plenty of research regarding the importance of culture on ERP implementation but very limited knowledge about the hierarchical culture and how it affects in ERP context. A case study conducted by Guo and Wang (2015) concluded that hierarchical culture and group culture influence ERP post-implementation success through horizontal coordination and vertical coordination. Another study by Guo et al. (2014) investigated ERP assimilation process by using competing values framework and found out similar kind of results stating the importance of coordinating mechanisms on both vertical and horizontal level. In addition, Guo et al. (2014) emphasized the cultural balance of organization.

Tseng (2010) studied the effects of hierarchical culture on knowledge management processes. Her case study finds that a hierarchical culture influences knowledge management processes and can act as a mediator for knowledge conversion and knowledge management processes. Although her study was conducted in a knowledge management context, it gives additional knowledge about hierarchical culture and its implications on knowledge management which can be used as a potential reference in ERP context. Especially the note of modeling proper behaviors by leaders could improve the perceived view of successful ERP implementation in our case.

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2.4. Conceptual framework

Figure 2. The conceptual framework

As stated earlier, our research question is: “How does hierarchical culture, as expressed in

management style, affect the success of ERP implementation?”. This study is built on three building

blocks: Hierarchical culture, management style and ERP implementation. The goal of this study is to understand the effects of hierarchical culture from managerial perspective in ERP implementation. In addition, this study aims to discover the underlying hierarchical control mechanisms that guide the change process and whether these processes were viewed as successful or not. Our conceptual framework is presented in Figure 2. Boxes are representing main concepts relevant to this study and below them are brackets that cover main elements that are analyzed in this research. Finally, arrows represent the interaction between these main concepts. As stated by Maxwell, the conceptual framework is “primarily a conception or model of what is out there that you plan to study, and of

what is going on with these things and why” (2005, p.33). We describe briefly the idea behind each

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Our conceptual framework starts with hierarchical culture which is situated at the top in Figure 2. Ever since the first studies by Weber (1947) and Fayol (1949), organizational structuring has been one of the key elements of management research. Concepts like bureaucracy, control, hierarchy etc. gained new meaning in managerial context. Several studies are referring to some dimensions of hierarchical culture such as power distance (Hofstede 1980), role culture (Handy 1989), aggressive/defensive culture (Jones et al. 2006) just to name a few. However, studies focusing primarily on hierarchical culture in managerial context are very rare. Cameron and Quinn´s competing values framework (1999) is an exception because it analyzes several cultural dimensions while connecting it to managerial perspective. According to Cameron and Quinn (1999), formal rules and policies and stability are typical characteristics for hierarchical culture. We use their model as a starting point for this study while remembering that their model is generic and not meant for some specific context like ERP implementation. As mentioned by Maxwell (2005) we want to “develop or

borrow theories and continually test them” (p. 46).

Our second building block is ERP implementation which is located on lower left corner in Figure 2. ERP implementation is widely researched topic due to its significant impact on organizational survival. Organizational culture has often identified as one of the main success factors of successful ERP implementation (Scott and Vessey 2002) However, studies regarding some specific culture in ERP context are rare and especially looking from hierarchical perspective, practically nonexistent. According to Cameron and Quinn (1999), maintaining smooth-running, predictable and structured working environment is essential in order to achieve effective organization. We also use user satisfaction as a success factor in ERP implementation since it is suggested that user satisfaction can be used as a measurement of successful integration by management with the IS (DeLone & McLean, 1992). Our goal is to identify the impact of hierarchical culture in ERP implementation, especially from managerial perspective. We also want to know how change was managed and perceived by managers and employees.

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Our assumption regarding the connection between different building blocks is displayed by arrows in Figure 2. Organizational culture has an impact through the whole organization and it is likely that it will guide ERP implementation and management style. In a case study by Scott and Vessey (2002), open culture encouraged people to be open and honest which is the key for successful implementation. This also applies another way around because culturally open environment enhances manager´s ability to be honest and truthful about upcoming changes which then creates trust in the organization. Management style is an essential in ERP implementation because badly managed implementation can have serious consequences to end result in terms of e.g. user satisfaction. Project management principles are strongly correlated with successful ERP implementation (Ehie and Madsen 2005) Finally, the impact of ERP implementation to management style is a wild card in a sense that we can´t predict its effect on management style. Existing literature about the connection between ERP implementation and management style was not identified. It requires more attention because there is clear evidence that ERP implementation can cause resistance when distribution of power is threatened (Lapointe and Rivard 2005) which indicates that ERP implementation can also change management style. This will be solved by asking questions about the effects of ERP implementation to management style.

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3. METHODOLOGY

In this section, an overview of the methodology for this research is given. We present our research strategy, case description, data collection and data-analysis.

3.1. Research strategy

The goal of this study is to gain better understanding about hierarchical culture and its possible implications on ERP implementation from managerial perspective. In order to achieve this goal, we are analyzing the possible connection between hierarchical culture, ERP implementation and management style as illustrated in our conceptual framework. Our conceptual framework is justified with existing academic literature regarding these key areas. For this research, we will conduct a qualitative case study. It is appropriate research strategy to answer “how” and “why” research questions and it focuses on contemporary events (Yin 2009: p. 6). In addition, Yin (2009) stated that studies that rely on multiple sources of evidence are appropriate for case studies in order to construct validity. Case study fits well for this research because prior research concerning ERP implementation in a hierarchical culture is rare and the concept is relatively new.

Qualitative case study is the best option for covering contextual conditions, in this case, a shared service center which operates directly under Defence Command in Finland and where most of the employees are civilian. As stated by Yin (2009) case study is suitable when researcher wants to cover contextual conditions. The quantitative methods would not provide detailed information on managers and employees thinking process and underlying motives in this contextual environment which is essential for this research. Therefore, qualitative methods is chosen to answer the research question and underlying problems related to it. However, it is not known if there are any solid relationships between hierarchical culture, management style and ERP implementation. Therefore, we used several follow up questions that can give better explanation about the phenomenon and support our selected research questions. Internal validity is not concern because this study is not trying to determine whether event x led to event y. (Yin 2009)

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analysis is an individual. However, it is important to remember that these individuals are working on a very different levels in a corporate hierarchy. Since our research question is strongly related to management style, we wanted to put a greater emphasis on managers/leaders stories, hence a larger share of our interviewed respondents could be classified as managers/leaders (7 managers/leaders and 5 employees) Nevertheless, we also interviewed employees, so we can compare how they viewed the change vs. managers/leaders.

3.2. Case description

Our research site is a shared service center (SSC) which is part of the Finnish Defense Forces (FDF). This SSC is a centralized unit of different back office functions such as HR, Finance, Database Management, Travel and Expenses etc. In 2015, they officially opened the SSC in Joensuu and adopted SAP ERP system to harmonize existing processes and remove unnecessary bureaucracy. This SSC employs people with various backgrounds providing support services for the FDF. This SSC operates in Joensuu Science Park in two different floors and it is considered as “military area” of the FDF.

There are several reasons to choose this site and specifically travel and expenses division as our research site. After pre-interviewing several different people about potential place for interviews, it became clear that this particular unit faced a lot of changes when the SSC was established, and ERP system implemented. There were several people who had to move from somewhere else to Joensuu because their own unit was closed. Many people had to get familiar with the new centralized unit and its new processes and culture.

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Travel and expenses division has been divided to 3 different “sectors” and each sector has its own sector leader who is responsible of its own sector´s results and development. These sector leaders report directly to travel and expenses division leader who is responsible of these 3 sectors. In each sector, there are team leaders who are supervising secretaries who are processing invoices related to their own sector. In addition, there are “designers” or “planners” who are approving these invoices and participating other activities related to their work. Each sector has a very clear work order and description about its activities (Puolustusvoimien palvelukeskuksen työjärjestys 2018) Each job description has been clearly specified and all managers/leaders have their own responsibilities, things they will approve, actions they lead, actions they prepare and present, actions they solve, monitor and participate.

Travel and expenses division is a unique group of people who have presumably a certain type of culture, that guides their way of working and thinking. What makes it very interesting environment, is the fact that all people working in this particular division are civilians whereas other divisions might include professional soldiers also. However, these civilians are working under FDF and their rules and guidelines are coming from the Defence Command which is led by professional soldiers. Therefore, this unit was chosen to conduct a research about hierarchical culture and its managerial implications on ERP implementation. We will interview and analyze managers/leaders and employees from all 3 sectors in order to get a rich overview about their culture and how they view ERP system and management style under these circumstances in 2015. All respondents were present when SSC was established in 2015 and all of them uses SAP in their everyday work.

3.3. Data collection

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about our themes and connections between them. In addition, after finishing interviews, respondents had a chance to make additional comments that were recorded and analyzed. This flexibility was necessary because the connection between different themes is not clear (Van Aken et al. 2012)

We interviewed managers (team leaders, sector leaders and unit leaders.) and employees (secretaries, designer) from different sub departments in travel and expense division that were part of the ERP implementation in 2015 and are using ERP system in their day to day work. In total we interviewed 12 people and one interview lasted between 30min-75min. Interviews were held in Finnish and they were recorded with 2 different recorders. In order to prevent any response biases, respondents were reminded to not speak about interview questions or any content related to it. After recording was finished, there was at least 1-hour break before the next interview so there would be time to reflect and write thoughts that came up from the interview. In total, interviews took 5 working days and there were max. 3 interviews per day. Finally, we anonymized respondents and gave them code names (REC=Recipient, AGE=Agent) in order to keep privacy and objectivity.

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We also wanted to do observations, but this was not possible due to privacy reasons. FDF SSC is classified as “military area” and entry to this area is punished without special permit. However, by the end of interviewing all people, tour to facilities was granted and notes were taken to describe the physical appearance of the SSC which is very unique. In addition to this, we received documents related to job order and description of the SSC and an info leaflet about statistics that were used to describe the key numbers of the SSC. Finally, a video interview from colonel Timo Viinikainen, who was the main responsible of setting up the SSC, was analyzed in this research. Triangulation helps to improve construct validity since multiple sources of data were used (Yin 2009, p. 34) By using multiple data collection methods, we can form stronger propositions for further research (Eisenhardt, 1989).

3.4. Data-analysis

To begin, we recorded and transcribed 12 interviews which yielded 153 pages of transcription. We reviewed and analyzed the data to get a comprehensive overview about the ERP implementation process by interviewing managers/leaders and employees. As mentioned by Eisenhardt (1989) an overlap between data collection and data analysis is valuable. Since our aim is to elaborate on competing values framework by Cameron and Quinn (1999), we aim to capitalize our own conceptual framework and further analyze the effects of hierarchical culture in different sub departments and see whether it has affected, as expressed in management style, to the success of ERP implementation.

We used coding as the main analytical strategy for this qualitative research. Our goal is to get a good “glimpse” of the data in order “rearrange it into categories that facilitate comparison between things

in the same category and between categories” (Maxwell 2008, p. 237) During transcription process,

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When new emerging codes that would bring value were not found, it was time to analyze substantive codes more in detail. Our aim is to clarify our conceptual framework by using theories and concepts from previous studies. Therefore, we used cross-case analysis to find cross-case patterns (Eisenhardt, 1989) in order to understand the underlying mechanisms of hierarchical culture in different departments. For example, we noticed that people with FDF experience vs. without had very different view about hierarchical culture. As mentioned earlier, our primary unit of analysis is individual. In addition, cross-case analysis is used to analyze similarities and/or differences between managers/leaders and employees and reflect our empirical findings against our framework. We also made comparison between different data sources to find patterns and conflicts between data (Eisenhardt, 1989) in order to get more grounded findings. For example, we founded that FDF´s values are not only evident when interviewing people, but it was clearly present when observing SSC´s facilities.

We used our memos to stimulate our thinking and tested different ideas against our framework (Maxwell 2008) We also did several concept maps to visualize our findings in order to improve the sensemaking process. These maps helped us with the understanding of relationships between different concepts and their interrelatedness. This sensemaking process resulted three emerging concept maps that are presented in the results section. In the end, we compared our new findings with the framework and realized that some parts of our conceptual framework were not valid, or they were only partially true. Especially the notion about hierarchical culture was challenged after the analysis. After realizing this, we focused on substantive codes that could clarify our framework. After iterative coding process new concepts were identified that would lead to new themes or theoretical “building blocks” which could answer our research question. We also established time-based diagrams to get better clarity on the evolution of the ERP implementation, organizational culture, management style and how this

“process unfolds over time” (Sutton and Staw 1995, p. 376). We used these figures to support our

data-analysis and also in our theory building process. Finally, after making sense what has happened, we asked “why” this happened and can our emerging theoretical building blocks capture the process of ERP implementation and what kind of impact culture has on it from managerial perspective?

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4. RESULTS

In this section, results from our interviews and data-analysis are presented. Our results reveal three emerging concepts: cultural diffusion, workable ERP implementation and facilitative management. We describe the emergence of these three concepts by presenting our data-analysis tables more in detail. We also explain how these new concepts in the results are related or departed from the conceptual framework (Figure 2.). Each section ends with a brief summary that captures the main findings of the emerging concept. After reflecting on these concepts, research question was deconstructed (Table 1.) in order to answer the research question. Finally, based on these concepts, we created a conceptual model to explain the connection between organizational culture, ERP implementation and management style from managerial perspective in defence context. This model is presented in the beginning of discussion section.

4.1. Cultural diffusion

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As shown in Figure 3. our first theoretical building block is cultural diffusion. Cultural diffusion refers to the findings at SSC which consists of different cultural layers with rigid structures and rules coming from top and open, dynamic culture at the bottom. In the middle part of the Figure 3 is people -based middle management which describes the influence of middle management and their personas when creating a culture. They are influenced by lower level organic culture and higher level hierarchical culture/structure. Cultural diffusion has emerged from these three distinguishable concepts as presented in Figure 3. First distinguishable concept is lower level organic culture. As mentioned earlier, the notion of hierarchical culture was challenged when interviewing different people and compared our findings. It appears that organizational culture at SSC is very different compared to FDF. Several people mentioned words “open”, “dynamic” and “up for questioning” when describing their own sub department culture at travel and expenses division in SSC. As presented in lower left corner in Figure 3. the atmosphere is very “open”, “supportive” and “initiative driven” which is a result of some employees and their extroverted behavior but also by management that wanted to create certain type of culture. Moreover, the physical appearance of SSC which is an open office, invites people to talk and discuss with others. It also became apparent that people who had previous experience from FDF described more often these anti hierarchical elements but people coming from outside FDF considered SSC as rigid and rule based. One manager has logical explanation for this:

AGE7: “This bureaucracy and rigidness stems maybe from that we have certain ways that might

seem a bit rigid for those coming directly from civilian corporations and they are…the regulation from government administration requires certain functionalities”

However, interesting insight was that some people considered hierarchy as a positive thing because it brings clarity and minimizes uncertainty. Some respondents viewed hierarchical culture as neutral and one respondent as negative. Overall the culture in lower levels of corporate hierarchy could be described as open where people have low threshold to speak up on their mind. Therefore, the concept of lower level organic culture is presented in Figure 3. Nevertheless, there are some rules and procedures that must be followed.

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but also lower level organic culture. Sometimes middle-management has stronger impact on culture but sometimes few individuals can guide the atmosphere of the whole department. As one manager comments:

AGE4: “There has been that kind of people who are very open and ready to learn new and maybe a

bit extroverted people who are grateful that they did not lose their job…this is my belief why this culture is very open”

Finally, our third distinguishable concept in Figure 3 is higher level hierarchical culture/structure which is presented in upper left corner. The starting point for SSC´s open culture came from the top. Managers explained that they tried to create certain type of culture to this new organization and this has clearly resonated to lower levels in corporate hierarchy. As several employees explained, the overall culture is very “conservative” and “clear” since it is a military organization where everything has an order. In addition, SSC has a “work order” that lists strict responsibilities of each employee and manager which enforces this culture. Despite the lower level organic culture, there are some things that are guided or controlled by the top management. SSC is under direct supervision of Defence Command which is the headquarters of the FDF. Defence command is part of Ministry of Defence and their job is to lead the execution of the FDF´s statutory tasks which stems from the Finnish law. Therefore, there are some rules, guidelines and roles that are determined beforehand, and these factors will guide SSC´s operations. These factors are more embedded in existing structures that are hard to change due to the unique nature of the FDF; hence the concept of higher level hierarchical culture/structure was established. One great example of this concept is the approval process for this research which eventually required the approval of FDF´s brigadier general. One interesting insight came from one manager who said that some hierarchical elements are included in their ERP system which in a small way guides the structure and culture at SSC. However, it is very much up to people to decide how these processes are implemented at SSC as long as the end product is the same what is asked. As one manager states:

AGE7: “We checked what the law really says since everyone were pleading on the fact that it is stated

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Looking back to our old conceptual framework (Figure 2.) we can clarify few things regarding the culture at SSC. First, hierarchical culture as a term was challenged at SSC because the culture among employees, especially in the lower level was open and surprisingly free. Secondly, first year at SSC was not stable and the operating environment was quite organic and uncertain. Culture became more stable in later period when operating procedures were established and roles became more concrete. Finally, managers did not try to control their employees. Instead, managers encouraged to question existing procedures and status quo. However, this culture is guided by embedded hierarchical structures/culture. Therefore, some formal rules and policies are valid from the conceptual framework (Figure 2.) These rules and policies also influence ERP implementation and management style as assumed in the conceptual framework since these are determined by Defence Command and it must be followed by managers and employees. Thus, control from the high-level is evident.

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4.2. Workable ERP implementation

Figure 4. The emergence of workable ERP implementation

As shown in Figure 4, our second theoretical building block is workable ERP implementation. The reason why it is called “workable” is because it fulfills minimum requirements to do the job. After interviewing several people, we noticed that ERP implementation at SSC was not a “success story” in a sense that everything went smoothly, and people would be satisfied with the system. Especially making ERP system more user friendly was challenging. However, workable ERP implementation was achieved, and it derives from three key components which are presented in Figure 4. The most important component is top management support and coordination as illustrated in upper left corner in Figure 4. It became evident that radical changes such as new SSC and ERP implementation requires support from the top management on every level. As one manager explains:

AGE6: “But it is so that if we think that some things should push forward then we always have that

one military person who does so. We have to go through these things in certain order…”

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necessary resources to execute the change. This connects to culture because top management is strongly influenced by rules, control and coordination since it is Defence Command´s responsibility to lead the execution of the FDF´s statutory tasks. In that sense, there are direct hierarchical actions that top management can do that affect the success of workable ERP implementation. It became obvious that there is a clear “pecking order” in certain things, especially in large transformation projects. In addition, top management´s guidelines bring order and clarity to operating procedures. As one secretary explains:

REC3: “…like on that private side and in big corporations elsewhere it might be so that one manager

says one thing and another something else and third one something else and they kind of like fall apart…but here I have felt that certain type of hierarchy helps that it is kind of positive that there are certain guidelines and they go smoothly”

This is an important finding because many people who are working in military organization are expecting certain kind of order and structure. Lack of structure can cause uncertainty and negative feelings as one manager describes the initial stage of the foundation of SSC:

AGE2: “ …they should remember to listen…that was a big minus for me and also kind of a

disappointment because I thought that in FDF everything would be organized so that it would go smoothly…”

Our second component in Figure 4 is necessary resources. As shown in lower left corner in Figure 4. it became apparent that necessary training was essential in order to achieve sufficient skill level with SAP. Secretaries had enough time to study the system and they were encouraged to ask questions. Most importantly, they had their own special SAP guru who was an experienced trainer and she had a lot of SAP experience in defence context. Sufficient training was often mentioned as one of the key factors in “workable” ERP implementation.

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first operating year, the system was slow, and it did not “bend” to everything that was expected which escalated later since people had to work over time. Therefore, the system must be suitable and fit for purpose in order to prevent further disruption. One employee mentioned that initial slowness of the system caused frustration and it also affected the overall atmosphere temporarily which supports the existing theory that the system must fit for purpose.

Looking back to our old conceptual framework (Figure 2.) we can clear few things regarding the ERP implementation at SSC. The ERP implementation at SSC did not go as smoothly as expected and the working environment during the first year was not very structured or predictable. As mentioned earlier, the environment was quite organic, and some uncertainty existed among employees. However, top management support and allocated resources helped to minimize the uncertainty and resistance towards the system because it signaled strong commitment and determination to stick with the chosen system. User satisfaction towards the system was not particularly high among users but the critique was not strong because the system was “workable” and necessary resources and support were provided. We did not find strong evidence that ERP implementation would have any significant impact on management style. Several employees explained that ERP implementation was kind of “given” and the role of the management was more administrative during the implementation. Finally, ERP implementation can affect the overall culture to a certain extent which was unexpected. It became evident that failed implementation (Figure 4.) might have an impact on the overall culture. Especially in an environment which is relatively stable and where people are expecting that everything goes “by the book”.

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4.3. Facilitative management

Figure 5. The emergence of facilitative management

As shown in Figure 5, our third theoretical building block is facilitative management. This means that management style has evolved from providing resources and establishing new procedures to encouraging people and facilitating new procedures. Facilitative management has emerged from three separate components as presented in Figure 5. During the first operating year, change management activities were mainly focusing on providing necessary resources and challenging existing procedures. This was needed because this newly established centralized unit required new operating procedures that should be aligned with new structure. The idea was to streamline operations and create new way of thinking that would question the existing procedures as one manager explains:

AGE7: “Things are going forward, and they are changing and because of that we must be able to

question things and view them critically in the future”

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consideration in planning phase. People who came outside the FDF, were encouraged to tell their view on ERP implementation and bring up their concerns.

Our second component in Figure 5. is learning by doing. It refers to the fact that some procedures were founded from scratch and through trial and error were eventually established. As presented in lower left corner in Figure 5. there were many procedures that did not initially work but after experimenting and learning succeeded. This “new way” of working was derived from the new strategy where existing status quo was questioned. Quite many secretaries described that their manager gave them carte blanche and the role of their manager was distant during the change. The role of the lower and middle management was more administrative, and they were developing new procedures instead of directly leading. As two managers explains:

AGE6: “I was trying to solve that chaos what was in our hands” (refers to different operating procedures between scattered administrative units and SSC)

AGE5: “I was developing our services…it took a lot of time because I had to think how centralized

service is produced…”

Despite the distant relationship between secretaries and managers, structural elements of FDF made sure that processes were moving forward and there was clarity in work order. Our third component in Figure 5 is structural leadership/guidance which refers to this process. Several workshops were organized, and sufficient training was provided. We also identified interesting finding labeled as “volunteerism-based control” which means that users are given the chance to participate activities voluntarily but if necessary, can be controlled by the top management. One secretary stated that even though lower level managers did not have direct impact on ERP implementation, they still made sure that there were enough resources, and everything went “by the book” which refers the fact that FDF structures guided day to day operations.

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by supporting, providing resources and guiding. The efficiency is one of the goals at SSC, but it is more something that managers are “aiming” for instead of actually having.

In sum, our data-analysis finds that in the beginning of the change, the role of management at SSC was more administrative, and their main task was to provide necessary resources. During this phase, status quo was questioned and learning by doing was a common strategy to develop new practices. This setting changed through time from providing resources to facilitating established procedures and encouraging people to improve processes. Hierarchical elements regarding conceptual framework (Figure 2.) were more apparent at top level in corporate hierarchy than lower levels.

4.4. Summary of findings

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Table 1. Research question breakdown

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5. DISCUSSION

5.1. A conceptual model

The goal of this research was to find out whether hierarchical culture as expressed in the management style affect the success of ERP implementation. We can conclude this research question by stating that structural hierarchy that derives from the top and is manifested by top management´s actions influence ERP implementation in a supporting manner. There are direct managerial actions that effect not only the culture but also ERP implementation. Elements of hierarchy are embedded on how things are managed and organized but also day to day operations on a certain level. However, the actual culture or social interaction between people is more dependent on actors and their behavior.

The starting point for this research was the conceptual framework (Figure 2.) that covered main concepts (hierarchical culture, ERP implementation and management style) in order to answer the research question. As stated in results section, some elements of these concepts were challenged when reviewing findings during the data-analysis. Each concept, sub concept and connections between them were reviewed one by one based on the data. After analyzing results and reflecting, a new model was established that builds on the conceptual framework and new insights that were discovered. This is necessary because the initial framework could not explain the different layers that are essential to understand the complexity of the end conclusion. Our conceptual model incorporates these concepts more nuanced way to view the reality.

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Figure 6. The conceptual model

On the left side of Figure 6, the contribution to workable ERP implementation is presented in different levels from different perspectives. Top management chooses the right system (fit for purpose), gives support, resources and guidance to the whole organizations. These direct managerial actions bring clarity and minimizes uncertainty towards not only the system but also culture in a supporting manner. They have very extensive role in initiating the change and their impact on end result is strong. Upper management is responsible for the execution process and they forward orders to lower and middle management. They also act as a mediator between Defence Command and SSC. Their impact is medium because rules and guidance are coming from the top, so their role is to maintain them and pursue for efficiency. Finally, middle and lower management were mainly administrating the change process and making sure that everything works among travel secretaries. Their impact on workable implementation is low because they did not have the power or authority to influence strategic decisions such as choosing the right ERP system or allocating necessary resources.

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influenced as strongly by hierarchy as top management. Moreover, SSC´s style to manage in different layers was not specifically hierarchical although they had to follow some rules and policies. Concepts, sub concepts and relationship between them were explained in results section.

Furthermore, our research shows that top management support is essential for workable ERP implementation (Ehie and Madsen 2005). Top management provides necessary resources that are needed during the implementation. It became also evident that in some situations change was difficult to implement due to the existing status quo (Stuart et al. 2010.) One example shows that, the misfit between role and system caused initially a strong resistance (Strong and Volkoff 2010) because change of power manifested in ERP context and status in social hierarchy changed (Hofstede 1980) Therefore, leading the change by showing an example is necessary in defence context. Showing an example is also one way to control the situation (Cameron and Quinn 1999).

5.2. Theoretical implications

Our research contributes the existing ERP literature regarding the impact of organizational culture on ERP implementation. We find strong evidence for top management support (Ehie and Madsen 2005) and would add that the support should not only be about providing resources but actions which show that top management is truly committed to change by e.g. showing example. Our results also resonate with Bala and Venkatesh (2016) because management support brings clarity and guidance to existing operations which then improves job performance. Power culture is still relevant (Handy 1989) because influence from the top will spread through the whole organization.

We also find support for Scott and Vassey´s (2002) study regarding the importance of open culture. In our research site, people were encouraged to raise issues concerning SAP and question any operating procedures. This feedback was taken into consideration when decisions were made. We would also add that open cultures enable more honest discussion on whether all processes should be done with SAP. In our case, it became clear that not all processes should be executed exclusively by using SAP. This links strongly to feasibility evaluation of ERP project which is also one of the success factors of ERP implementation (Ehie and Madsen 2005). This kind of discussion is useful for any type of organization.

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“make things happen” and who can get the support from top management. This depends very much on people in the middle management who have direct communication contact to secretaries but also to upper management. In addition, open culture is not effective in defence context without people who can act based on the feedback and who can be proactive to both directions in a corporate hierarchy. Therefore, we contribute to discussion about open culture by considering management style as one key factor in defence context. Our findings also support Nandhakumar et al. (2005) observations and would confirm that manager´s intentions and power in defence context are especially important in ERP implementation process because managers are expected to lead the change.

Our study also reflects the findings by Ke and Wei (2005) regarding the challenges that ERP system imposes to adopting organization in terms of setting up the right values and desired culture. Nevertheless, organizations can also use the ERP system to embrace desired values. In our case, hierarchical elements were embedded to ERP system to support existing structure and enforce the desired culture. This finding also resonates to the study by Tseng (2010) despite the fact that her study was conducted in knowledge management-context. Our case shows that hierarchical elements that are embedded in culture and structures can bring clarity and decrease uncertainty in operating environment which then improves efficiency. This contradicts Tseng´s findings in which she states that hierarchical culture is not beneficial to knowledge management strategy and planning. However, contextual conditions are very different and also organization type since Tseng´s study was concerning Taiwanese corporations whereas our site was a Finnish military organization. National difference between these cases is quite significant culture-wise (Hofstede 1980).

We also contribute to study by Zaglago et al. (2013) regarding the importance of understanding different elements of culture in ERP context. People with different backgrounds had different expectations not only about culture at SSC but also ERP system. In general, people with FDF background assumed that power distance at SSC would be higher than people with no FDF background (Hofstede 1980). Therefore, special attention should be targeted towards project managements principles since it is also one of the success factors of ERP implementation (Ehie and Madsen 2005).

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implementation. As mentioned by Cameron and Quinn (1999), organization and its culture tend to change over time as it is growing. However, typical organizational lifecycle that organizations tend to go through is not purely recognized. Cameron and Quinn (1999) argue that hierarchy is achieved after adhocracy and clan-phases. In our case, hierarchical elements were recognized already at the beginning of SSC because rules, procedures and values govern the culture. This is a result of established structures and embedded values that stems from historical institutions and law. Obviously, this is not the case in corporation-context when everything is started from scratch and history does not play such a role.

Finally, by forcing managers to use the system instead of delegating the task to someone else, the organizations have managed to decrease the power distance between individuals which is also more congruent with Finnish national culture where power distance is low (Hofstede 1980). However, as our analysis shows, if the change regarding power is too radical in ERP context, it might cause resistance among members (Lapointe & Rivard 2005). This loss of power decreases manager´s control of the situation and forces them to become more independent and self-reliant. Therefore, it is essential that top management leads the change by showing an example. The shift from hierarchy-type culture to more clan-based culture was possible due to a strong commitment from the top management (Cameron and Quinn 1999). This commitment not only encouraged managers to become more independent, but it also signals that existing procedures are not carved in stone and external focus is also needed. This is especially relevant when organization has evolved from internal focus and integration to external focus and differentiation (figure 1.) We would argue that in defence-context, the commitment from the top management is equally important as other value drivers in hierarchy-type culture.

5.3. Managerial implications

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Second, during major change projects like ERP implementation, a special project team should be established where one person is responsible of mapping different needs and requirements of the people. Stakeholder analysis can help to prevent undesired sub cultures. This also help with the integration and unity of the staff.

Finally, as mentioned earlier, top management can change, to a certain extent, the current culture and existing structures by modifying the ERP system. This might cause resistance especially when power distance changes (Hofstede 1980). However, in hierarchically structured organizations such as the FDF leadership plays essential role when demonstrating new ways of doing things. Again, leading by example carries a long way.

5.4. Limitations and further research

There are some limitations that also guide the way for further research. First, as mentioned earlier, our contextual conditions in this research are unique since our selected department at SSC is totally run by civilians but they are part of the Finnish military organization. Therefore, our results are not generalizable to other types of contexts. Studies regarding purely military personnel would be beneficial since hierarchy is presumably stronger vs. civilian organizations. It would be interesting to see if our findings are applicable in other organizations that are characterized as “hierarchical” or “conservative” such as financial institutions and universities. Furthermore, studies regarding the impact of different cultural elements on ERP implementation is needed.

Secondly, it became evident that during the data gathering process, people had difficulties to separate hierarchical culture and structure since they are closely related concepts. Despite paraphrasing and presenting guiding questions, it is not certain whether the difference between these two concepts were clear. Further studies regarding these concepts and interplay with them is needed. In addition, the approval process and restrictions to data gathering brought their own challenges.

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5.5. End conclusion

This research provides answers to the effect of hierarchical culture in ERP implementation. Our study identifies three emerging concepts that explain the connection between hierarchical culture, ERP implementation and management style. We also identified structural hierarchy which derives from the top and is manifested by top management´s actions. These direct managerial actions influence ERP implementation in a supporting manner, but they also influence the culture. We conclude that elements of hierarchy are embedded not only on how things are managed and organized but also day to day operations on a certain level. Nevertheless, the actual culture or social interaction between people is more dependent on actors and their behavior.

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