Master Thesis Supply Chain Management-
Research proposal
University of Groningen
The influence of organizational culture on supply chain
resilience - an organizational view
Maarten Jan Mesu - s2730278
m.j.mesu@student.rug.nl
Paterswoldseweg 288-52, 9727 BW Groningen
+31629404875
Supervisor University of Groningen: Dr. K. Scholten
Co-assessor University of Groningen: prof. dr. ir. J.C. H.
Wortmann
January 28, 2019
Word count: 1183
Acknowledgements: I would like to thank dr. Kirstin Scholten for providing the useful
feedback and comments on my thesis which gave me new insights and direction to finalize my research proposal. On top of that I want to thank her for the time and effort she putted into my thesis. As last I want to thank W. van der Meulen, from the
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Abstract
Today’s turbulent environment and increased complexity of supply chains makes that companies are more vulnerable to supply chain disruptions than ever before. By enhancing supply chain resilience companies will be able to prepare for, respond to and recover from disruptions within their supply chain. Theory has highlighted the importance of an
appropriate culture to enhance resilience. However, it is still not clear how organizational culture can influence resilience. By means of exploratory research this paper explores the relationship between culture and resilience. Concluding, cultural dimensions such as involvement, consistency, adaptability and mission either directly or indirectly influence resilience via several mechanisms. Mechanisms such as risk awareness and knowledge, internal integration and commitment were shown to increase flexibility, velocity, visibility and collaboration. Therefore, an appropriate organizational culture can help to enhance
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Contents
Abstract 2
1. Introduction 4
2. Theoretical background 5
2.1 Introducing supply chain resilience (SCRES) ...5
2.2 Flexibility ...6
2.3 Velocity ...7
2.4 Visibility ...7
2.5 Collaboration ...8
3. Organizational culture (OC) 9 3.1 Introducing organizational culture ...9
3.2 Involvement ...14 3.3 Consistency ...15 3.4 Adaptability ...16 3.5 Mission ...16 4. Conceptual model 17 5. Methodology 18 5.1 Research design ...18 5.2 Setting ...18 5.3 Data collection ...19 5.6 Data analysis...21 6. Findings 24 6.1 Descriptive findings ...24
6.2 How organizational culture influences supply chain resilience ...26
6.2.1 Flexiblity 28 6.2.2 Velocity 31 6.2.3 Visibility 34 7. Discussion 35 7.1 How organizational culture influences supply chain resilience ...36
8. Conclusion 40 8.1 Managerial implications ...40
8.2 Limitations and future ...41
Reference list 41
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1. Introduction
In today’s turbulent environment, evident in daily-news about cyber-attacks and natural disasters, companies are more exposed to risks in supply chains than ever before (Knemeyer et al., 2009). In 2017, 65% of companies faced significant disruptions in their supply chain, which ultimately had an economic impact of over €1 million euros in 23% of the cases (Business Continuity Institute, 2017). Because it is clear that supply chain disruptions can have severe negative performance consequences (Hendricks & Singhal, 2005), both literature and practice have highlighted the importance of supply chain resilience (SCRES) for organizations (Ambulkar et al., 2015). SCRES namely aims to develop ‘’the adaptive capability to prepare for, respond to and recover from disruptions’’ (Ponomarov & Holcomb, 2009, p. 131). In order to develop this adaptive capability, organizations should embrace a supply chain risk management culture (Christopher & Peck, 2004). This culture can make the difference between success and failure in dealing with disruptions (Sheffi, 2005) and is therefore very important (Business Continuity Institute, 2017). Yet, insights in the dynamics and development of a supply chain risk management culture to enhance resilience remain scarce (Kamalahmadi & Parast, 2016).
Organizational culture (OC) already has been shown as an important concept in other management practices (e.g. Hofstede, 1981; Schein, 1984) and effective supply chain management organizational culture (Braunscheidel et al., 2010). Yet, no consensus about a comprehensive definition exists within literature (Jarnagin & Slocum, 2007). However, organizational culture often relates to ‘‘basic assumptions, values and artifacts an organization has developed to cope
with problems regarding external and internal integration’’ (Schein, 1984, p.3). An appropriate
organizational culture can increase effectiveness of firms on several performance aspects (e.g. sales growth) (Denison et al., 2006). More specifically, the following aspects are found to influence organizational effectiveness: involvement (i.e. autonomy of - and well-developed employees), consistency (i.e. well-accepted shared values and good coordination/integration between departments), adaptability (i.e. appropriately deal with the environment) and mission (i.e. shared definition of the firm’s purpose) (Denison et al., 2006).
5 risks (Blackhurst et al., 2011). However, literature does not provide a comprehensive view on the cultural aspects that an organizational culture should consist of, to enhance SCRES. On top of that, no in-depth empirical evidence in the dynamics and development of organizational culture have been provided; it remains unclear how organizations should shape their organizational culture to create resilience within their supply chains. To give substance to these theoretical and managerial gaps the aim of this research is to explore how organizational culture influences supply chain
resilience.
By investigating this research question via multiple exploratory interviews at supply chain firms this study makes several contributions. First, while many authors have developed conceptual models regarding SCRES, empirical evidence around the topic remains scarce (Scholten & Schilder, 2015). This study is the first to provide understanding, to both theory and practice. about a comprehensive and holistic view on the topic of organizational culture within a resilience context. Hereby, this study provides details on the new elements in this relationship. Moreover, the relationship between culture and the resilience constructs will be explained to explain the phenomenon of organizational culture within a resilience context. Ultimately, the found cultural activities and the interaction between these aspects adds important insights for both future research and managers, as it creates understanding about how firms could manage their resilience culture.
The paper is structured as follows. First, literature regarding the concept of SCRES resilience and organizational culture will be reviewed. Subsequently, the research design will be explained: which is followed by the findings and a discussion of them regarding literature to date. The paper will end with a conclusion, implications for theory and practice and suggestions for future research.
2. Theoretical background
2.1 Introducing supply chain resilience (SCRES)
6 manage the threat of such a disruption by building SCRES within their supply chains (Ambulkar et al., 2015; Scholten & Schilder, 2015). Although the importance of resilience is clear, extensive literature reviews (Tukamuhabwa et al., 2015; Kamalahmadi & Parast, 2016) show a lack of consensus about a definition of resilience (e.g. Christopher & Peck, 2004). Regarding this research, a commonly cited (Kamalahmadi & Parast, 2016) and comprehensive (Tukamuhabwa, et al., 2015) definition within literature followed:
‘’Supply chain resilience is the adaptive capability of companies to reduce the impact of such
negative consequences by designing supply chains to incorporate event readiness, provide an efficient and effective response, and be capable of recovering to their original state’’ (Ponomarov
& Holcomb, 2009). From this definition becomes clear that resilience includes the capacity of organizations to be proactive (i.e. anticipate on disruptions), responsive (i.e. respond quickly) and reactive (i.e. recover to original state) (Lenginck-Hall & Beck, 2005; Sheffi & Rice, 2005). Even though SCRES has been clearly defined, the underlying constructs of supply chain resilience differ within theory (Scholten et al., 2014). Theory namely derived the constructs from different research levels, such as a detailed resource level (Sheffi, 2005) or a system-wide level (Christopher & Peck, 2004). However, from abovementioned definition of SCRES the adaptive capability perspective comes forward. In line with this perspective the generally accepted (Johnson et al., 2013) framework of Jüttner & Maklan (2011) is followed. This framework was derived from extensive literature research and capture supply chain resilience as ‘flexibility, velocity, visibility
and collaboration’ (Jüttner & Maklan, 2011). More interestingly, the framework is derived from
a capability perspective, which is especially important for future supply chains because this is based on integrating and coordinating resources among functional areas (Jüttner & Maklan, 2011). The paper will follow by discussing the constructs of supply chain resilience more detailed.
2.2 Flexibility
Flexibility can be defined as ‘the ability of firms to adapt to environmental changes with as less
7 workforce (Johnson et al., 2013) to increase flexibility. Literature highlights redundancy – i.e. ‘a duplication of capacity to continue business after a disruption’ – as a separate enabler of SCRES (e.g. Sheffi & Rice, 2005). However, this research follows Jüttner & Maklan (2011) that redundancy rather contributes to flexibility than seeing it as a separate resilience capability. To summarize, flexibility can help to anticipate on disruptions (e.g. delivery schedules to minimize the risk of shortages (Urciuoli et al., 2014)), appropriately react to strategies (i.e. deal with change) and recover from disruptions (i.e. redundant capacity (Jüttner & Maklan, 2011)).
2.3 Velocity
Velocity can be defined as ‘distance over time’ (Christopher & Peck, 2004) or ‘the pace of flexible
adaptation to determine the recovery speed from disruptions’ (Carvalho et al., 2012). Hence, it allows firms to respond quickly to supply chain disruptions (Scholten & Schilder, 2015). More specifically, velocity contributes to resilience by providing indications about how often risk events due to disruptions happen, how fast the disruption is discovered and subsequently how fast the organization recovers from this disruption (Jüttner & Maklan, 2011). Within literature velocity is also seen as an antecedent of flexibility, because flexibility is also concerned with solving supply chain disruptions with minimum time (e.g. Christopher et al., 2005). However, within this research velocity is seen as construct that helps with an efficient (Stevenson & Spring, 2007) rather than an
effective response and recovery (i.e. flexibility) to disruptions (Skipper & Hanna, 2009). More
specifically, velocity focuses on the pace of flexible adaptations, while flexibility focuses on the reconfigurations of possible supply chain states (Carvalho et al., 2012). To summarize, velocity can help firms to reduce: the occurrence of disruptions (i.e. anticipation), the amount and severance of losses (i.e. reaction) (Jüttner & Maklan, 2011) and the time it takes to discover and recover from disruptions (Manuj & Mentzer, 2008).
2.4 Visibility
Visibility is ‘the ability of organizations to screen their supply chains from initial supplier to end
8 captured as ‘agility’ (e.g. Faisal et al., 2006) or seen as antecedent of SCRES (Brandon-Jones et al., 2014) or agility (Kamalahmadi & Parast, 2016). However, this research follows Jüttner & Maklan (2011) who view visibility separately to explore the relationship on a more detailed level. To summarize, visibility helps to identify potential threats (i.e. anticipate) and is a needed condition to respond and recover from disruptions (Wieland & Wallenberg, 2013).
2.5 Collaboration
Collaboration is the ‘capability of two or more firms to work effectively together and form
long-term relationships towards common goals’ (Cao et al., 2010). Because supply chain resilience is a network-wide concept (Scholten & Schilder, 2015), organizations need to collaborate with supply chain partners to adopt flexibility, velocity and visibility (Juttner & Maklan, 2011). Namely, supply chain collaboration is evident in more information sharing, reduced cycle times, open communication (Daugerthy et al., 2006) and joint investments (Scholten & Schilder, 2015). In line with this, the findings of Scholten & Schilder (2015) are followed, who suggested that collaboration is an antecedent of the other supply chain constructs. To summarize, collaboration will help to develop joint capabilities, a consecutive planning and more real-time information exchange (Whipple & Russell, 2007) and thus helps to prepare for, respond to and recover from disruptions (Scholten & Schilder, 2015).
9 Whereas current literature has highlighted the importance of the four abovementioned resilience constructs, organizations should not underestimate the importance of an appropriate
organizational culture to enhance resilience (Sheffi & Rice, 2005) and increase effectiveness at
supply chain management (Braunscheidel et al., 2010). Namely, an appropriate culture shapes the attitude of employees regarding information sharing (i.e. visibility/collaboration) and risk-taking (Mandal, 2017). Additionally, it improves trust and commitment among employees and towards supply chain partners (Schilke & Cook, 2014). Also, within a resilience context authors have mentioned cultural related aspects such as empowering employees to identify potential disruptions (creating visibility) and subsequently act upon this disruption (enhance velocity) (Sheffi, 2005) to be important for resilience. Hence, organizational culture is mostly seen as a separate construct or capability to enhance resilience (Kamalahmadi & Parast, 2016). However, a holistic view of all important cultural aspects which an organizations could possess to enhance resilience is not available. On top of that, literature does not provide any empirical in-depth insight in the elements and relationship between organizational culture and SCRES. For instance, Kamalahmadi & Parast (2016) argued that a lack of insight in the dynamics and development of organizational culture in a resilience context exists. To fill these theoretical and managerial gaps this paper will follow by exploring the concept of organizational culture and make possible linkages with the concept of resilience.
3. Organizational culture (OC)
3.1 Introducing organizational culture
10 overarching (Adler & Jelinek, 1986) definition of Schein (1984, p.3): ‘’the pattern of basic
assumptions, values and artifacts that a given group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration, which have worked well enough to be considered valid, and therefore, to be taught to new members as the correct way to perceived, think and feel in relation to those problems’’. From this definition
becomes clear that organizational culture can help to deal with environmental changes (i.e. external adaptation) such as the bankruptcy of a supplier or natural disasters (i.e. supply chain disruptions). This makes the definition especially appropriate for research within a resilience context.
Although the definition of organizational culture is applicable within a resilience context, it remains difficult to conceptualize and subsequently empirical investigate the concept. Within literature a conceptualization of OC also lacks consensus (Ashkanasy et al., 2000; Mandal, 2017). Because the purpose of this study is not to solve this consensus, it rather follows the conceptualization of Denison and colleagues (i.e. Denison & Mishra, 1995; Denison et al., 2006). This conceptualization is most appropriate for the purpose of this study for several reasons. First, the model is distracted from research on the influence of culture on an organizations’ effectiveness on several performance aspects (e.g. Denison et al., 2004). Hence, this model can create understanding about how differences on the cultural aspects in the model might influence the organizations’ effectiveness at SCRES. Additionally, the model lays emphasis on contradictions organizations might face when they try to deal with problems regarding external adaptation (Denison et al., 2004). In line with the aim of this research the model therefore can give insights in the dynamics and development of an appropriate supply chain risk management culture to influence resilience. While the applicability of the model is clear, further explanation of the model is needed.
The model consists of four cultural aspects: involvement, consistency, adaptability and mission (Denison et al., 2006). These cultural aspects are summarized in table 3.1, from which becomes clear that each cultural traits consists of a few underlying components. One of these components needs clarification. More specifically, in the original model one component of adaptability is
customer focus (Denison et al., 2006). However, this research is conducted in a network-wide
12 Cultural traits (derived from: Denison and colleagues (i.a. Denison & Mishra, 1995; Denison et al., 2006) Definition (source: Zheng et al., 2010, p. 765)
Underlying component: definition (source: Denison et al., 2006, p. 6-9, but adapted for the purpose of this study)
Possible linkages with SCRES (derived from: literature research within the area of SCRES)
Involvement ‘The level of participation by an organization’s members in decision making’
Empowerment: ‘Individuals have the authority, initiative, and ability to manage their own work. This creates a sense of ownership and responsibility toward the organization’
- Empower front-line employees in case of disruption (Rice & Caniato, 2003; Sheffi, 2005)
Team orientation: ‘Value is placed on working cooperatively toward common goals for which all employees feel mutually accountable’
- Joint efforts by all employees (Mandal, 2017)
Capability development: ‘The organization continually invests in the development of employees’ skills in order to deal with
environmental changes (Costanza et al., 2015)
- Education & training about risks (Rice & Caniato, 2003; Sheffi, 2005; Sheffi & Rice, 2005; Blackhurst et al., 2011);
- Cross-training to enhance workforce flexibility (Pettit et al., 2010)
- Scenario exercise (Seville et al., 2006). Consistency ‘The extent to
which beliefs, values and expectations are held consistently by members’
Core values: ‘Members of the organization share a set of values which create a sense of identity and a clear set of expectations’
- Make risk the concern for everyone in organization (Christopher & Peck, 2004)
- Shared set and beliefs about SCRES (Rice & Caniato, 2003);
- Make risk assessment part of the formal decision making process (Christopher & Peck, 2004).
Agreement: ‘Members of the organization are able to reach agreement on critical issues. This includes both the underlying level of agreement and the ability to reconcile differences when they occur’
- N.A.
Coordination & integration: ‘Different functions and units of the organization are able to work together well to achieve common goals. Organizational boundaries do not interfere with getting work done.’
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Table 3.1: Conceptualization of organizational culture, definitions and possible linkages with supply chain resilience
Adaptability ‘The degree to which an organization has the ability to alter behaviour, structures and systems in order to deal with environmental changes’
Creating change: ‘The extent to which an organization is able to: meet environmental changes, appropriately read this environment and react on current trends or anticipate on future trends’.
- Innovation (Dobni, 2008; Golgeci & Ponomarov, 2013)
External focus (composed from: Costanza et al., 2015, p. 365): ‘The organization pays attention to the external environment and
appropriately values signals from this environment. On top of that, the organization proactively seeks for internal and external problems and anticipate on these.’
- Risk assessment (Christopher & Peck, 2004; Scholten et al., 2014);
- Risk mitigation plans/business continuity plans (Seville et al., 2006; Blackhurst et al., 2011; Mandal, 2017) Organizational learning: ‘The organization receives, translates and
interprets signals from the environment into opportunities for encouraging innovation, gaining knowledge, and developing capabilities.
Learning/benchmarking (Ponomarov & Holcomb, 2009; Scholten et al., 2014)
Mission ‘The existence of a shared definition of the
organization’s purpose’
Goals & objectives: ‘A clear set of goals and objectives can be linked to the mission, vision, and strategy, and provide everyone with a clear direction in their work’
-
Strategic direction and intent: ‘Clear strategic intentions convey the organization’s purpose and make it clear how everyone can contribute and make their mark on the industry’
- Leaders to review company policies/strategies to determine impact on risk profile (Wilding, 2013) Vision: ‘The organization has a shared view of a desired future state.
It embodies core values and captures the hearts and minds of the organization’s people, while providing guidance and direction’
- Strong vision from top management about cultural change (Christopher & Peck, 2004);
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3.2 Involvement
Involvement refers to ‘the degree of participation of employees in decision-making’ (Zheng et
al., 2010). In table 3.2 can be seen that in cultures where organizations focus on the cultural aspect involvement the following components are evident: empowering employees, establish
organizations around teams (i.e. human orientation) and continually invest in employees’ skills
(i.e. capability development) (Buckingham & Coffman, 1999). The definitions of each of these underlying components are shown in table 3.2. Involvement allows firms to increase employee commitment, give them a feeling that they can participate in decision-making (Denison et al., 2006) and increase employee satisfaction and quality of work (Zamanou & Glaser, 1994). To contribute to involvement, organizations can empower employees to create a sense of responsibility and authority among them towards the organizations (Denison et al., 2006). Moreover, it creates a culture in which organizational members feel that their ideas and suggestions are valued (Zamanou & Glaser, 1994). Taking into account the resilience context, empowering front-lines employees might help to take action and initiative based on facts on the ground (Sheffi & Rice, 2005) and thus deal with disruptions faster. However, organizations should balance empowerment with accountability (Pettit et al., 2010), because employees seem to be highly reliant on their managers when they need to make decisions (Forrester, 2000). Besides empowerment, organizations should place value on human orientation to contribute to
involvement (Denison et al., 2006). This teamwork is essential for success of joint efforts
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3.3 Consistency
Consistency refers to ‘the extent to which beliefs, values and expectations remain consistent
among all employees of an organization’ (Zheng et al., 2010). In table 3.2 can be seen that in a culture where organizations focus on consistency the following components are evident: core
values, agreement on issues within the organization and different departments to work effectively together (Denison et al., 2006). Consistency is mainly important to provide
employees with guidance and direction in their work and make decisions based on consensual support rather than on explicit rules and regulation (Denison et al., 2006). To contribute to
consistency, organizations can have a set of core values in place to shape expectations among
employees (Treacy & Wiersma, 1995). To shape these expectations, organizations could communicate the values via their leaders (Pettit et al., 2010). Moreover, core values such as openness, loyalty, honesty, participation or learning (Van Marrewijk & Werre, 2003) can influence the behavior of employees within the organization. Taking into account a resilience context, such a core value might be making risk assessment part of the formal decision making process (Christopher & Peck, 2004). However, while core values might provide internal stability, it might also conflicts with quick and flexible decisions needed during a supply chain disruption (Seville et al., 2016). While core values might provide direction, still differences in point of view might exist between employees. Therefore, organizations should be able to find
agreement on critical issues to create consistency. As such, organizations are able to find
consensual support on issues, rather than relying on explicit rules and regulations (Denison et al., 2016). In addition to agreement, organizations need to integrate different departments within their organization to increase consistency (Denison et al., 2006). This coordination &
integration can create a culture where employees trust each other and work effectively together
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3.4 Adaptability
Adaptability refers to ‘the degree to which organizations have the ability to alter behaviour,
structures and systems in order to deal with environmental changes’ (Zheng et al., 2010). From table 3.1 becomes clear that creating change, external focus and organizational learning can help to create this ability. While the latter shows consistency to create advantages, it might also negatively influence the adaptability of an organization (Denison et al., 2006). This
adaptability is, however, very important for organizations to translate environmental changes
into valuable action (Denison et al., 2006) and thus might especially be important to deal with disruptions. Organizations can contribute to adaptability by creating change ways. These ways are, for instance, allowing employees to explore creative solutions to problems (Dr Dreu & West, 2001) and stimulate employees to think in different ways (Sutton, 2002). Regarding the resilience context, this might result in innovation to meet customer demands (Dobni, 2008). However, organizations should not only create ways to make the organization: rather they should also pay attention to their environment (i.e. external focus). As earlier explained, this research focus on external focus (Costanza et al., 2015) rather than on customer focus from the original model.External focus will help firms to read and interpret signals from their environment and take action on internal and external problems (Costanza et al., 2015). More specifically, this external focus creates a culture in which organizations place value on anticipative thinking (Costanza et al., 2015). Literature to date has shown that such anticipative thinking create success because they are able to anticipate on environmental change (Fey & Denison, 2003). On the contrary, reactive thinking leads to a non-adaptive culture and thus less effectiveness on performance. Taking into account the resilience context, anticipative thinking might help to reduce the impact of disruptions in advance. The last contributor to adaptability is organizational learning (Denison et al., 2006). Adaptable organizations namely learn from their mistakes, but also use signals from their environment to develop capabilities and increase knowledge (Denison et al., 2006). This adaptability creates a culture in which employees create knowledge and share this among each other with can create new valuable opportunities for the future. In a resilience context, this might be reflected in benchmarking and learning from past disruptions (Ponomarov & Holcomb, 2009) which can create experience and knowledge to prepare better for future events.
3.5 Mission
Mission refers to ‘the existence of a shared definition of the organization’s purpose’ (Zheng et
al., 2010). Organizations can contribute to a mission via vision, strategic direction & intent and
17 action points to employees and give the organizations a social role within their environment (Denison et al., 2006). As such, this mission makes an organizations able to create short- and long-term commitment among employees (Denison et al., 2006). To create this mission, organizations should firstly define a vision about a desired future state (Mintzberg, 1989). With this vision organizations can be able to shape current behavior to create this future state (Denison et al., 2006). Regarding resilience, literature does not show insight in a particular
vision. While vision is reflected in a desired future state, strategic direction & intent refers to
the actions to achieve this future state (Denison et al., 2006). For example, if organizations want to be the most innovative company within their industry (i.e. vision), their strategy might be focused on many R&D investments or an extensive focus on their environment. Regarding resilience, creating a fully resilient supply chain might be the vision of a company. To create this resilient supply chain, a strategic direction might be to focus on more than one supplier. On a lower organizational level goals & objectives might be important, which contribute to the
strategy and vision (Denison et al., 2006). Examples are a certain rate of innovation or produced
products that should be achieved by employees. To summarize, a mission provides direction in how an organization acts, makes choices and decisions and how employees should carry out their jobs (Denison et al., 2006). More interestingly, a mission might therefore by reflected in the degree of involvement or coordination & integration. For instance, when organizations place value on innovation, they probably also let employees come up with new ideas (i.e.
involvement) and decentralize decision-making (i.e. coordination & integration).
4. Conceptual model
It has become clear that organizational culture is important to increase performance within firms (Denison et al., 2006). Also within a resilience context the importance of an appropriate culture has been highlighted (Christopher & Peck, 2004), yet there is a lack of empirical research on the concept. Theory does not provide empirical evidence about how organizations can shape a culture to influence the constructs of SCRES. However, the model of Denison et al. (2006) creates insights in the fact that the cultural aspects involvement, consistency, adaptability and
mission all can influence effectiveness of organizations on several aspects. In line with this is
18 2006). Even though, how these issues regarding culture can be solved remains still unclear. This research fill these managerial and theoretical gaps by identifying new elements and relationships between organizational culture (here as per: Denison et al., 2006) and SCRES (here as per: Jüttner & Maklan, 2011). By conducting exploratory interviews it will be investigated how organizational culture influences supply chain resilience, which is depicted in figure 4.1 below.
5. Methodology
5.1 Research design
The aim of this research is to explore how organizational culture influences supply chain
resilience: hence, a qualitative research approach was used. This research approach is especially
appropriate for the purpose of this study, because a lack of insights in the dynamics and development of an appropriate risk management culture exists (Kamalahmadi & Parast, 2016). Namely, qualitative research can help to understand a phenomenon it’s real-life setting (Yin, 2015) and thus creates the possibility to develop theory by identifying new elements and relationships between culture and resilience (Ridder, 2017). More specifically, exploratory interviews have been conducted. Hereby, the ability is created to generate insights in little-understood phenomena (i.e. culture in a resilience context) and discover important categories of meaning (Marshall, 2014). Hence, this study will be able to identify patterns and important categories of organizational culture to influence resilience. Accordingly, the unit of analysis is the culture of an organization during a disruption.
5.2 Setting
The study was conducted at four companies in the food processing and one company in the critical infrastructure industry. The second industry was added because of interview cancellations and time restrictions. However, this industry might be especially interesting as disruptions within this industry can have such a huge impact that their culture should be as
Organizational culture:
Involvement Consistency Adaptability Mission
Supply chain resilience:
Collaboration
Flexibility Velocity Visibility
19 optimal as possible. Following, both industries are chosen because it is expected that the companies are highly vulnerable to disruptions and that they therefore actively pay attention to cultural aspects to deal with these disruptions. In advance to the study, all organizations confirmed the importance of soft processes (i.e. cultural aspects) to successfully deal with disruptions. Moreover, companies with different sizes, missions and role within their sector were chosen. This is purposefully done, because it is expected that these factors might create differences in the cultural aspects and therefore help to understand the influence of these aspects on resilience with more in-depth insights. For instance, the firm size might influence the organizational structures within an organization (i.e. flat or hierarchical) and performance (Dalton et al., 1980) on enhancing supply chain resilience.
5.3 Data collection
20 Before conducting the interviews all informants were personally informed about the purpose of the research via a consent form (i.e. interview procedures), interview guide and interview protocol, which were sent by e-mail. These documents can be found in appendix A and help to ensure reliability (Ellram, 1995). The interview protocol was composed based on literature research and started with some general questions regarding the company and the informants’ role. Subsequently the informants were asked to recall two supply chain disruptions and describe these events in detail. Subsequently was asked how the company anticipated, responded and recovered from this disruption. Additionally, questions grounded in theory related to cultural aspects were asked to get insights in the researched phenomenon. All questions were open-ended and during the interview the researcher used probing to get more in-depth insights in the dynamics and development of culture.
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5.6 Data analysis
To analyse the data all interviews were transcribed. Subsequently the data was analysed following the three reduction steps of Miles & Huberman (1994): reducing, displaying and concluding. The first step was to reduce all transcribed data to quotes or sentences that are important to answer the research question (first order codes). Subsequently these first order quotes were analysed from an organizational culture and resilience capability perspective. More specifically, the quotes which were derived by reducing the data were sorted into (sub-) categories (Miles & Huberman, 1994). These (sub-) categories were deductively derived from the descriptions of organizational culture and SCRES as mentioned in the theoretical background (see table 2.1 and 3.1). Subsequently the first-order codes were assigned to descriptive second-order categories such as ‘front-line employee participation’, ‘scenario exercises’, ‘screening environment’ and ‘internal communication’. With these descriptive categories it was made possible to get insights in the specific activities organizations conduct to contribute to the cultural components from the model of Denison et al., 2006). After the sentences were assigned to these second-order categories, the data has been explored regarding SCRES. This actually means that a link with the different resilience constructs was made via several deductively descriptive of the constructs. For flexibility this was reflected in terms such as ‘alternative locations’ or ‘adjust the planning system’, for velocity these terms were ‘quick solutions’ and ‘time losses’. Regarding visibility ‘information availability’ and ‘quality checks’ came forward and collaboration was reflected in ‘good relationships’, ‘joint understanding’ and ‘joint investments’. However, because this research approaches collaboration as an antecedent of the other three constructs a link between these elements was also made.
After coding the data, two separate analyses were conducted regarding organizational culture and the resilience constructs to look how the cultural activities influence the resilience constructs. Hereby it was possible to determine third-order codes, which can be identified as the mechanism underlying the relation between organizational culture and resilience (see table
5.3 for the coding tree). The analysis was in the beginning concentrated at the individual
22 table 5.3 an in-depth insight is created on how this study progressed from reducing the data to second-order quotes and subsequently to mechanisms.
Table 5.3: Excerpt of coding tree
Link to resilience construct
Data reduction (first-order quotes) Second order codes Third order codes (mechanism)
Flexibility ‘We stimulate participative-thinking. This creates a
culture in which employees come up with own ideas for improvement. For instance, recently we bought a back-up production line because an employee said we had big problems with our first line.’ (A2)
Empowerment Risk awareness Out of the box thinking
‘You need to invest in employees who have a lack of knowledge about risks.’ (A1)
Capability development
Risk knowledge
‘We focus on openness, trust and honesty in our organization to find an alternative option’ (E1). We focus on an open working climate in which
information is shared rapidly to find the best solution’ (A1)
Core values No direct link (via empowerment)
‘The planning system makes it able to communicate Among departments. As such we can share
experience and find a good alternative’ (E1), ‘Internal cooperation & communication is very important to find the best option’ (C1)
Coordination & integration
Information availability
Our products have a very short shelf life. Therefore we can only deliver these products in Europe, but our logistics is very good planned. However, we also have some products which can be frozen, these are delivered to Asia.’ (B)
Creating change Creativity
‘We screen weather influences to anticipate on bad weather and prevent quality issues’ (C2), ‘We continuously screen the weather forecast. This focus guides me in my work: I am more aware of possible risks. As such, when we expect bad weather we are able to make planning adjustment and pick up harmed areas first to prevent quality issues in supply’ (C2)
External focus Proactive attitude
Risk awareness
‘Because we noted that we made many human faults which caused quality issues, we build our production lines very automated, which makes us able to deliver the products very fast. This prevents the shifting of our production to production locations around the world and in case of a disruption such you have everything nearby’ (B)
Organizational learning
Improvement attitude
‘Our employees are the key to success’ (A1),
‘Employee commitment is key to solve the disruption and find the best option’ (D)
Strategic direction & intent
23
‘To get where we want all employees are needed’ (C), ‘To keep our whole supply chain safe our employees are the key’ (E1)
Vision No direct link (via capability
development)
(Via
collaboration)
‘Our employees are assigned to a specific area and maintain a good relationship. As such we jointly find a good alternative’ (E1)
Empowerment Openness towards partners
Velocity ‘We assign some employees get a task during the
disruption, this increases efficiency’ (A2) ‘Our employees worked day and night to solve it’ (C2)
Empowerment Risk awareness Commitment
‘With our training we inform our employees about possible internal and external risks, makes that they are better aware of what might happen within the process and subsequently act upon those risks’ (C1)
Capability development
Risk knowledge
‘In this way you create commitment among involved people, which will increase performance in dealing with the disruption.’ (C1)
‘We place high emphasis on openness within our organization: all employees should be open towards each other. As such, in case of a disruption you are able to share information and experiences better’ (E1)
Core values
No direct link (via coordination & integration) Commitment (via empowerment) Information availability
‘Internally we are able to share information very fast. If we face a disruption in our environment, this makes us able to assess the risk and find an
alternative solution faster’. (E2)
Coordination & integration
Information availability
We saw that we might could face problems with ice on the rivers: no boat could sail. Therefore we already searched for an external party with an ice breaker: this will spare time in case it actually happens’ (C1)
External focus Proactive attitude
By visiting these suppliers we are able to see what is going on and share information with these parties. Sometimes we find valuable insights in how other organizations deal with disruptions: this can we use ourselves to make our process more efficient.’ (A2)
Organizational learning
Improvement attitude
‘I think the most essential part in this is that you show your customer that you do everything you have in power that you are willing to solve the problem and give them the feeling that they are king. This will result in understanding among the customers and will give you more time to solve the problem.’ (A1)
Strategic direction & intent (via core values -> empowerment)
Openness towards partners
‘To achieve our goals in security, participative thinking and input from our employees is very important’ (E1)
Vision No direct link (via empowerment)
(Via
collaboration)
‘We conduct scenario exercises with supply chain partners to create understanding among employees in each other’s way of working. When a real
Capability development
24
6. Findings
The data analysis provides valuate insights in how the cultural aspects (i.e. involvement,
consistency, adaptability and mission) influence the SCRES constructs. By conducting
exploratory interviews, specific details on how organizational culture influences supply chain
resilience were found. However, before explaining these details into depth, an explanation
about the descriptive findings is needed to create understanding about the further findings.
6.1 Descriptive findings
This section first will explain the descriptive findings regarding the overall culture of the company in relation to the cultural aspects. To get an overview, these overall cultural aspects are summarized in table 6.1 below.
disruption occurs, we are thus able to anticipate better on each other and don’t loss time.’ (C1)
Visibility ‘Quality checks make that we are able to screen
quality and quantity of products in all steps of the chain’ (C2)
Empowerment Direct link
‘All our departments are able to collaborate and share information in a good way. This made that our departments are very well-integrated. This makes that all departments have a good understanding and overview about everything that happens within our chain’ (C1)
Coordination & integration
Information availability
‘We have a team of employees which continuously screens our environment, in our sector you need to be prepared for all possible scenarios’ (E2)
External focus Proactive risk attitude
(Via
collaboration)
‘For our company our supply chain partners are very important to add value to our supply chain.
Therefore we focus on a trustworthiness, honesty and loyalty in our contact with them. This is for instance translated in the intensive contact our field
employees maintain with these partners. Ultimately this leads to more information sharing and a better quality of information’ (C2)
25
Table 6.1: Overview descriptive findings
Company No. of employees Total employees Decision making Integration between departments Attitude regarding risks Important notes
A 150 13.000 Decentralized High Proactive Part of multinational company B 25 350 Centralized Medium Reactive Specialized/stand-alone unit
within organization C 10-15 600 Decentralized High Proactive Headquarter of company D 200 >5000 Centralized Low Reactive Part of bigger company E 20 1400 Decentralized N.A. Proactive Specialized/stand-alone unit
within organization Table 6.1 shows some overall cultural aspects of the company regarding involvement,
consistency, adaptability and mission. These aspects will be explained into depth below,
because they were found to create differences in the findings.
From table 6.1 differences can be seen in decision-making. Decision-making is at company A/C/E decentralized, while this is at company B and D more centralized. This influences the degree of involvement. The data shows that company A/C/E let their employees take initiative, stimulate participative thinking and let them come up with own ideas regarding supply chain risks. The culture within this organization is therefore characterized by more informal control systems instead of particular rules and regulations to provide employees with guidance in their work. On the other hand, company B and D show more hierarchy within their organization to provide employees with guidance in their work. Therefore they have more formal routines and procedures in place.
The culture is also reflected in the consistency of the organization. While organizations A//C/E place emphasis on core values such as job ownership, meaningful jobs and commitment, company B/D focuses more on high productivity, hard work and good performance. This type of culture might be explained by the type of workforce: company B/D mainly works with employees from a deployment agency, while the other companies have employees with long-term contracts. However, all companies highlighted the importance of core values such as trust,
openness, loyalty and honesty within their organizations as well as regarding their supply chain
26 Within table 6.2 also the cultural aspect attitude regarding risks is shown. While company A/C and E actively seek for problems within and outside their organizations to prepare for disruptions, company B and D are more reactive because ‘disruptions will happen anyway’. This thinking creates a difference in how organizations approach risks. More specifically, company A heavily invests in skills of employees and a continuity plan, while company D only finds the most appropriate solution when a disruption actually happens.
Now the differences between the companies in their overall culture are clear, the next section will explore the identified elements and mechanisms in the relation between organizational culture and SCRES.
6.2 How organizational culture influences supply chain resilience
Table 6.2 show how the cultural dimensions (i.e. involvement, consistency, adaptability and
mission) (left column), via several mechanisms (boxes), influence the constructs of supply chain
27 Cultural aspects Underlying components cultural traits
Flexibility (6.2.1) Velocity (6.2.2) Visibility (6.2.3)
Invol ve m en t Empowerment
Risk awareness (A/B/C);
‘Out-of-the-box thinking’ (A/C/E) (Via collaboration):
Openness towards partners (B/C/E)
Risk awareness (A/C/D/E);
Employee commitment (A, B, C, E); ‘Out-of-the-box thinking’ (A/C/E)
(Also via collaboration):
Openness towards partners (C/E)
Capability development
Risk awareness (A/C/E);
Risk knowledge (A/C//E) Risk awareness (A/C/E); Employee commitment (A, B, C, E); Risk knowledge (all organizations) (Via collaboration):
Joint understanding (A/C/E)
C onsi st enc y Core values Indirect:
Risk awareness (via empowerment)
Employee commitment (via empowerment) Internal integration (via coordination &
integration)
Indirect:
Risk awareness (via empowerment/cap. development);
Employee commitment (via empowerment/cap. development)
Information availability (via coordination & integration)
Indirect:
Openness towards partners (C/E) Internal integration (via coordination &
integration) (C/E)
Coordination & integration
Information availability (all organizations) Information availability (all organizations) (Also via collaboration):
Information availability (A/B/C/E)
A dapt ab ili ty Creating change Creativity (B) External focus
Risk awareness (A/B/C/E);
(Proactive/reactive) risk attitude (all organizations)
Risk awareness (A/B/C/E);
(Proactive/reactive) risk attitude (all organizations)
Risk awareness (A/B/C/E)
Organization al learning
Improvement attitude (A/C/E) Improvement attitude (A/C/E)
Mi
ssi
on
Vision Indirect:
Risk awareness (via core values -> empowerment/capability development) Information availability (via core values->
coordination & integration) (A/C/E)
Indirect:
Risk awareness (via core values ->
empowerment/capability development) (A/C/E) Information availability (via core values->
coordination & integration) (A/C/E)
Indirect:
Openness towards partners (via core values -> empowerment)
Information availability (via core values-> coordination & integration) (A/C/E) Strategic
direction & intent
28
6.2.1 Flexiblity
Table 6.2 shows the cultural aspects found to influence flexibility. As can be seen in table 6.2, both indirect and direct linkages between the cultural aspects and flexibility have been found. Before explaining the findings into more detail a short introduction about the findings will be given. Firstly, in table 6.2 can be seen that cultures in which a strong mission and core values are present, organizations involve people via empowerment and capability development. This
involvement of employees creates risk awareness, out-of-the box thinking and risk knowledge
among employees, which makes organizations able to increase flexibility. Moreover, core
values were shown to influence coordination & integration and subsequently consistency
within their organizations. This consistency is shown to influence flexibility via information availability. In table 6.2 can also be seen that adaptability, enabled by creating change,
external focus and organizational learning, results in creativity, risk awareness,
proactive/reactive attitude and an improvement attitude. It is shown that all these mechanisms can help organizations to influence flexibility. Following, above-mentioned relationships between respectively involvement, consistency, adaptability and flexibility, will be explained alongside the cultural aspects into detail below.
The findings show organizations A/C/E to have a mission, enabled by strategic direction and intent and vision, in which employees play a key role in the organization. Company C stated: ‘our employees are key to successes, therefore we give them the chance to improve themselves
and involve them in the decisions made’ and A mentioned: ‘to achieve our goals, participative thinking and input from our employees is very important’. This shared definition (i.e. mission)
creates guidance in the culture of the companies. It is namely shown that the emphasis on employees (from the mission) creates a culture in which core values such as ‘openness, trust and honesty towards colleagues’, ‘passion and commitment for the job’ and ‘independency’ are of big importance (A/C/E). Following these values company E states: ‘we have a very open
culture, which means that we place high emphasis on input and participation of all our employees. On top of that we invest heavily in the employees’ skills’. Hence in such cultures
companies empower employees and develop the capabilities of these employees.
To empower employees company A explains: ‘we stimulate participative thinking,
employees input via new ideas, involve employees in decision-making and give them a specific task or job in the prevention and solvation of disruptions’. This makes the organizations able
29 increase flexibility (A/C/E). ‘We let employees come up with new ideas and involve them
regarding supply chain risks. Therefore they are more aware of risks: recently we faced quality issues at a few suppliers of us. Our field employees identified these issues at an early stage and therefore we were able to effectively adjust the planning system to balance supply and demand
(C).’ Moreover, company A explains: ‘by involving our employees we give them space to come
up with own ideas or improvement points in our process. Therefore they think ‘further’ than their normal jobs or task. For instance, a few years ago an employee mentioned that one machine broke-down quite often and thus we invest in a back-up production line’. These
effective planning adjustments and back-up production lines make the firm better able to adapt to environmental changes and thus increase flexibility.
Moreover, in cultures were employees are involved the companies also focused on the
development of employees capabilities, evident in ‘unannounced exercises and internal/external
training programs’, regarding supply chain risks (A/C/E). These investments in the skills of employees create risk awareness and risk knowledge among the workforce. Hereby the organizations were shown to increase flexibility: ‘With our in-take training programs we create
a multi-skilled workforce which makes us able to shift employees in case of a disruption to another function. Moreover, it provides our employees with knowledge and experience regarding disruptions, creating the skills to analyse a disruption and find an alternative (company E)’. On the other hand, company B and D have cultures in which they less focus on involvement via empowerment and capability development. This might be explained by the
type of workforce, because both companies ‘mainly work with employees from a deployment
agency’. Therefore these companies mentioned a big turnover in personnel in which they are ‘not willing to invest’. However, the data does not give indications about a difference in
flexibility in comparison to company A/C/E.
More interestingly, it is shown that cultures in which organizations focus on involvement can influence collaboration and subsequently flexibility. ‘We use certain employees to maintain a
good relationship with our partners via intensive contact. This creates an open character among partners about our organization. As such, we have good relationships with partners
30 Besides involvement, table 6.2 shows the relation between consistency and flexibility. It was earlier explained that core values such as ‘openness, honesty and trust’ result in an open working climate: ‘we place high value on openness, trust and honesty in internal collaboration
and cooperation (E)’. This open culture leads to increased information availability: ‘our working climate is very open. This creates a culture in which our different departments easily communicate and collaborate together via for instance small talks or informal meetings (C)’
and subsequently flexibility: ‘when a disruption occurs which matters our whole supply chain,
the inter-departmental communication and collaboration makes that we have more information about the disruption available. With this information we are able to assess the risk better and thus we know which alternative solution fits best.’ The better information availability makes
that the organization is able to find a better alternative and increase flexibility. On the other hand, the culture at company B and D is less open, but more characterized by formalization: ‘to
work effectively we have created formalized procedures and routines to make collaboration and communication between departments more efficient. For instance, we invested in a very-well integrated planning system (company D)’. This difference in culture might be explained
by the size of the company, which needs more formalization. However, it is shown that such a culture also can increase flexibility: ‘we plan moments in the week in which we discuss
everything, as such we are able to change our planning system if we see quality or quantity issues at suppliers. The planning system is build such that every user, from office to transport, can see all made changes and therefore we are able to anticipate and respond to such issues
(company D).’ To summarize, both informal and formal cultures are able to influence
coordination & integration and subsequently increase flexibility.
Additionally, next to involvement and consistency table 6.2 shows adaptability, enabled by
creating change, external focus and organizational learning, to influence flexibility. One
manager (company B) explains: ‘we have created a culture in which we continuously improve
our products and look for alternative markets. This creativity among our employees have recently created a new market with less strict demands. As such, if we face quality issues, we are able to continue delivering by shifting to this market.’ This alternative market gives
31 and a proactive attitude on an organizational level. For instance, manager one from company C explains: ‘we continuously focus on the environment, such as the weather. This focus guides
employees in their work: they are aware of possible risks. When we expect bad weather, we are therefore able to make planning adjustments and harvest harmed areas first to prevent quality issues in supply’. Such environmental focus is highlighted by all companies to be important to
influence flexibility. Moreover, the findings show that a culture in which employees seek for internal and external problems – i.e. external focus – a proactive attitude is created within the organization. This mechanism is evident in ‘internal risk assessment’ (A/C) and ‘worst-case scenario thinking’ (A/E): ‘we continuously look for internal and external problems within our
supply chain (company E)’. As such, these organizations were able to increase flexibility: ‘we want to prevent future disruptions and therefore we already invested in back-up machines
(company E)’. On the other hand, company B and D have a culture in which risks are seen as
‘inevitable events which you cannot prevent for’. It has been shown that this difference leads to
less flexibility, because these organizations did not have any alternative locations or options available and recently faced big supply disruptions which costed a lot of money.
Finally, cultures in which organizations put focus on organizational learning were shown to influence flexibility, because they created an attitude of learning. Key informant one from company A explains: ‘because we visit network meetings, other locations within and outside
our sector and exchange information with other production locations we are able to learn from them. As such, we are able to identify possible improvement points regarding risks. For instance, a competitor of us recently faced an electricity break-down and lost revenues. Therefore we bought a back-up generator.’ More interestingly, all organizations highlighted
the importance of learning from past disruptions. Such past disruptions made that the organizations invested in ‘back-up production lines (A/C)’ and ‘back-up machines (E)’, so that they were able to increase flexibility and continue delivering.
6.2.2 Velocity
32 were shown to influence collaboration and subsequently velocity via joint understanding. Table
6.2 also shows that consistency, enabled by coordination & integration, influences (via
collaboration) velocity via information availability As last, adaptability, enabled by external
focus and organizational learning, create a culture with mechanisms such as risk awareness, a
proactive attitude and an improvement attitude. This has been shown to influence flexibility. Now an overview is given, the above-mentioned relationship will be explained in the same order more detailed.
Table 6.2 shows that in a culture where organizations focus on involvement they are able to create risk awareness, risk knowledge and employee commitment within their workforce. One manager (E) explains: ‘our employees work very independently. This job ownership makes that
they can make quick decisions when they identify potential risk. As such we are able to respond quickly’. Such empowerment to create risk awareness is confirmed by both companies A and
C to increase velocity. On the contrary, company D states: ‘decision-making is mainly
centralized. I have to admit that we lose time in case of a disruption, because employees are not aware of the risks and need to ask permission at a higher organizational layer.’ Hence, in
cultures where organizations focus less on empowerment velocity might decrease.
This increased risk awareness is also shown to be created in cultures where organizations focus on ‘scenario exercises’ (A/C/E) or ‘internal, external or in-take training (all organizations’ (i.e. capability development). For instance, manager one from company A states: ‘with our training we inform our employees about possible internal and external risks, this
makes that they are better aware of what might happen within the process and subsequently act upon those risks’. By providing this investments organizations were able to develop a culture
in which employees have ‘experience with risks (C)’ and ‘information availability’ (A/C/E) and thus are aware of risks. As explained this leads to faster decision-making after risks are identified and thus higher velocity.
On top of that, the latter mentioned forms of capability development are shown to create another mechanism: ‘with our training we provide our employees with all possible information
about possible quality instances. Because they have this knowledge they are able to identify quality issues and have a quick response directly available (company C).’ In cultures where
