The role of organizational culture in operations improvement: findings from a systematic literature review and empirical investigation
Purpose – The aim of this thesis is to clarify the role of organizational culture (OC) in
operations improvement and to investigate whether actions can be taking to develop OC.
Research design – This thesis has two parts. First, the role of OC in the operations
improvement context will be clarified through reviewing recently published papers in a systematic way. Second, as lack of guidance is still holding managers back from adapting knowledge regarding OC into useful decisions, a prescriptive ‘best-in-class’ case study sheds light on how cultural development can be achieved to successfully implement operations improvement practices.
Findings – OC appears to be a relevant variable in operations improvement, but there is
no consensus among academics regarding its strength and impact on the focus areas within operations improvement. One prominent research gap that came forward was during the analysis was the lack of research regarding the way that managers can develop OC. A retrospective case study at Scania identified four clusters of actions that can enable cultural development: actions regarding the organizational structure, behaviour, support mechanisms & system and information & communication.
Added value/originality – This thesis contributes to knowledge on operations
improvement by creating a comprehensive picture of the state-of-the-art regarding OC, which is not (recently) done by other academics. Furthermore, practitioners are provided with guidance on how to achieve cultural development and academics are provided with recommendations for future research.
Keywords – Organizational culture, operations improvement, systematic literature
review, multi-plant lean programme, case study, cultural development
PREFACE
1. Introduction
Effective management of operations can be the key to success in this highly competitive world of the 21st century (Jaehne et al., 2009; Naor, Linderman & Schroeder, 2009). To
successfully fulfill changing demand of customers, organizations constantly have to improve their operations (Hope & Mühlemann, 2000; Narasimhan et al., 2010). Studies show that organizational culture (OC) is an important fundamental in operations management (OM) as it can be the key driver for operational performance and managers’ decision-making (Baird et al., 2011; Jayamaha et al., 2014; Valmohammadi & Roshanzamir, 2015). OC can both have a negative and positive impact on achieving competitive advantage (Chan et al., 2014), but research is inconclusive with regards to the specific role that OC plays in operations improvement. Academics approach the role of OC in varying ways, as some address the concept as antecedent (e.g. Prajogo & McDermott, 2005; Baird et al., 2011), others as moderator (e.g. Yang et al., 2017) or explanatory variable (e.g. Adam et al., 2001). The varying perspectives on the role of OC have resulted in the fact that practical implications regarding OC remain underdeveloped as managers encounter difficulties to develop their culture (Marshall, Metters & Pagell, 2016).
regarding the role of OC in operations improvement is crucial. Hence, this thesis aims to clarify what the role of OC is and how managers could achieve cultural development. Despite theoretical and managerial relevance, no recent SLRs regarding the role of OC in operations improvement has been published. Marshall et al. (2016) reviewed literature on the relationship of OC and operations improvement, but unsystematically. Their study focused on discussing methodological concerns regarding prior research and provided direction for future research. Differently from Marshall et al. (2016), I classify and compare the findings of literature regarding OC in operations improvement, which provides contribution to both theory and practice.
First, through reviewing the literature in a systematic way, a comprehensive state-of-the-art picture will be drawn regarding the role of OC in operations improvement. The following broad research question is therefore formulated: what is the role of
organizational culture in operations improvement? The SLR classifies and compares
findings of papers on the impact of OC on operations improvement. Also, the use of theoretical perspectives will be analyzed, as adoption of theories can help to add explanatory power to complex phenomena (Danese et al., 2017). Furthermore, this thesis identifies fruitful directions for future studies based through identification of research gaps. Second, the most prominent lack of research identified in the SLR will be addressed by means of a ‘best-in-class’ retrospective case study. Valuable insights are gathered to provide practitioners with guidance on how to achieve cultural development to improve their operations. The following specific research question is formulated:
what actions can organizations take to create a more homogeneous corporate lean culture among global subsidiaries? This question will be further explained and
motivated in section 5.
2. Theoretical Background
This section presents the theoretical background for main concepts used in both literature review and empirical research. Section 2.1 will discuss OC and the models and instruments that are used by academics to measure the concept. Section 2.2 provides the definition and interpretation of operations management to clarify the content of operations. Section 2.3 provides an overview of relevant theoretical perspectives used in operations improvement literature.
2.1 Organizational culture
about and reacts to its various environments” (Schein, 1996: 236). With this definition, it is argued that OC affects behaviour of employees in organizations. Beulens & Debussche (2006) agree with this definition and state that new workers have to adjust to the culture of the organization to become part of it. OC is often considered as “static” concept, which shows little or no change (e.g. Naor, Linderman & Schroeder, 2009; Wiengarten, Gimenez, Fynes & Ferdows, 2015; Yang, Kull, Nahm & Li, 2017). Baumgartner (2009) contradicts this view and advocates considering OC as dynamic concept, as it evolves over time because of influencing variables, such as management styles, and the process of socializing. A recent review of literature by Marshall et al. (2016) agrees that culture should be considered as malleable; a construct that can be adapted, built or changed by managers through taking actions.
As OC is a social construct, it is highly complex and considered to be multidimensional (Hofstede, 2001; Morris et al. 2014). During the last decades, many academics have tried to operationalize the concept of OC, which can be recognized in the variety of instruments that academics proposed over time. The variety of models (e.g. House et al., 2004; Beugelsdijk et al., 2006;) classified over 100 dimensions to measure the multidimensionality of OC. Jung et al. (2009) identified 26 prominent dimensions that are widely addressed throughout the various instruments, such as: achievement, collaboration, innovation, leadership, power distance, rewards, team orientation, trust and vision.
For simplicity, this thesis adopts the Competing Values Framework (CVF) (Quinn & Rohrbaugh, 1983) as the findings have been related to the culture types of the CVF. Although criticized, the CVF is among the most influential and extensively used models in OC research (Yu & Wu, 2009) and is widely used in papers regarding operations improvement (see section 4.1.3). The multidimensionality of OC is captured in four culture types. These four culture types group cultural aspects based on the dimensions; control – flexibility and internal focus – external focus. Table 2.1 provides an overview of the four culture types and specifies the third dimension of the CVF: thrust – means – end. This dimensions explains to what mechanisms (means) and effectiveness criteria (ends) the culture types are related.
Organizations do not simply have one specific culture type, but always have a profile, which is the combination of the four culture types. Therefore, when academics gather insights regarding the influence of OC, the dominant culture type should be identified (Losonci et al., 2017). Each orientation has a polar opposite that emphasizes contrary characteristics (e.g. clan culture emphasizes flexibility and internal focus; market culture emphasizes control and external focus). This implication is important when studying the impact of OC, as a negative impact on one culture type implies a positive impact on the opposite culture. The adhocracy culture is for instance focused on innovation (agility/adaptability), where the hierarchy culture focuses on stable, efficient processes; the impact of OC is likely to be different for these cultural types. Parallel culture types are important too, as one of the dimensions may be shared, but the other dimension is contrary (e.g. clan and adhocracy culture both have a similar structure, but a contradicting focus).
2.2 Improvement area OM
Operations improvement is an area in operations management. Operations management is defined as “the management of processes or systems that create goods and/or provide services” (Stevenson, 2001: 4). Hope and Mühlemann (2001) pointed out that consistency is lacking in the general structure of operations management.
Hope and Mühlemann (2001) identified common themes in operations management, based on the threats proposed by Slack et al. (1998). In more recent work, Slack et al. (2010) refined these aspects of operations management; they divide operations management into four main areas, as can be seen in figure 2.1: operations strategy, design, planning and control and improvement. The areas similar to the areas identified by Hill and Hill (2017), who argue that operations management encompasses strategy, execution and improvement. Figure 2.1 areas of operations management (Slack et al., 2010) An important driver for this thesis to focus on operations improvement is the necessity of organizations to constantly improve, as competitors do so too; it is crucial to maintain or increase competitive advantage (Khanchanapong et al., 2014). Recently, operations managers have shifted their activities towards an operations improvement focus (Netland & Aspelund, 2014). Increased competitiveness due to globalization, introduction of new technologies and the widened scope of operations management have increased the need for continuous improvement (Matthews & Marzec, 2010; Slack et al., 2013). Hence, in the past decades, researchers and practitioners have contributed to an array of improvement practices.
As prior literature reviews (e.g. Hope & Mühlemann, 2001; Boscari et al. 2018) primarily based their operations management classification on work of Slack et al. (1998, 2010, 2012, 2016), the classification of Slack et al. (2016) is used to categorize sub-topics within the improvement area of operations management. Four sub-topics are distinguished: standardized improvement programmes, capability development, risk management and corporate social responsibility. Corporate social responsibility (CSR) is not addressed during this thesis, as CSR is the focus of another thesis. See table 2.2 for an overview and definition of the practices, classified in the three overarching categories.
1) Standardized improvement programmes; philosophies or set of methods/practices that have the purpose to improve organizational operations of manufacturing (Netland & Aspelund, 2014). Examples are Total Quality Management (Deming, 1986), Lean Thinking (Womack & Jones, 1996), Six Sigma (Schroeder et al., 2008). Every programme includes a different set of elements. Improvement techniques, such as Pareto diagrams, process maps or scatter diagrams are often used to support the improvement programmes (van der Wiele et al., 2006).
2) Capability development; business environments are rapidly changing nowadays. Competitive organizations should adapt to changes by developing internal and external competencies (Zollo & Winter, 2002). Capability development is important to create and preserve competitive advantage as it can improve organizational effectiveness (Hsu et al., 2009); it is the ability to learn and develop as organization (Zollo & Winter, 2002). This thesis will distinguish capability development as organizational learning and technology development. Organizational learning relates to the ability to develop new knowledge, which may guide improvement (Skerlavaj et al., 2007). Technology development encompasses process innovation based on advanced technology, such as Advanced Manufacturing Technology (AMT) (see e.g. Khazanchi et al., 2007).
3) Risk management; managing and mitigating risks is important to maximize the effort of operations improvement. Operational failure can be caused by an array of sources, like increased demand, disrupted supply of raw materials or issues regarding safety (Tang & Musa, 2011). Operations can be improved by maintenance, as successful maintenance increases the continuity of production (Ahuja & Khamba, 2008). Total productive maintenance (TPM) is a popular innovative approach to maintenance that strives to optimize equipment effectiveness, reduce or eliminate machine breakdowns and promotes maintenance practices through employee involvement (Ahuja & Khamba, 2008). A more holistic approach to risk management, especially relating to supply risk, is supply chain risk management (SCRM). In SCRM, the aim is to reduce variations or disruptions in material, product, or information flow through strategic collaboration with partners in the supply chain (Jüttner et al., 2003).
The three sub-topics of operations improvement are highly interrelated. Dependable and effective equipment is a crucial fundamental for the various improvement programmes such as lean (Sekine & Arai, 1998). The effectiveness of process improvement can only be achieved when disruptions are minimized through risk management (Kleindorfer & Saad, 2005). And, to facilitate innovative improvement, dynamic organizational capabilities in terms of organizational learning or technological developments are essential (Upton, 1996; Skerlavaj et al., 2007). Generic targets are used to measure the effectiveness of the improvement programmes. These targets include quality, dependability, speed, flexibility and cost (Ferdows & De Meyer, 1990; Slack et al., 2010).
2.3 Theoretical perspectives in OM
Table 2.3: top 10 most used theories in operation management literature (adapted from Walker et al., 2015: 1191-1192)
important to analyze the use of theories with regards to OC, as interesting gaps may come forward.
3. Methodology systematic literature review
This section elaborates on the design of the SLR methodology. Reviewing literature in a systematic way is discussed by various academics (e.g. Tranfield, Denyer and Smart, 2003). Tranfield et al. (2003) argue that through reviewing literature in a systematic way, the replicability and reliability is endorsed, which enhances rigor and reduces search bias. Above all, it increases process transparency (Denyer & Tranfield, 2009). The objective of the research method is to constitute a database of relevant literature, which will then be analyzed in a systematic way. This research method will be used to discuss the state-of-the art of research regarding OC in operations improvement and provides insights regarding underdeveloped or incomplete research areas. 3.1 Paper classification and analysis
This thesis is part of a larger study, each thesis specifying on one specific area of operations management, as mentioned in section 2.2. The distinction is made to narrow the scope of the theses, which 1) enhances the feasibility of the studies and 2) enhances the value of the managerial implications, as they are specified to the context of operations management. The SLR encompassed three main phases, which are displayed in figure 3.1: a keyword search, article shortlisting and selection and full paper classification analysis.
In the first stage, a keyword search in the SCOPUS database was performed to gather an overview of potentially relevant articles. The search was limited to the top 10 internationally respected journals regarding operations management. The journals were identified based on a combination of results from acknowledged journal rankings by Barman, Hanna, & LaForge (2001); Fry & Donohue (2013); Gorman & Kanet (2005); Holsapple & Lee-Post (2010); Meredith, Steward & Lewis (2011); Olson (2005); Petersen, Aase & Heiser (2011) and Soteriou, Hadjinicola & Patsia (1999). The following ten operations management journal were included: • International Journal of Operations and Production Management (IJOPM) • International Journal of Production Economics (IJPE) • International Journal of Production Research (IJPR) • Journal of Business Logistics (JBL) • Journal of Operations Management (JOM) • Journal of Supply Chain Management (JSCM) • Manufacturing & Service Operations Management (MSOM) • Production and Inventory Management Journal (PIMJ) • Production and Operations Management (POM) • Transport Science (TS).
The search was further limited to papers published in the period between 2000 and 2017. The keyword used was *cultur* and was ought to occur in the title, abstract or keywords. By using asterisks on both ends of the keyword and leaving out the last letter of culture, adaptations of the word culture (i.e. cultures, cultural) were also included. The initial keyword search (*cultur*) in SCOPUS resulted in a list of 300 articles.
In the second phase, exclusion criteria identified by Denyer and Tranfield (2009) were used to eliminate irrelevant articles for this study. Papers were excluded when they did not include OC as research or explanatory variable. As this thesis focuses on OC, publications related to other cultural levels (e.g. national culture) or other – for this study - irrelevant words that include ‘cultur’ (e.g. agriculture) were therefore excluded.
A few authors, like Su & Chen (2013) used other terms related to OC, such as plant culture (covering both national culture and OC); therefore they were included in the research. The total amount of papers was reduced to 91 after applying the described exclusion criteria. Four reviewers, under supervision of an experienced reviewer, executed the article selection and coding. After the initial coding, each reviewer double-checked the selected papers regarding their own operations management area. The inclusion of multiple reviewers increases the selection reliability (Tranfield et al., 2003).
4. Findings from the systematic literature review
This section provides the analysis of the papers regarding operations improvement. The first subchapter presents descriptive statistics that analyze the findings regarding trends in publication details, research methods and research contexts. The second subchapter clarifies the role of OC in the operations improvement. The findings and direction for future research will be in section 4.3.
4.1 Descriptive statistics
The articles are first analyzed based on general characteristics such as publication year and type of journal, to see whether interesting trends can be identified.
4.1.1. Publication details
4.1.2. Research method and context
Table 4.1 provides an overview of the research methods of the analyzed papers. All of the reviewed articles were based on empirical data. Primary data was used to obtain results in 20 of the 24 papers. Three papers exclusively used secondary data to obtain results. Wiengarten et al. (2015) combined the use of both primary and secondary data. The majority of the papers were quantitative studies, based on survey-based methods (16). Two papers combined multiple methods; Maull et al. (2001) combined case study research with survey research and Yauch & Steudel (2002) combined case study research with action research. Only a limited amount of papers used case study as method (5). This is in line with the findings from Marshall et al. (2016), who conclude that most studies investigate the role of OC by means of quantitative, survey-based research.
Most of the researches (18) are conducted in the manufacturing sector. Four papers combined data from various sectors (both service and manufacturing, such as IT, retail, transportation, etc.). The remaining researches are conducted in the financial service sector (1) and healthcare (1)
4.1.3 Models of OC
The majority of the articles (16) used models to operationalize or assess OC. The competing values framework (Quinn & Rohrbaugh, 1983) or adaptation of the CVF (Denison & Spreitzer, 1991) was used in seven papers. Other adopted models were the cultural framework of Schein (1992), the GLOBE model (House et al., 2004), the OCP instrument by O’ Reilly (1991) and the OC model by Hofstede (2001). See figure 4.2 for the frequency of the used models in the reviewed papers. As discussed in section 2.1, this thesis adopts CVF model to analyze the findings of the role of OC in operations improvement. The model was chosen because it is the most used model among the analyzed papers and it is one of the most influential and extensively used model regarding OC (Yu & Wu, 2009).
Figure 4.2: overview of the application of models
4.2 The role of OC in operations improvement
• Impact: how does OC influence operations improvement?
• Actions: what actions can organizations take to manage the misfit between their OC and their operations?
4.2.1 Impact: the influence of OC on OM improvement
Table 4.3: overview of the impact of culture types (CVF) on operations improvement *Operationalized using the four culture types of the CVF (Quinn & Rohrbaugh, 1983). Note: four papers were excluded due to various reasons: • Yaugh & Steudel (2002) found mixed results in different stages of the CM conversion process. • Maull et al. (2001) found mixed results among the four investigated cases. • The findings of Boyer et al. (2012) could not be converted into (one of the) CVF culture types, as they specified on the safety culture in the healthcare sector.
• Bateman & Rich (2003) used OC as single, contextual variable without specifying cultural aspects and is therefore not included in the table.
Findings regarding improvement programmes: fifteen papers studied the impact of OC on the effectiveness of improvement programmes. Although most authors agree on the importance of OC in operations improvement programmes, varying results can be identified. The impact of OC on TQM has been researched extensively. Across reviewed papers, positive impacts are identified for each of the four culture types (CVF). This implies that the findings are contradictory, as the culture types are (polar) opposites (see section 2.3). To illustrate: Prajogo & McDermott (2005) argue that all four cultural profiles have a significant impact on TQM, which is not in line with Zu et al. (2010) and Baird et al. (2011) who argue that the hierarchy culture has no significant impact on TQM implementation. The least support has been found for the hierarchical culture type, as only two papers concluded a positive impact on TQM. In lean, most support has been gathered for the clan culture. Three papers found that this culture type positively influences lean practices, although Jayamaha et al. (2014) did not find a significant positive influence. The role of the hierarchical culture seems to be insignificant, as none of the papers found an impact with regards to lean. Adhocracy and market cultures are also argued to positively influence lean practices, but other authors do not reinforce these findings. The only research regarding the impact of OC on Six Sigma practices is from by Zu et al. (2010). According their findings, three culture types: clan, adhocracy and market positively influence the effectiveness of Six Sigma. The hierarchy culture is not found to positively influence Six Sigma, which is in line with the findings regarding lean. Findings regarding risk management: two papers investigated the impact of OC on risk management in operations improvement. Fan et al. (2017) found that shared visions in a supply chain positively influences risk information sharing, analysis and assessment, which in turn positively influences operational performance. The findings of Maletic et al. (2014) suggest that quality management orientation (market culture) plays an important role in maintenance performance, which positively influences the operational performance through achieving less downtime.
Findings regarding capability development: four papers provided insights in the impact of OC on capability development. Skerlavaj et al. (2007) investigated the impact of an organizational learning culture (OLC) on organizational performance and found a positive, but indirect effect on financial performance (through non-financial performance). They argue that the main characteristics of an OLC are located within the clan and adhocracy cultures, but are present to a lesser extent in the market and hierarchy culture. Su & Chen (2013) on the other hand, did not find a significant positive impact of the adhocracy culture on organizational learning. They even suggest that plants with a collectivistic (clan) culture experience more positive effects of conceptual learning. Khazanchi et al. (2007) and Wagner et al. (2011) studied the impact of the adhocracy culture on AMT and both found positive impacts of this culture type regarding AMT process innovation. Khazanchi et al. (2007) argues that the hierarchy culture does not influence the effectiveness of AMT.
4.2.2 Action: changing OC
A disappointingly low number of papers (two) studied what actions firms can take to control for the misfit between OC and operations improvement practices. Boscari et al. (2016) stress that cultural values are important in successful implementation of lean. They suggest that these cultural values can be developed through training, sensegiving, pressure and practice adaptation. These major actions, based on organizational change literature, can help to “reduce incongruences between an adopter’s contextual conditions and the transferred knowledge” (Boscari et al., 2016: 55). In their paper, they describe how a combination of transfer mechanisms and actions can be used to improve alignment regarding context characteristics (e.g. formal audit the lean implementation). Kitazawa and Sarkis (2000) argue that cultural change supports operational activities, which can ultimately lead to a continuous source reduction program. Based on TQM literature, they specify actions that may aid in cultural change: empowerment, introduction of team-based approaches to improvement, systematic problem-solving, process-conscious approaches; open communication and feedback, cross-functional integration and continuous improvement by effective measurements.
SLRs regarding lean from Danese et al. (2017A) and Soliman & Saurin (2017). A literature review that specifically explores theoretical aspects of OC in an operations improvement context is however lacking. The SLR papers are therefore examined on the use theoretical perspectives. The theoretical contribution, argumentation, referencing to adopted theories and/or the implications that are emphasized in the articles are analyzed and summarized in table 4.4. The analysis of the articles indicated that 5 out of the 24 papers used theories in their paper with various purposes. The classification by Zorzini et al. (2015) is used to identify how the theoretical perspectives are used (see section 2.3).
4.3 Discussion and research agenda
4.3.1 Impact: how does OC influence operations improvement?
Analysis shows that academics generally agree on the fact that OC can positively influence the effectiveness of operations improvement. However, no conclusive answer to the research question could be formulated due to the lack general agreement regarding the impact of OC on improvement approaches. The potential impact of contextual variables on the relationship between OC and operations improvement could be one of the reasons to explain the lack of agreement; as has also been argued by e.g. Jayaram et al. (2010). Table 4.6 provides an overview of findings that indicate positive impact on the improvement practices/approaches. Contradiction in the findings can be observed as (polar) opposites are found to have positive influences on the improvement approaches. The clan and adhocracy culture seem to be the most positively influential when it comes to operations improvement. Both culture types were found to have a positive impact on six of the seven improvement practices. One possible explanation for this interesting finding is the flexibility structure; flexibility may enable the ability to adapt to the changing environment. The hierarchy culture does not seem to play a substantial role in operations improvement. The only positive impact that has been found for the hierarchical culture is the impact on TQM. No paper on other improvement practice or approach concluded that the hierarchy culture positively influences improvement approaches. This is an interesting finding as it contradicts with the recent findings of Paro & Gerolamo (2017), who argue that a lean culture is most related to a culture of hierarchy. Market culture is argued to have a positively influence on TPM and the improvement programmes. These relationships may be explained due to the fact that the market culture is characterized by its orientation on outcomes (Hartnell et al., 2011), which aligns with the aims of the improvement approaches.
It is worth noting that the absence of evidence regarding impact of culture types on improvement practices/approaches does not directly imply that no such relationship may exist; the analysis is based on the papers from the SLR. Also, the presence of contextual conditions should be taken into account. Findings may differ in various contexts, as variables like national cultures (Wiengarten et al., 2015) and firm sizes (Jayaram et al., 2010) may play a key role in the impact of the culture types. Understanding the context in which data is gathered is crucial for the implications to be useful. Hence, future studies should expand research regarding the interplay of OC with contextual variables related to improvement approaches. As suggested by Jayaram et al. (2010), fine-grained contingency analyses could increase robustness and consistency of results, which can strengthen the theory building. 4.3.2 Actions to overcome the misfit between OC and operations improvement
The most prominent research gap identified in the SLR was the lack of research regarding OC development through taking actions. A disappointingly low number of papers (two) were aimed at addressing actions to manage the culture-practice (mis) fit. Marshall et al. (2016) argue that descriptive studies on OC should be complemented with prescriptive studies to provide sufficient guidance for practitioners in improving operations. Hence, future studies should investigate what actions organizations can take to develop their OC. Because of the lack of operations improvement literature regarding cultural development, other streams of literature have been used to gather insights in potential actions that can develop OC. OC has been extensively researched in various management journals. Four action clusters for achieving cultural development were identified based on a cross-field analysis of the general management literature, innovation management literature, change management literature and HRM literature. Table 4.7 provides an overview of these four clusters of actions, including examples of specific actions to develop an OC. Future research should verify whether the actions are also applicable in the operations improvement context. Of course, studies should not limit themselves to verifying actions that are encompassed in these clusters, but should identify potential complementary actions too.
4.3.3 Theoretical perspectives
The analysis brought forward that only five of the 24 articles use theories to strengthen their research findings, of which only three related to OC (see section 4.2). Future studies may consider the adoption of theories from other streams of literature to increase the explanatory power of findings regarding OC. A few illustrative examples of theories that academics could use to expand their understanding of OC: 1) the Institutional theory suggests that similar organizations with regards to environment are likely to use the same organizational structures and practices. Hence, the institutional theory could be adopted to see whether a lean culture leads to adoption of employee behaviour, like taking responsibility and initiatives. Employees who are employed in non-lean environments could show variation in this specific behaviour. 2) The contingency theory can aid in understanding the role of dimensions of OC, such as achievement, collaboration, innovation and leadership. This theory states that organizations are exposed to various contingency factors at all times. Therefore, a successful universal strategy for organizations in different context does not exists (Chavez et al., 2015). This is important to consider when researching OC. 3) The theoretical lens of the Resource Based View (RBV) may be useful in addressing the sustainability of improvement programmes, as it enables to understand the synergy between practices regarding the people and the process side of improvement programmes (Danese et al., 2017B). The RBV may help to identify OC as one of the key factors in achieving successful operations improvements (Jayamaha et al., 2010; Danese et al., 2017B), which can lead to useful implications for managers that struggle to successfully implement operations improvement practices. Although the three exemplified theories may bring powerful explanatory power with regards to OC, future studies should not limit themselves to these three theories.
4.3.4. Methodological concerns
5. Methodology for empirical research
This section presents the methodology of the empirical research. The analysis of the SLR suggests that knowledge about developing OC is underdeveloped, which is in line with the findings of Marshall et al. (2016). The goal of the empirical part of this thesis is therefore to fill the most prominent research gap originating from the SLR and thereby providing managers with guidance on how to develop their OC. The empirical research will focus on the improvement programme lean. Prior research (Wicel & Kull, 2013; Jayamaha et al., 2014; Losonci et al., 2017) argued that cultural development can be achieved by applying lean tools and methods. Research regarding the transformation process of this cultural development is however lacking, as discussed in section 4.3. The aim for this thesis is therefore to examine by means of what actions development of OC can be achieved. Hence, the following research question is formulated: what actions can organizations take to create a more homogeneous corporate lean culture among global subsidiaries? Due to the complexity of the phenomenon and the inadequacy of prior research, a case study is selected as most appropriate method (Yin, 1989; Eisenhardt & Graebner, 2007). The research question is investigated by means of one single in-depth case study. Single case studies can be used to build theory by developing in-depth understanding of the constructs, taking the context into account (Dyer and Wilkins, 1991; Voss et al., 2002). Barratt et al. (2011) suggest that it is especially suitable for theorizing process data.
5.1 Research setting
This qualitative data was collected to investigate lean transfer projects in MNCs (de Jong, 2018; Kluiving, 2018). Transcripts of these interviews were initially analyzed to ensure that the interviews were usable as data source. 5.2 Data collection
Retrospective data has been gathered to answer the research question. Both primary and secondary data based on semi-structured interviews was used. Data has been triangulated to limit constraints regarding retrospective data, as historical data may be subject to inaccuracies and biases Eisenhardt (1989). Company documents were used to validate the gathered data and similar questions have been asked to the different interviewees, to further limit the constraints (Maritan & Brush, 2003). The secondary data has also been collected and verified through multiple plant visits.
5.2.1 Semi-structured interviews
Therefore, interviewees were informed about the initial findings from the analysis of the secondary data and were asked to verify whether these answers still hold. The follow-up interviews have been conducted in May 2018. Interview protocols were used to properly structure the information (Yin, 1994); see appendix 4 and 5 for the interview protocols of both the primary and secondary data. The interviews started with questions regarding general information from the subsidiary. The second part related to the development of Scania’s OC. The interview questions were semi-structured; core questions with open endings were asked to ensure that relevant questions were answered, but providing allowance for interviewees to enrich the data. Recordings of the interviews were transcribed directly after conducting them. The research process was cyclic. After each of the interviews, the interview guide was adapted to increase the depth of the interviews. Cyclic data is typical for case-study research (Danese et al., 2017B).
5.2.2 Company documents
6. Findings
This section provides the results of the empirical research. Section 6.1 provides an overview of the multi-plant lean programme at Scania. Section 6.2 describes the cultural development within Scania and its implications for Scania’s lean operations. Quotations and corresponding cases specifically mentioned and refer to the table 5.2.
6.1 Overview of the Scania Production System (SPS)
Scania has become an industry example when it comes to lean practices, as lots of organizations visit Scania plants every year to observe the lean processes (Case B). With their lean methodology, called the SPS: Scania Production System, they have developed a global XPS best practice. An XPS is defined as a company specific corporate lean programme (Danese et al., 2017B). For Scania, it is a fundamental for their operations: “SPS is the framework for how we think and how we want to work” (Case A). It is mainly focused on continuous improvement by having respect for the individual, eliminating waste and putting the customer first (Palmgren, 2017). Lean is integrated into the core of Scania’s processes: “SPS is a value based, principle driven production system that fundamentally looks at values and principles within the organization” (Case A). The SPS originated from the Toyota Production System (TPS); it was developed in cooperation with Toyota. Figure 6.1 illustrates the core values and elements of the SPS.
6.2 OC as dynamic phenomenon
Scania faces severe challenges, as its headquarters is located in Södertälje (Sweden) and its production facilities with each their own contextual conditions, are located across Europe, South-America and Asia. Logically, this has implications for the presence of different national cultures. Scania’s multi-plant lean programme SPS, which is implemented at all production facilities, helps Scania to overcome differences in plant cultures. By applying an array of standardized global SPS structures, corporate frameworks and methodologies, Scania has been trying to develop a company-wide OC, independent of plant characteristics or locations. When new subsidiaries or business units are acquired or developed, the SPS methodology aid in developing their specific plant culture to the company-wide Scania culture: “If you look at the relatively newer subsidiaries, you can see that it takes some time to develop the [Scania] culture” (Case A). It can be rather hard to express how much time it takes to develop the Scania culture because the steps are very incremental, as is pointed out by the SPS manager of the plant in Meppel: “two years ago we had an audit and they came back recently. They showed us the mirror and pointed out that our culture had developed substantially during that time” (Case B).
P1: Long-term cultural development at subsidiaries with plant-specific
characteristics can be achieved by working with standardized lean tools and methods, ultimately resulting in a shared OC among global subsidiaries.
Actions that have been identified during analysis of the interviews and company documentation have been clustered into the four main categories that were found in other streams of literature (see section 4.3). Cluster 1: organizational structure, Cluster 2: organizational behaviour, Cluster 3: organizational support mechanisms & systems, Cluster 4: information & communication. As mentioned, and pointed out by the SPS manager of Meppel, cultural development is hard to directly observe. Compelling evidence for relationships between specific actions and OC development is therefore not present. Complementary results of cultural development through actions (clusters) are discussed in sections section 6.2.1 – 6.2.4, unless specifically mentioned.
6.2.1 Organizational structure
Scania has made various changes in their organizational structure to enable cultural development. Table 6.1 provides an overview of actions that were identified in the interviews, which aided in creating a more homogenous culture among the various plants.
The most commonly discussed action was the empowerment of employees. Employees play a central role in the SPS, as they are vital in operations improvement: “empowering helps to give employees flexibility and responsibility and provides them with the opportunity to be part of improving their own working situation” (Case E2). Swedish, Dutch and Finnish subsidiaries often have to cope with resistance when implementing new SPS practices. “The Swedish culture is a consensus culture, everybody should be involved in a decision” (Case E1), “People in countries like the Netherlands are more critical and want to give practices their own twist” (Case I), the Finnish people are afraid that standardization will reveal how they consume their time during the day, silent resistance could be noticed (Case K). By empowering employees and providing them with flexibility and responsibility, resistance to the implementation of new lean practices was reduced, which in turn contributed to OC development: “by making workfloor employees responsible for their processes, an improvement culture is shaped” (Case A).
Teamwork, especially in multidisciplinary teams with high responsibilities has been stimulated lately: “every Tuesday, we stop our production line for 30 minutes, to work with a specific multi-disciplinary improvement group” (Case J). Standardization is one of the key elements of the SPS and is used in all facets of the production process: “we use the same SPS framework and principles, like 5S, Kaizen, etc. in each plant around the world”; “the standardized tools help us to encourage a lean culture” (Case G1). In general, Scania is organized in a decentralized manner, but several changes have been made to structure the SPS implementation: “We now have a centralized SPS office in Sweden” (Case G1). Other changes that were observed was the addition of a management layer due to strong growth and the layout of offices, to stimulate an open communication culture, which has a positive impact of sharing the corporate culture: “If you have a corporate culture, then it is really helpful if all the plants have good contact with each other. If they know each other, it is easier to create a corporate culture” (Case D). The identified actions lead to the following proposition.
6.2.2 Organizational behaviour
Scania has tried to change the organizational behaviour in all layers of the organization. Table 6.2 provides an overview of actions that were identified in the interviews, which aided in creating a more homogenous culture among the various plants.
P2B: Cultural development resulting in a more homogeneous corporate lean culture among subsidiaries can be achieved by taking actions related to the organizational behaviour.
6.2.3 Organizational support mechanisms and systems
Besides training, increased management support regarding SPS implementation has helped to successfully integrate the SPS culture, especially helping the newer subsidiaries to align this plant culture with more mature subsidiaries. “The global SPS office is supporting the new plant in Lahti to build up a SPS function within the Lahti plant, so we are training the local SPS manager and the local SPS team members to create a SPS roadmap and to train them in the tools and methods” (Case D).
To enable sharing best practices and training employees, developed IT support has been crucial. Nowadays, Scania is using an array of IT systems/programs that simplify and stimulate communication between local SPS offices or with global SPS office: “among others, we use the agora channel, SPS intranet page to share and transfer practices, it simplifies contacting each other, without writing a formal e-mail” (Case E). This open communication culture helps to shape the corporate culture (see quotation and reasoning in section 6.2.1). The final action regarding support mechanisms and systems that was identified during the interviews was the recruitment policy. Employing the right people has become more of a priority now SPS is implemented: “recently, the programme about diversity was important to reduce the difference in OC between plants. This had to do with selecting the right people for the jobs and how to get diversity in terms of gender and competences” (Case B). Developing culture is a long-term process: as is pointed out by Case C: “we should have the maximum amount of fixed contracts, as culture is a travel. You need to be sure about the people you employ”. The identified actions lead to the following proposition:
P2C: Cultural development resulting in a more homogeneous corporate lean culture among subsidiaries can be achieved by taking actions related to the organizational support mechanisms and systems.
6.2.4 Information and communication
The importance of communication between the various production facilities has been stressed throughout the majority of the interviews. Since the implementation of the SPS, technological developments enabled Scania to make advancements in their information and communication systems. Table 6.4 provides an overview of actions that were identified in the interviews, which aided in creating a more homogenous culture among the various plants. Communicating and sharing knowledge is essential for a corporate lean programme as is pointed out during the interviews: “if you like to have a corporate culture, then it is really helpful if all different plants have good contact with each other. If they [local SPS managers] know each other, then it is really easy to create a corporate culture” (Case D). Developments in transfer mechanisms made it easier for the subsidiaries of Scania to exchange information: “the OC has changed, communication is better than in the past as it now is easier to communicate with Europe and share our way of working, best practices, and so on” (Case L). The global SPS office manages the information sharing between subsidiaries, especially focused on presenting best practices: “we have a monthly meeting with the global SPS office and other local SPS offices, in which we share ideas regarding SPS around the world” (Case L).
P2D: Cultural development resulting in a more homogeneous corporate lean culture among subsidiaries can be achieved by taking actions related to information & communication. The way of communicating at Scania has been calibrated to improve the effectiveness of the communication structure: “we started with a blank sheet and calibrated the way of communicating and the way we work with SPS. The toolkit is linked to the values that we want in the process” (Case B). Case C argues that [Name of global SPS manager] “did a very good job the last two to three years, we really improved our communication, which enabled us exchange SPS practices, this has influenced our plant culture”. The identified actions lead to the following proposition:
7. Discussion
This section reflects on the findings of the empirical research. The first sub-section highlights the contribution to literature. Section 7.2 aims to provide implications for practitioners. Several limitations and suggestions for future research are provided in section 7.3.
7.1 Theoretical contributions
Literature on OC is divided. Many authors view the business phenomenon as a static concept, which is present in every organization, but can hardly be modified (e.g. Bateman & Rich, 2003; Prajogo & McDermott, 2005; Maletic et al., 2015;). Fewer academics consider OC as dynamic and argue that cultural development can be achieved by taking actions (e.g. Khazanchi et al., 2007; Jayamaha et al., 2014; Boscari et al., 2016). Netland and Sanchez (2014) suggest that company specific production systems, such as SPS, can aid in establishing a corporate culture by forming aligned strategies and creating a uniform, standardized production language. This thesis provides supports to the dynamic perspective on OC and findings of Netland & Sanchez (2014); Scania, an industry example for many organizations when it comes to lean manufacturing, illustrates that it is possible to develop and improve an OC. Scania put effort in actively developing their corporate lean culture by taking actions regarding the organizational structure, organizational behaviour, organizational support mechanisms & systems and information and communication, guided by the use of corporate lean frameworks and methodologies. The way that Scania uses their lean practices to shape the improvement culture is in line with the argumentation of Ferdows (2006), who suggests that creating a powerful mindset in every production unit should be the overall of corporate lean programmes. By having the same mindset focused on continuous improvement, lean practices will be embraced to a greater extent, which has positive implications for the success of the programme (Bortolotti et al., 2015).
they reinforce the findings of Jensen & Szulanski (2004) and Wallace (2004), who argue that that lean practices should be adapted to plant specific situations to increase the successfulness of the implementation (Jensen & Szulanski, 2004; Wallace, 2004). The four clusters of actions that have been identified action in section 4.3 were all found have a positive impact on cultural development at Scania. This suggests that the actions found in other streams of literature may be valid action to achieve cultural development in the operations improvement context too.
7.2 Managerial implications
7.3 Limitations and future research
Several limitations of this thesis should be noted. The key limitation of this thesis is the questionable generalizability of the results, as only one (‘best-in-class’) case has been studied. Single case studies provide clear benefits, such as the ability to get deeper insights regarding the phenomenon (Voss et al., 2002). The findings, especially in the prescriptive empirical part of this thesis, may however be limited due to the context of Scania. Hence, future research could follow a similar methodology and test whether the findings hold in other organizations and/or industries. Also, future research could investigate if the findings are generalizable for other improvement programmes, such as TQM or Six Sigma. The inclusion of secondary data enriched the data set, as it enabled to include 15 interviews; using secondary data may have limited the level of detail of the interviewees’ answers. The data is however validated through conducting interviews with the same interviewees again. One employee of every subsidiary was interviewed due to time constraints. Including interviews with employees from other layers in the organization could provide another fruitful perspective on the subject. Hence, future research could use informants from various levels of the organization.
8. Overall conclusions of the thesis
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