Global Journal of Editor-in-Chief

Sushil
Flexible Systems Management Professor of Strategic, Flexible Systems &
Technology Management
giftjourn@l Department of Management Studies
Indian Institute of Technology Delhi
ISSN 0972-2696 Vishwakarma Bhawan, Shaheed Jeet Singh
Marg, New Delhi-110016
(Quarterly Journal of Global Institute of e-mail : [email protected]
Flexible Systems Management) Tel : 91-11-26591167, Fax : 91-11-26862620

Editorial Board
Rakesh Kumar Agrawal H. Paul Kathryn E. Stecke Co-Editor-in-Chief
School of Management Professor The University of Texas at Dallas Subhash Wadhwa
University of Western Sydney School of Management
School of Management Principal
Sydney, Australia Richardson, USA
Asian Institute of Technology Indira Gandhi Institute of Technology, Delhi
John Brocklesby Editor-in-Chief and Professor
Pathumthani, Thailand
Victoria Management School Intl. Journal of Flexible Mfg. Systems Department of Mechanical Engineering
Victoria University of Wellington Indian Institute of Technology Delhi
Wellington, New Zealand Daniel Rouach Regional Editor-North America Region
Professor Ushio Sumita
Ali Dastmalchian School of Management Professor Jatinder N.D. (Jeet) Gupta
Dean, Faculty of Business Institute of Policy & Eminent Scholar and Chairperson
University of Victoria ESCP-EAP, Paris, France
Planning Science Department of Accounting &
Victoria, Canada Information Systems
University of Tsukuba
Kulwant Singh College of Administrative Science
M.C. Jackson Japan
Department of The University of Alabama in Huntsville, USA
Director of the Business School
Associate Editor, Decision Sciences
University of Hull, UK Management & Organization
Editor-in-Chief, Faculty of Business Admn. Henk W. Volberda Associate Editor
Systems Research and Professor of Strategic Management & Edward Stohr
National University of Singapore
Behavioral Science Business Policy Associate Dean for Research and Academics
Rotterdam School of Management Wesley J Howe School of Technology
Nanua Singh Erasmus University, The Netherlands Management, Stevens Institute of Technology,
Anthony Michell Professor and Director of Integrated New Jersey, USA
Visiting Prof. (Strategy & Global Product Development Laboratory,
Associate Editor (Production)
Mgt.) Wayne State University, USA
Abid Haleem
School of Public Policy and
Jamia Millia Islamia, New Delhi
Management, KDI, Korea

Managing Committee
Prof. D. P. Agrawal Prof. Prem Vrat Prof. S. S. Yadav
Member UPSC Vice Chanceller, Head, Department of Manage-
Shahjahan Road, New Delhi UP Technical University ment Studies
Editor-in-Chief Lucknow IIT Delhi, New Delhi
Global Journal of Editor-in-Chief Editor-in-Chief
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 Global Journal of
Flexible Systems Management
giftjourn@l
ISSN 0972-2696 Vol. 7 Nos. 1 & 2, Jan - Jun 2006

Contents

Editorial iii
Research Papers

! Technology Transfer Induced Technological Dependency in an

Electric Power Plant: Effects on Efficiency, Reliability and Flexibility 1
Thumanoon Paukatong and H. Paul

! Impact of Information Technology on Organizational Effectiveness:

A Conceptual Framework Incorporating Organizational Flexibility 15
Surinder Batra

! Impact of Supply Chain Collaboration on Customer Service

Level and Working Capital 27
S. Wadhwa, A. Kanda, K.S. Bhoon and Bibhushan

! Role of Organizational Flexibility for Corporate Entrepreneurship:

Case Study of FedEx Corporation 37
B.R. Bhardwaj and K. Momaya

! Management of Change – A Comprehensive Review 45

R.K.Garg and T. P. Singh
 giftjourn@l
Global Journal of
Editorial Flexible Systems Management
2006, Vol. 7, Nos. 1 & 2, pp iii

Anti-Inertia –The Pro-change Tendency

The inertia present in all The concept of ‘inertia’ for the physical bodies is aptly reflected by Newton’s first law of
bodies connotes resistance motion; according to which “a body continues to be in a state of rest or uniform motion until and
to change
unless it is acted upon by an external force”.The inertia is inherent in all physical bodies which
connotes resistance to change; it is also exhibited by organic entities such as plants, animals,
human beings and organizations. It is a force which gives stability to any system.
Organic entities are also However, the organic entities are not only governed by the law of inertia, but as living
governed by law of anti-
entities they also exhibit anti-inertial or pro-change tendencies. A counter law, which may be called
inertia or pro-change
tendency as law of anti-inertia also acts upon the organic entities; according to which, “an organic body
tends to change its current state by applying pro-change internal forces”. Such a pro-change
tendency is visible in the processes of growth, renewal and reproduction, which are uniquely
present in living organic entities.
The pro-change tendency For example, a seed grows into a big tree, an infant turns into a fully grown adult, and an
is visible in processes of
growth, renewal and
entrepreneurial organization may grow into a global corporation such as Microsoft, Sony etc. These
reproduction organic entities also renew on a continuous basis to remain vital, e.g. plants shed old leaves to be
replaced by new ones, the cells are renewed, the organizations learn and innovate, and so on.
The anti-inertial forces act The anti-inertial forces act at various levels such as physical or operational, intellectual,
at physical, intellectual, emotional, psychological etc. Rarely any employee loves a monotonous job and normally looks for
emotional and
psychological levels
some change over time. Similarly, a stagnant compensation is highly demotivating. Each one strives
to go for the fulfillment of higher level needs. Organizations cannot remain alive in a static framework
and work towards creation of new product enhancements, processes, procedures, rules etc. on an
ongoing basis.
The same set of activities The same kind of activities may result into both the inertia and anti inertia in the systems.
may develop inertia and Usually, the negative outcome of any activity would develop anti-inertia as a force to develop pro-
anti-inertia simultaneously
change tendency. For example, repeatability of task develops habit which one finds easy to perform
and doesn’t want to change. At the same time, it may also result in monotony which propels one to
go for change. Another example can be taken of established systems and procedures as inertia but
delays and red tapism leads to anti- inertia. Establishing a brand with a given set of customer value
leads to brand recall and loyalty, but it may result into brand stagnation, which will propel for
change.
The leadership should Thus, the organizations exhibit resistance to change (inertia) and tendency to change
synthesize inertia and anti- (anti-inertia) at the same time. The balance of inertial and anti–inertial forces would result either into
inertia to balance stability
and dynamism an organization with dominant inertia (or continuity and stability) or into an organization with more
of anti–inertia (or change and dynamism). In order to take the best advantage of continuity as well
as change, the leadership should synthesize inertia and anti-inertia appropriately, as one provides
stability to the organization and the other creates dynamism.

Sushil
Editor-in-Chief

© 2006, Global Institute of

Flexible Systems Management
 Global Journal of
Flexible Systems Management
giftjourn@l Guidelines for Authors
Aim and organization. Based on the recommendations of the referees, the editor
The journal is intended to share concepts, researches and practical then decides whether the paper should be accepted as it is, to be revised or
experiences to enable the organizations to become more flexible (adaptive, rejected. The reviewing time will normally be 10-12 weeks.
responsive, and agile) at the level of strategy, structure, systems, people, and Manuscript Requirements
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 1
giftjourn@l
Global Journal of
Case Study Flexible Systems Management
2006, Vol. 7, Nos. 1&2, pp 1-14

Technology Transfer Induced Technological Dependency in an

Electric Power Plant: Effects on Efficiency, Reliability and
Flexibility
Thumanoon Paukatong
School of Management, Asian Institute of Technology,
P.O. Box 4, Klong Luang, Pathumthani, 12120, Thailand
E-mail: [email protected]
H. Paul
School of Management, Asian Institute of Technology,
P.O. Box 4, Klong Luang, Pathumthani, 12120, Thailand
E-mail: [email protected]
Abstract
Most electric power generation technologies in developing countries are acquired through technology transfer from suppliers in
advanced developed countries. Despite providing large benefits, such technology transfer could potentially perpetuate and
deepen technological dependency between a technology transferee, the buyer, and a technology transferor, the seller. The big
challenge of a technology transfer exercise is to satisfy the need for foreign technology while taking measures to minimize
current and future technological dependency. The main objective of this paper is to examine the technology transfer reinforced
technological dependency in an electric power plant based on a technological dependency assessment (TDA) model developed
for this purpose. The model consists of four manifest components of technological dependency: technology, utilization, knowledge,
and acquisition dependencies. Each manifest component has a number of elements and each element is assessed based on a
number of indicators. In addition the model incorporates one attitude dependency component with four elements embedded in
the four respective manifest components: technology attitude, utilization attitude, knowledge attitude and acquisition attitude
dependencies. The elements and their assessment indicators are identified through literature review and expert opinions, and
are confirmed by practioners.
This paper presents an analysis of the most critical technological dependency, using the Bang Pakong Power Plant (BPPP) in
Thailand as a case study. The results of assessment in the plant indicate that lack of flexibility for adaptation and lack of
sufficient information are causes of the plant’s poor performance. The paper suggests how BPPP could reduce the levels of
technology transfer reinforced technology dependency to prevent unfavorable long-term effects in the effective and efficient
operation of the power plant.

Keywords: electric power plants; electric power generation technology; technology transfer; technological
capability; technology dependency

Introduction minimize technological dependency. After costs and

benefits, technical and financial risks caused by unproven
The importance of reliable electrical power supplies in
advanced technology have become an important third factor
fostering national economic development is well established;
concerned in technology transfer projects (Tate, 1988). Risk
low reliability of electricity supplies could hinder the progress
corresponding to technological dependency on a transferor
of a country’s economy. The reliability of electric power
of an advanced technology is one of them. Unforeseen
generation technology generally affects the reliability of
technical problems could occur with unproven advanced
electrical power supplies.
technology leading to increase in cost of production.
In developing countries, very often, the electric power Technological dependency, therefore, could reduce a firm’s
generation technology has to be imported from industrially competitiveness resulting in deterioration of business
advanced developed countries. A firm in developing country performance and reduction in its earnings.
often tends to be dependent on developed country firms for
The main objective of this paper is to present an analysis
technology. The acquisition of advanced technology through
of technology transfer reinforced technological dependency
technology transfer generally brings large benefits to buyers
in an electric power plant in Thailand. The analysis is based
(Ortolani, 2005). However, it could also potentially
on a technological dependency assessment (TDA) model that
perpetuate and deepen the technological dependency of
incorporates three dependencies, resource, capability, and
developing country firms on developed country firms. The
attitude. This model is a refinement of the assessment model
big challenge of a technology transfer exercise is to satisfy
developed by Paukatong et al. (2003), which defines
the need for foreign know-how while taking measures to
technological dependency as comprising acquisition,
© 2006, Global Institute of
Flexible Systems Management
2 Thumanoon Paukatong and H. Paul
technical, utilization and knowledge dependency dependency relationship between Siemens AG and small and
components. The paper is based on the premise that medium enterprises (SMEs) has shown favorable results
understanding the causes of technological dependency could through diverse and intra-regional cooperation in innovation
help to identify the weaknesses of a firm and eliminate these rather than posing threats to participating firms (Sternberg
in order to enhance competitiveness and prevent unfavorable and Tamasy, 1999). However, often, it is very difficult to
long-term effects on profitability and growth. sustain mutual balance due to unaffordable huge investments
by smaller firms (Ennis, 1989; Hooper, 1992).
Technological Dependency
In asymmetric dependency, technology flow is
Firms in the developing and less developed countries usually
characterized by a one-way relationship. In such a situation,
rely on technology transfer as an important means for
usually one firm buys technology from another without any
acquiring technology (Mambula, 2002; Schatz, 1996). Due
involvement in the development of that technology. This
to insufficient capability, a firm typically depends on outside
situation frequently arises when the purchasing firm does not
help to solve any technical problems in implementation and
have the capability to develop the technology it needs and
utilization of the transferred technology. Technological
has to rely on external sources for its core technological
dependency resulting from technology transfer has historically
requirements. Under asymmetric dependency, imported
been a major concern (Moxon and Fagafi-nejad, 1977). Some
technology is adopted as it is without any modification,
literature defines technological dependency only as reliance
adaptation, or integration with in-house technology, as the
on the imported technology (Fabayo, 1996). Technology
capability of the transferee is very limited. Technology is
transfer is the sole mechanism for acquiring the needed
bought to substitute rather than support in-house
technology. In-house technology development does not exist.
technological development. Such forms of dependency
Others refer to the interrelationships among the technical
could lead to domination and exploitation by the
development of different technologies (Chiesa et al., 1999),
technologically superior transferor firm.
where success of the development of a technology depends
on the availability of one or more other technologies. Yet, In this paper, only asymmetric dependency at the firm
others have focused on level is considered.
the effects of the Technological
decision-making The big challenge of a technology transfer exercise is to dependency, in this
process in technology satisfy the need for foreign technology while taking paper, is defined as the
acquisition or on measures to minimize current and future technological reliance of a technology
innovation (Hakansson, transferee firm, on a
1987). After a decision
dependency. This paper presents an analysis of technology technology transferor
has been made to transfer reinforced technological dependency in an electric firm for the acquisition
acquire some power plant in Thailand and its effects on efficiency, and use of the
technology, a firm has reliability and flexibility. transferred technology.
to stay with the It is the inadequate
acquired technology for a considerable period. However, to capability and knowledge of the transferee that prevent it
be considered as contributing to dependency, an acquired from mastering the transferred technology, thus reinforcing
technology has to be critical to the continued profitability its dependency on the transferor. While insufficient
of the firm (Mabry, 1999). capability in operations may impede the effective utilization
of the transferred technology, insufficient knowledge about
There are two types of technological dependency,
the technology itself could limit the ability to transact the
“mutual” and “asymmetric” (Fabayo, 1996). In the case of
purchase and identify sources of funding thereby increasing
mutual dependency, one firm buys technology from another
the firm’s reliance on consultants. This limitation in
firm while pursuing its own technological developments. The
knowledge could also indirectly reduce the number of
imported technology is aimed at complementing local
potential technologies and transferors available to the firm.
technology resources for further development. Two
Moreover, it could hinder the technology development and
conditions are often found in this case. First, the imported
diffusion processes of a firm and lead to perpetual reliance
technology is not usually used as it is; it is modified and
on the transfer of technology as the only means of
integrated together with an already self-developed
acquisition.
technological system. Second, mutual dependency enhances
technological interdependence between the transferee and the The technological dependency could also be of two
transferor. Both transferor and transferee could make more types: manifest and attitudinal. The manifest technological
efficient allocation of their resources for technology dependencies limit the transferee firm’s ability to use the
development to achieve the lowest overall cost and highest technology it already has effectively without help from the
returns on investment. The mutual type of dependency is transferor or some other party. The attitude dependencies
usually not a problem, and may be seen as contributing to are, in contrast, inherent in the transferee firm, which limit
faster, better and higher technology development in a firm. the firm from venturing out to source new technologies from
One good example is the successful history of technology current or new sources. More discussions on these two types
improvement among firms in Munich, Germany. The mutual of dependencies are presented in the following section.

giftjourn@l
 Technology Transfer Induced Technological Dependency in an Electric Power Plant 3
A Model for the Assessment of Technological De- • Problems related to the acquisition of spare parts:
pendency When a firm has the capability to undertake effective
“planned” maintenance, there is adequate time to look
As mentioned above, technological dependency may occur for alternative suppliers and negotiate prices. However,
when a firm has insufficient capability for acquisition, if there is only one source of spare parts (often the
operation and maintenance (including acquisition of its transferor) dependency is total. In the case of
spare parts) of a technology. Moreover, the dependency may “unplanned” maintenance, time is of essence. To reduce
resurface when the time comes for the replacement of the downtime priority is given to suppliers whose lead-time
transferred technology. Thus, technological dependency could is shortest and as a consequence dependency is
exist throughout the life cycle of the technology used in the reinforced unless the firm has the capability to undertake
production system of a firm. The nature and causes of some total productive maintenance and has sound spare parts
of the important elements of dependency are summarized inventory management practices.
below.
• Problems related to technology replacement: Rapid
• Problems with technology acquisition: Insufficient technological change requires that a firm upgrade or
acquisition capability could limit the ability of a firm to replace its existing technology so that it can continue
identify suitable technologies, their sources (transferors) to enhance customer value. When making replacement
and the appropriate mechanisms for transfer. A firm may decisions, problems outlined above under acquisition
look only at a limited number of technologies due to of new technology are likely to be encountered unless
inadequate technology scanning skills. Prospective the transferee firm has upgraded its acquisitive
transferors may be confined to only a few large well- capability during the period of first purchase and
known firms. replacement.
Inevitably, such
firms wield There are two types of technological dependency, “mutual” To assess technological
tremendous and “asymmetric”; under the asymmetric dependency, dependency, Barlas et
bargaining power imported technology is adopted as it is without any al. (2001) have
and may insist on suggested that the
modification, adaptation or integration with in-house measures related to
the use of transfer
mechanisms that technology, as the capability of the transferee is very contribution made by
they favor. Such limited. outsiders to the total
constraints may profit of the firm, and
well restrict the scope of the acquisition and hinder contacts with outsiders
development of transferee technological capability. in search of advice, assistance, and information could be
used. High values of such measures indicate higher
• Problems with plant and equipment: Problems could capability dependency. Another measure suggested by
arise here due to the transferred hardware not performing Brockhoff and Chakrabarti (1997) refers to the “external
to specifications or due to the transferor not providing dependence ratio”. A high external dependency ratio occurs
sufficient information for the effective utilization and when the firm spends relatively large amounts on acquiring
maintenance of the hardware. Rectifying such problems external knowledge and technology. A high value of this
requires considerable commitment and support from the measure would indicate high resource dependency.
transferor. Such a situation, while prolonging the However, no previous studies explored attitude dependency,
duration of the technology transfer exercise, also which stems from the feeling among decision makers in the
reinforces dependency. transferor firm that outside help is required in the transfer
• Problems related to operations: Inadequate transferee of technology.
capability for the proper and effective operation of the The TDA model used here focuses on the technological
technology could lead to sub-optimal results and damage process in electric power plant operation at the firm level
to the plant and equipment. Interventions from the and is based on a modified version of a model of technology
transferor may be needed in taking corrective action transfer and development at the enterprise level (Sharif and
reinforcing the dependency. Ramanathan, 1995) and the “technology ball” (Lan and
• Problems related to maintenance: Insufficient capability Young, 1996).
to maintain the technology could lead to dependency As shown in Figure 1, the technology utilization and
on the transferor in two ways. Firstly, the firm may development process in a firm can be divided into four parts.
need transferor support for “planned” maintenance due Firstly, starting with the process of technology ‘acquisition’,
to inadequate capability in undertaking itself such a a firm acquires the needed ‘technology’ for its production
maintenance effort. Secondly, in situations of system via either ‘technology transfer’ or in-house
“unplanned” maintenance, if the firm lacks the capability ‘technology development’. Secondly, inputs to the
to quickly troubleshoot and develop corrective actions, production system are ‘technology components’ such as
it may have no option but to seek support from the hardware and software and other ‘inputs’ such as materials.
transferor.
© 2006, Global Institute of
Flexible Systems Management
4 Thumanoon Paukatong and H. Paul

Electricity
Fuel as raw material ATD1 ATD2

Technology Utilization

Acquisition Knowledge

ATD4 ATD3
Technology

Technological Dependency
Figure 2. Technological Dependency Model

1. Resource: Technology & Knowledge

2. Capability: Utilization & Acquisition
3. Embedded Attitude
Figure 1. Technology Transfer and Development Process at ATD1: Technology Attitude Dependency
the Enterprise Level ATD2: Utilization Attitude Dependency
ATD3: Knowledge Attitude Dependency
Note : Adopted from the model of indicators for assessing the ATD4: Acquisition Attitude Dependency
elements of the technology transfer and development process at the
enterprise level, Technology Transfer and Development: Implications to the ongoing requirements of effectiveness, efficiency,
for Developing Asia, An Asia Development Bank Publication, May
and reliability, the future requirements of flexibility, and
1995 by Shari and Ramanathan (1995)
the information requirements to utilize and maintain the
Thirdly, to produce the goods as ‘output’, here electricity, technology.
a firm has to utilize the technology effectively. Fourthly, • Utilization dependency: refers to the need for assistance
‘utilization’ capability could be built up and as experience from other firms in planning, performing and evaluating
accumulates, the ‘knowledge’ level of the firm would plant operations, and in planning, performing and
increase. With long experience, a firm could understand the evaluating plant maintenance.
reason behind ‘what to do’. It, then, knows ‘why to do’
which refers to ‘knowledge’ level. This ‘knowledge’ is • Knowledge dependency: occurs when the staff has
useful for the ‘acquisition’ of the new ‘technology’ and the inadequate supportive knowledge with respect to
spare parts in the future. Technological dependency exists planning and implementing effective programs for
in these four parts, and the corresponding dependency obtaining funding and accessing raw materials and when
components are defined as ‘acquisition’, ‘technology’, the firm lacks of knowledge development on human
‘utilization’, and ‘knowledge’ dependencies respectively, as resource and in-house R&D activities.
shown in Figure 2. • Acquisition dependency: means depending on external
From these four components, two technological sources for identifying a new technology, locating
dependency types could be identified. The first type called sources of the identified technology, negotiating and
‘resource’ dependency consists of ‘technology’ and structuring appropriate mechanisms for its transfer, and
‘knowledge’ components. The second type called ‘capability’ for the eventual transfer and commissioning of the new
dependency consists of ‘utilization’ and ‘acquisition’ technology transfer. Moreover, it also means depending
components. However, as mentioned above, there is also a on others for identifying good sources of spare parts,
dependency syndrome based on the attitude and belief that negotiating its purchase, and arranging business
the transferee themselves could not solve their own problems processes for completing such transactions.
without outside help including some preference. The five • Attitude dependency: is an embedded technological
components of the three types of technological dependency dependency component of other components. It includes
are identified in Figure 2. ‘Resource’, ‘capability’ and ‘Technology attitude dependency’, ‘Utilization attitude
‘attitude’ refer to ‘what a firm has’, ‘what a firm could do’ dependency’, ‘Knowledge attitude dependency’, and
and ‘what a firm thinks it could do and actually does’, ‘Acquisition attitude dependency’.
respectively. The five components of technological
dependency are described briefly as hereunder. Because one component of manifest technological
dependency affects another, a chain of technological
• Technology dependency: occurs when chronic technical dependency may evolve and persist. For example, if
problems, which a transferee is unable to independently acquisition dependency exists, a firm cannot acquire the
resolve, exists. The technical problems could be related right technology on its own. The acquired technology
giftjourn@l
 Technology Transfer Induced Technological Dependency in an Electric Power Plant
5
could have a technical problem leading to technology the TDA model. At the first ‘exploratory’, phase, there were
dependency on the transferor. To solve this problem, the three activities: initial literature review, initial single
firm may rely on help from the transferor, thus leading to informant interviews, and more focused literature review. The
utilization dependency. Due to the continued long published literature on technology transfer and
dependence on outside help for technology utilization, the technological dependency in the electric power generation
knowledge of the firm’s staff would not develop to an was reviewed in order to develop the definition, cause and
advanced level. Therefore, knowledge dependency may effect of technological dependency.
persist. With this knowledge dependency, the firm would
To ascertain the extent of the technological dependency
not have the ability to acquire suitable new technology and
in the electric power generation in Thailand, ‘single
spare parts in the future. Thus acquisition dependency
informant’ interviews were conducted with three groups of
continues and reoccurs.
experts: two from the electric power generation business and
Methodology one group from the transmission system business, of the
Electricity Generating Authority of Thailand (EGAT). The
A single case study methodology is used in this study. Based
experts were selected based on how technological
on the model in the previous section, a detailed and in-depth
dependency affected their tasks and responsibilities. There
investigation has to be conducted at the element and
were two groups from
component levels of
the generation business
t e c h n o l o g i c a l The technological dependency could also be of two types:
because the study is
dependency. The case manifest and attitudinal. The manifest technological
about technological
study methodology is
dependency in electric
ideal in such dependencies limit the transferee firm’s ability to use the
power generation. One
investigations (Feagin et technology it already has effectively without help from the
group from the
al. 1991). Also, case transferor or some other party. The attitude dependencies
transmissions systems
study, as a triangulated are, in contrast, inherent in the transferee firm, which limit
business was selected to
research strategy, can the firm from venturing out to source new technologies
provide an outside view
ensure the accuracy of
of the technological
data and provide from current or new sources.
dependency in electric
alternative explanations
power generation, as
of the findings (Stake 1995). In this research, data and other
transmission is by far the closest outside customer/supplier
information from four sources, documentation, archival
of the generation business.
records, interviews, and direct observations, were
crosschecked. The case study methodology possesses the Each group from the generation business included top
characteristics of analytic generalization, which ensures the management (division directors and above) and middle
external validity reflecting whether or not findings are management (from section to department managers) to
generalizable beyond the immediate case (Yin, 1994). An represent strategy/policy and operational levels. The expert
analytical technique of within-case examination along with group from the transmission business system included only
literature review was used in this study. For the validity of middle management because the experts thought that the
the measurement constructs three tactics suggested by Yin views of the top management in this business would be
(1994) are used in this research, using multiple sources of similar to the views of the top management in the generation
evidence, establishing a chain of evidence, and having a business. The members of the expert groups had between
draft report reviewed by key informant. 10 –20 years of experience in their respective businesses.
In each group, three persons were selected randomly. Each
This research was conducted in two phases. Figure 3
member informant was interviewed individually. The
shows the research activities conducted in order to develop
interview questions were open-ended ‘what’ and ‘how’
questions so that a wide range of opinions could be gathered
Research activity Exploratory phase 'Model development phase from the informants regarding technological dependency in
the electric power generation. The answers to these
1.Initial lite rature review questions were used to develop the framework of the TDA
model.
2.Initial single informant
interviews
A focused literature review was carried out to explore
3.More focused rature in-depth the concerned issues of technological dependency
review
identified through expert group interviews. Issues such as
4.Development of initial
model & study protocol
current and future technical needs of the existing technology,
the operation and maintenance capability, the supportive
5.Single pilot study
knowledge required in operation and maintenance,
6. Final revision model & knowledge development, acquisition of new technology and
study protocol
spare parts, and attitude were included in the focused
Figure 3. Research Activity Map literature review.
© 2006, Global Institute of
Flexible Systems Management
6 Thumanoon Paukatong and H. Paul
In the second phase of the research, an initial model is collection.
developed from the information obtained in the first phase.
• Documentation: Any document showing some
Elements on each component of technological dependency
relationship with the technological dependency was
were developed based on literature review. The relevance of
copied with permission of the owner. These documents,
the assessment elements in the context of the electric power
used in the triangulation of evidence, corroborate
generation was then verified through consultations with
evidence from other sources.
experts. The summary of constructed elements is presented
in Appendix I. A case study protocol was developed for • Archival records: Service records, organizational
data collection and analysis to ensure the reliability of the records, and other records related to technological
research. The protocol included preparing an overview of dependency were collected. Internet was used collect
objectives, field procedures, case study questions, and a this kind of data. The accuracy of the records was
format for the case study report. examined before using them.
The developed initial model was used to make a • Direct observations: Unobtrusive casual direct
preliminary assessment of the technological dependency at observations (Glesne and Peshkin, 1992) during site
the Bang Pakong Power Plant (BPPP) owned by EGAT. visits were used confirm some of the findings from other
According to the field procedure, permission was sought for sources of data.
data gathering at BPPP from the EGAT Governor (Head of A tape recorder was used in order to capture all
the State Enterprise). Then permission of the top information during discussion with informants who had
management at the site plant was sought to proceed with limited time. An informal environment during interview was
actual data collection. Initial information about the site was created in order to avoid the cautious attitude of informants
gathered from the website of EGAT (http://www.egat.co.th). because of the use of tape recorder (Tellis 1997). In the
An interview schedule was organized according to site plant single pilot case study, questions on prospective indicators
management’s availability. The top management of the plant were in a structured form to facilitate retrieval of specific
named a site coordinator. data for assessing each
The informants (groups component of
of experts) were briefed The pertinence and feasibility of the model including the technological
in advance on discussion components, elements, and indicators of technological dependency. Some
topics and issues related dependency were evaluated based on the experience in documents and archival
to each manifest earlier steps and the model and study protocols modified records were requested
component of
to better suit the context. Problems faced during earlier from the informants in
technological order to support their
d e p e n d e n c y : data collection were identified and strategies for preventing information. The list of
technology, utilization, them were developed. documents, archival
knowledge, and records, and names of
acquisition. However, the embedded attitude dependency responsible persons was put into the memo. This memo was
was not informed in order to receive the actual information submitted to the site coordinator for follow up information.
during the interviews. The site coordinator assisted in organizing the direct
In this study, in addition to the primary data collected by observations and discussions with other staff to gather
the researcher, secondary information from published information on working processes and evidences of
literature are used to supplement the findings. For data technological dependency. Staff at the site was informed
collection, three principles are utilized: using multiple sources that information collected was for academic purpose only
of data, creating a case database, and maintaining a chain of in order to avoid the cautious attitude of the informants. The
evidence. Chains of evidence in both forward and backward names, positions, and telephone numbers of all informants
directions could help in securing the internal validity of the were collected for further contacts.
research (Stake 1995, Yin 1994). Four complementary data The pertinence and feasibility of the model including the
sources were identified for this research: documentation, components, elements, and indicators of technological
archival records, interviews, and direct observations, as dependency were evaluated based on the experience in earlier
follows: steps and the model and study protocols modified to better
• Interviews: Three forms of interviews were used in suit the context. Problems faced during earlier data collection
different stage of research. During initial single were identified and strategies for preventing them were
informant interview, open-ended interviews were developed. The final version of the model and the study
conducted to gather information regarding technological protocol were then released.
dependency in the electric power generation industry
Technological Dependency Assessment
according to expert opinion. Structured interviews
were used later in collecting data in the single pilot As mentioned in the previous section, elements on each
case study. Focused interviews were also used to verify component of technological dependency from the TDA
some interesting evidence found during and after data model (see Figure 2.) were identified. Indicators associated

giftjourn@l
 Technology Transfer Induced Technological Dependency in an Electric Power Plant 7
with the element were also developed based on information functional requirements (such as frequency control) inhibit
received from the ‘Exploratory’ phase. The number of effective utilization of the power generating technology. The
indicators may vary depending on the technological difference between the rated maximum generating capacity
dependency element being assessed. These indicators must and actual maximum megawatts generated is taken as one
be measurable from available data and satisfy the validity indicator of the ability to deploy technology effectively
of the measurement constructs as stated in previous. (TED1-1). The other indicator is the difference between the
designed functional requirements specifications of the
Measurement criteria for analyzing the level of various
technology and the actual functional requirements met
technological dependency elements as ‘high’, ‘medium’, and
(TED1-2).
‘low’ were established based on Thai electric power
generation norms (based on extensive discussion with TED2. Lack of efficient deployment of technology: The
experts at EGAT) and literature review. Some of indicators efficiency of the technology is the ratio of energy output
have a positive meaning. When arriving at the level of the to energy input. High efficiency generally provides low
technological dependency elements, the inverse meaning has cost of electricity generated. Generally, an electric power
to be taken (e.g. high degree of flexibility in the electric plant selects highly efficient technology. However, this does
power generation technology means low technological not guarantee actual achievement of high efficiency. The
dependency). For some indicators that have negative lack of ability to deploy the technology efficiently based
meaning, when arriving at the level of the dependency on original requirements forces a firm to request helps from
elements, the ratings and levels of indicators will have the the transferor for frequent technical modifications and
same meaning. However, these proposed indicators will not calibrations. The ability to deploy the technology efficiently
be relevant for all electric power generation firms. is measured by one indicator (TED2-1), which is the
difference between the
The most critical
original efficiency
component is the There are a number of requirements the technology in a specifications and actual
T e c h n o l o g y power plant has to meet. These are ongoing requirements efficiency achieved.
dependency. This paper
for current operation, future requirements for modification
discusses in details the TED3. Lack of reliable
elements, indicators, and change, and information requirements for not only deployment of
and measurement hardware but also effective utilization of the technology. technology: Low
criteria for high, Failure to meet these requirements independently leads to reliability of technology
medium and low levels critical technology dependency. normally leads to low
of this dependency (see productivity. Moreover,
Appendix II). the malfunctions of
power plants resulting in low reliability make the power grid
Technology Dependency
unstable. The blackouts in Moscow in 2005 and in the
There are a number of requirements the technology in a Philippines in 2001 are good examples. Similar problems
power plant has to meet. These are ongoing requirements occurred in Indonesia in January 1992, November 1994, and
for current operation, future requirements for modification April 1997. Moreover, the reactor of the new Czech nuclear
and change, and information requirements for not only power plant at Temelin was shut down due to technical
hardware but also effective utilization of the technology problems (Anonymous, 2001). Availability of the power
(Ting, 2004). The technology dependency has three elements plant can be enhanced if the failure of auxiliaries and their
under ongoing requirements (TED1, TED2 and TED3) and downtime is minimized (Srikrishna et al., 1996). The lack
one element each for future requirements for modification of ability to deploy technology reliability makes a firm seek
and change (TED4) and information requirements (TED5). help from the transferor of the technology, and is measured
These elements and their indicators are identified below: by one indicator (TED3-1), which is the difference between
the Equivalent Availability Factor (EAF) of the electric
Ongoing Requirements power generation technology and the five-year EAF of the
This issue concerns a user’s requirements of the hardware of North America Electricity Reliability Council.
the electric power generation technology throughout its EAF = {Available Hours – (Equivalent Unit Derated Hours
lifetime. Effectiveness, efficiency, and reliability are these + Equivalent Seasonal Derated Hours)} / Period Hours
requirements. Lack of ability to meet any of these
requirements anytime can lead to technology dependency EAF represents the availability of the electric power
due to the need for help from the transferor or other parties. generation technology both in terms of time and capacity.
The ratio of available hours to period hours shows
TED1. Lack of effective deployment of technology: Effective availability of the technology in terms of time. However, it
deployment of technology is crucial to the well being of includes the period of time that the technology cannot
any firm. Lacking the ability to do this by itself, a firm generate electric power at the rated capacity called “derated”
generally requires help from the transferor to correct, adjust, period. EAF is the actual availability of the electric power
or modify the transferred technology. Failing to achieve the generation technology after deducting the “derated” hours.
rated generating capacity and meeting the minimum
© 2006, Global Institute of
Flexible Systems Management
8 Thumanoon Paukatong and H. Paul
Future Requirements for Modifications and Change maintenance of the existing technology (TED5-1) and help
needed from the transferor due to insufficient information
These are a user’s requirements of the electric power (TED5-2).
generation in the future for modifications, expansion, and
replacement. The flexibility of the existing electric power A Case Study of the Bang Pakong Power Plant
generation technology provides a firm an opportunity to The technological dependency assessment described in
make changes to the current technology in the future by Section 5 is applied to the Bang Pakong Power Plant (BPPP)
adding new modules, replacing some existing modules with of the Electricity Generating Authority of Thailand (EGAT),
new ones or replacing the entire plant. Without this which was formed on May 1, 1969 by the merging of three
flexibility, a firm will have to stay with the current transferor former regional electricity authorities. The activities of the
for all its future requirements. Moreover, inappropriate state owned utility, with an asset of about US$10 billion,
modification on the technology could lead to some include construction, operation and maintenance of power
technical problems and serious outage (Anonymous, 2005). plants and transmission networks, purchase of power from
TED4. Lack of flexibility for adaptation: There are three Small Power Producers and Independent Power Producers,
indicators showing the flexibility for adaptation of the and sale of power to regional electricity distribution
existing technology in the future. The first indicator (TED4- authorities, some direct large customers and neighboring
1) is the degree/type of standardization of the existing countries of Laos and Malaysia. The utility is also
technology. Standardization would determine the extent to responsible for implementing demand side management
which modifications and changes could be made to an programs under Thailand’s government mandate energy
electric power generation system. The issue of flexibility policies. In order to comply with the government’s policy
with respect to upgrades assumes importance because plant of electricity supply industry reform, EGAT’s new structure
and equipment may become unavailable or obsolete in the now consists of three business units, Transmission,
future. Moreover, hardware maintenance and software Generation, and Development, and supportive units such as
programming expertise may become unavailable (e.g. Neder Policy and Planning, Accounts and Finance, and
et al., 1998). Often, low level of flexibility is found in Administration (see Fig. 4).
proprietary systems. Public standardization, which is
available to all, provides more flexibility than proprietary EGAT Supportive Units
standardization, which is available to only particular owners Business Units
and holders, does. Therefore, the degree/type of
standardization (‘Public’, ‘Proprietary’, and ‘None’) would Transmission Generation Development
affect this flexibility.
The second indicator (TED4-2) is the cost of existing
technology. Switching to other technologies is one of Power Plant Fuel
alternatives for modifications and change. However, if the
cost of existing electric power generation technology is BPPP Other Plants
high, switching may be difficult. Thus the cost of existing
technology would reduce the flexibility or change. Another Figure 4. BPPP in the EGAT's Organization Chart
option is to modify and change the technology only in some
parts or modules. However, availability of this option The BPPP is in the Generation business unit of EGAT.
depends on the degree of modularity of the technology. The The plant with an aggregate capacity of 3,680 megawatts
electric power generation technology may come as either a (MW) provides more than 20 percent of Thailand’s electricity
single integrated system or several integrated modular needs. The plant uses both thermal and combined-cycle
subsystems. Therefore, the degree of modularity of the power generating technologies. The 2,300 MW thermal
electric power generation technology is identified as the power unit consisting of four conventional steam turbine
third indicator (TED4-3) of this flexibility. generators, two of 550 MW each and two of 600 MW each,
uses bunker oil and natural gas. The 1,380 MW combined
Information Requirements
cycle power unit consisting of two of 370 MW and two of
The transferee has to transfer not just the hardware, but also 320 MW generators uses natural gas and diesel oil. At a
the information on how the technology could be utilized total investment cost of over US$1 billion, the Bang Pakong
effectively (Gross, 2004). Moreover, detailed technical Power Project was developed in two stages. The first stage
drawings and design information, which is rarely given with two 550MW thermal generators and two 370 MW
(Misseijer et al., 1996), is needed for upgrading the existing combined cycle generators started in 1979 and was
technology. If this information were not provided, the completed in 1984. The second stage including two 600
transferee would become dependent on the transferor. MW thermal power generators and two 320 MW combined
cycle generators started in 1988 and was completed in 1992.
TED5. Lack of sufficient information: We identify two
Its power generating technologies were transferred from
indicators for lack of sufficiency of information: The
developed countries such as Siemens from Germany and GE
availability of the information for the operation and
from the US. The following subsections describe the various
giftjourn@l
 Technology Transfer Induced Technological Dependency in an Electric Power Plant 9
components, elements and indicators of technology (EAF) (1997-2002) was higher than 80%. For the combined
dependency caused by transfer of these technologies. cycle plant, the average EAF of the plant was higher than
85%. Therefore, based on TED3-1 indicator, ‘Low’
Technology Dependency
dependency is identified on account of this element.
Ongoing Requirements For the issue of lack of ability to meet ongoing
TED1. Lack of effective deployment of technology: requirements, based on three elements above, ‘Low’
Although the required generating capacity could not be dependency is currently assigned.
achieved at the early stage of commissioning at BPPP, all Future Requirements for Modifications and Change
power generating units are meeting their generating
capacities. Adjustment and modifications had to be carried TED4. Lack of flexibility for adaptation: The power
out in order to ensure that all requirements of major generating technology at BPPP uses proprietary standards.
functions were met during commissioning. The values of The technology has been designed according to functional
both TED1-1 and TED1-2 indicators show there is currently specifications. Therefore, ‘Medium’ dependency is assigned
no negative deviation in effectiveness of the electric power on the TED4-1 indicator. The cost of its technology is very
generation technology. Technical dependency is ‘Low’ on high and depreciation time is 300 months. ‘High’
account of this element. dependency, therefore, is given to the TED4-2 indicator. Only
two combined cycle generators have been designed in
TED2. Lack of efficient deployment of technology: All units
modular pattern, and the other two form part of the integrated
of BPPP were able to satisfy efficiency requirements at the
system. In case of the thermal plant, a modular design has
commissioning stage. However, during operation the
been applied for all four generators. However, the reliability
efficiency had dropped from the original values but is still
of combined cycle generators in the integrated system is less
greater than 90% of the specified value. It is envisaged
than the reliability of others. Since some of units have been
that by using ‘step factor’ during maintenance, the efficiency
designed in modular pattern and some have been designed
would be restored to earlier levels. The indicator TED2-1
as part of the integrated system, ‘Medium’ dependency value
is assigned a ‘Low’ value thus giving ‘Low’ dependency on
is assigned to the TED4-3 indicator.
account of this element.
Since two indicators indicate ‘Medium’ dependency and
TED3. Lack of reliable deployment of technology: In
general, the availability of the power generating technology
at BPPP is higher than the 5-year NERC’s average, which is
about 80% for thermal plant and 85% for combined cycle TED4
plant. There is no negative deviation on reliability of the
plant’s power generating technology. At the thermal power
plant of BPPP, the average Equivalent Availability Factor Low Medium High

TED2 Figure 6. Technology Dependency on Future Requirements

for Change
Element Dependency
TED4: Lack of flexibility for adaptation Medium-High

one indicator indicates ‘High’ dependency, ‘Medium-High’

dependency is assessed on account of this lack of flexibility
TED1 element resulting in ‘Medium-High’ dependency on the issue
of future requirements for modification and change.
Low Medium High

TED5

TED3 Low Medium High

Figure 5. Technology Dependency - Ongoing Requirements
Figure 7. Technology Dependency - Information Requirements
Element Dependency
TED1: Lack of effective deployment of technology Low Element Dependency
TED2: Lack of efficient deployment of technology Low TED5: Lack of sufficient information Medium
TED3: Lack of reliable deployment of technology Low
© 2006, Global Institute of
Flexible Systems Management
10 Thumanoon Paukatong and H. Paul

Information Requirements Anonymous (2001) ‘Glitch Closes Czech N-plant’, Financial Times,
London, August 20, p. 1.
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© 2006, Global Institute of

Flexible Systems Management
12 Thumanoon Paukatong and H. Paul

APPENDIX I
Elements of technological dependency components

giftjourn@l
 Technology Transfer Induced Technological Dependency in an Electric Power Plant 13
APPENDIX II
Elements, Indicators and criteria of technology dependency
Technology Dependency
Element Indicator Criteria for dependency
Low Medium High
TED1. Lack of effective TED1-1. Negative deviation in Megawatt The required MW level n.a. The required MW level
deployment of technology (MW) from the specified power generating can be achieved cannot be achieved.
capacity

TED1-2. Negative deviations of the functions All functional Some functional Some functional
from original expectation requirements are met requirements have requirements have not
not been fulfilled but this been fulfilled and this
imperfection does not imperfection causes
cause any trouble in the unease in the operation
operation comparing to comparing to the original
the original expectation expectation

TED2. Lack of efficient TED2-1. Negative deviation of the plant’s The efficiency index of The specification on The efficiency of the
deployment of technology efficiency index from its original requirement the plant is not less than efficiency could not be plant could not reach
the original required level met. The efficiency of the
at commissioning stage. plant is less than the
Moreover, during actual original required level but
operation, the efficiency more than 90% of the
is not less than 90% of requirement. The overhaul
the specification. With could not help recovering
the overhaul, the efficiency the efficiency
can be recovered.

TED3. Lack of reliable TED3-1. Negative deviation in reliability Low: EAF of the plant Medium: EAF of the plant High: EAF of the plant
deployment of technology (Equivalent Availability Factor: EAF from is higher than the NERC is between the average one is less than 81.73% of
North America Electricity Reliability Council: value and 81.73% of the average the average value
NERC) of technology (Average 5 year period) one

TED4. Lack of flexibility TED4-1. Negative degree in standardization Low: A public Medium: A proprietary High: No standard-
for adaptation of technology for checking the availability of standardization exists standardization exists ization of the
alternatives technology

TED4-2. Switching cost of technology for Low: If the depreciation Medium: If the High: If the depre-
evaluating the difficulty in decision making of time is less than 10 years depreciation time is ciation time is more
modification in monetary term between 10 to 20 years than 20 years

TED4-3. Negative degree in modularity Low: If the system of Medium: If the technology High: If the technology
of technology for evaluating the difficulty in technology is designed as is not designed as cannot be grouped to
decision making of modification in technical an integration of several modularity but able to be several modules
term modules grouped to several
modules

TED5. Lack of sufficient TED5-1. Insufficient information for All information has been Information is sufficient Existing in-hand
information operation and maintenance transferred and sufficient for operation and information is not
for peration and maintenance but detailed sufficient for
maintenance. drawings and design operation and
information are not maintenance.
transferred.

TED5-2. Existence of help from None Some with acceptable Some with
transferor due to insufficient information response time unacceptable response
time

© 2006, Global Institute of

Flexible Systems Management
14 Thumanoon Paukatong and H. Paul

Thumanoon Paukatong is a Ph.D. candidate in the School of Management, Asian Institute of Technology. He obtained his Bachelor of
Electrical Engineering from King Mongkut Institute of Technology, Lad Krabang, Thailand, and Master of Electrical Engineering from
University of Southern California, USA in 1992 and 1994 respectively. He had obtained his MBA from Kansas State University, USA in
1996. Mr. Thumanoon is currently a senior engineer and a member of a team developing an in-house Supervisory Control and Data
Acquisition (SCADA) system at the Electricity Generating Authority of Thailand.

H. Paul is presently a Professor, School of Management, Asian Institute of Technology and was Dean of the School during 1999-2003.
He has taught at National University of Singapore, North Carolina State University, USA, and University of Canterbury and Auckland
University of Technology, New Zealand. His research interests are in Management of Technology, Manufacturing Technology and
Strategy, Logistics and Supply Chain Management, and Total Quality Management.

giftjourn@l
 15
giftjourn@l
Global Journal of
Framework Flexible Systems Management
2006, Vol. 7 Nos. 1&2, pp 15-25

Impact of Information Technology on Organizational

Effectiveness: A Conceptual Framework Incorporating
Organizational Flexibility
Surinder Batra
Principal Consultant
Centre for Interactive Management India
5/11 West Patel Nagar, New Delhi 110008
[email protected]
Abstract
In a doctoral thesis submitted to IIT Delhi in 1994, this author had proposed a conceptual framework of the impact of information
technology (IT) on organizational effectiveness. This framework hypothesized a series of impacts of IT on various organizational
variables categorized as (a) process variables; (b) structural variables; (c) performance variables; and (d) effectiveness variables.
A hierarchy of objectives was then developed amongst these variables using Interpretive Structural Modeling (ISM). The emerging
structure indicated a series of facilitating relationships between IT applications in the organization and various organizational
variables, eventually contributing to organizational effectiveness. Amongst the process variables identified, one was “enhancing
operational efficiency and flexibility”. In the hierarchy of objectives, this element had appeared as one of the direct impacts of
IT. Thus, the significance of flexibility in the organization, as a variable influenced by IT applications, and in turn, influencing
certain other organizational variables was highlighted. After more than a decade of this work, there have been enormous changes
in the applications of IT in organizations, opening up new market opportunities, delivering improved services to customers,
creating new IT-based products and streamlining internal business processes, etc. At an academic level, the concept of flexibility
has taken deeper roots, with scope of flexibility also encompassing the concepts of organizational flexibility, strategic flexibility,
product flexibility, manufacturing flexibility, and technology flexibility etc. The concept of systemic flexibility coupled with SAP-
LAP framework has also been propounded. This Paper proposes a revised conceptual framework of the impact of IT on
organizational effectiveness, incorporating the dimension of organizational flexibility in the earlier conceptual framework. Empirical
data from published literature on the impact of IT on organizations has also been provided, which demonstrates the validity of
the revised conceptual framework.

Keywords : flexibility, information technology, operational flexibility, organizational effectiveness,

organizational flexibility, performance variables, process variables, strategic flexibility, structural flexibility,
structural variables

Introduction validated many hypotheses of inter-dependence amongst

organizational variables and revealed additional linkages
A research study was conducted by this author during the
amongst them. It also helped in identifying factors
period 1990 to 1994 as a part of a doctorate theses with IIT
contributing to the success of IT in enhancing organizational
Delhi primarily with a view to examine the nature and extent
effectiveness and highlighted various situational factors to
of the impact of IT on organizational effectiveness. (Batra,
which the variations in the impact of IT could be attributed.
1994) Based on the available theoretical perspectives at that
Lastly the study led to the development of recommendations
time and through application of consensus methodologies, a
for planning and managing IT in organizations.
conceptual framework was developed. This framework
analyzed the impact of IT on various organizational variables, Over the last decade, the scope of the term IT has
categorized into process, structural, performance and undergone considerable change. The almost instantaneous
effectiveness variables. Organizational effectiveness was capability of IT for information acquisition, processing,
conceived to comprise of three effectiveness variables, transmission, storage and retrieval continues to be its basic
namely, ability to meet current organizational objectives, essence. However, the modes through which this happens
adaptability to external environment and ability to match have been transformed. The basic premise that IT reflects
organizational objectives with personal objectives of the convergence of computer and communication technologies
employees. From this conceptual framework a set of remains unaltered, yet this convergence has much bigger
hypotheses about the impact of IT on individual meaning than indicated – the convergence now implies an
organizational variables and inter-dependence among various almost total fusion of technologies and products, which create
categories of organizational variables was generated. The global impact. IT has created a new information society
empirical study carried out in selected organizations adopting characterized by availability of large amounts of
the methodology described in detail in the said theses, information, facilitating increased power, wider choices and

© 2006, Global Institute of

Flexible Systems Management
16 Surinder Batra
heightened awareness. The revolutionary changes in IT have The Original Conceptual Framework
given pre-eminence to the role of knowledge, which has a
The original conceptual framework was developed based on
much larger connotation than information, and which
inputs from the literature survey findings, key propositions
subsumes data, information, interpretation of the information
of the then existing partial frameworks and application of
and derivation of new meanings and insights from such
consensus methodologies. The steps involved in this
interpretation. The explosion of content on the Internet, for
exercise included the following:
instance, has led to availability of tones of ever-changing
and ever-growing information, both relevant and irrelevant, (a) Identification of Organizational Variables on which the
and has made the task of carving out knowledge from this impact of IT needs to be examined (This was done
heap of information a difficult art. It however demonstrates through a Nominal Group Technique exercise)
the capability of IT to generate knowledge. Systematic IT
(b) Classification of Organizational Variables into broad
interventions are now being increasingly adopted to acquire
groups
knowledge from customers, employees and other
stakeholders, and distribute and leverage this knowledge in (c) Developing a hierarchy of the impact of IT on various
accordance with the strategic needs of the organization. organizational variables identified above
At a conceptual level a far-reaching work has emerged (d) Developing an integrated framework based on the above
over the last decade in the field of flexibility. At least two
(e) Defining and identifying contingency factors
key streams on flexibility in organizations are seen in the
literature. One of these is the concept of systemic flexibility The organizational variables identified through step (a)
(Sushil, 2000) . This coupled with the related methodology above were categorized into three broad groups designated
of SAP-LAP framework (Sushil 2001) provides a useful as process variables, structural variables and performance
framework for understanding and implementing flexibility variables.
in organizations. The Process variables are
other is a comprehensive The basic premise that IT reflects the convergence of those organizational
conceptual work on computer and communication technologies remains variables which are
“Building the Flexible either related to the
Firm” (Volberda 1998). unaltered, yet this convergence has much bigger meaning conduct of various
While the conceptual than indicated – the convergence now implies an almost managerial role functions
framework proposed by total fusion of technologies and products, which create in the organization or
the present author global impact. are concerned with
recognized flexibility as carrying out important
an important organizational variable influenced by IT, he organizational processes such as decision-making,
gave flexibility a limited connotation of “Operational communication and control.
Flexibility”. However, the literature on flexibility in the last
decade has given a paradigm shift to the meaning and vision Structural variables are those organizational variables, which
contained in the word “flexibility”. It has become apparent are related to the structure of an organization and cover
that flexibility is not confined to operational flexibility, but aspects such as levels of hierarchy, centralization/
can be viewed in a much wider perspective to encompass decentralization and reporting relationships etc.
structural flexibility or even strategic flexibility. It is now Performance variables are those organizational variables,
recognized that IT influences flexibility in all its dimensions. which are related to tangible or intangible indicators of the
Not only IT has an impact on operational flexibility as performance of an organization.
hypothesized in the original conceptual framework
suggested by this author, it also has impact on other forms The various organizational variables were synthesized
of flexibility such as structural flexibility and strategic into a smaller number of variables under each category, with
flexibility. a view to develop a manageable set of objectives, which
could be considered for the development of a hierarchy of
This paper examines the concepts on flexibility that have objectives. A total of ten objectives were synthesized from
emerged over the last decade through the work of Sushil the process variables, six from structural variables and three
and Volberda, and proposes changes to the earlier conceptual from performance variables. The next step was to develop a
framework with regard to the impact of IT on new hierarchy of these objectives to obtain an understanding of
organizational variables based on different types of the nature of facilitating relationships amongst them, if any.
flexibility. Empirical evidence of the impact of IT on For this purpose, an Interpretive Structural Modeling (ISM)
operational flexibility, structural flexibility and strategic approach was adopted. The final step was to interpret the
flexibility has also been provided. Some of the empirical structure emerging from ISM and synthesize the same into
observations reflecting a deviation from the proposed an integrative framework. This is presented at Figure 1 and
conceptual framework have also been highlighted, and the described as follows:
reasons for such deviations have been examined.
(a) The direct impacts of IT on organizations are to provide
timely and relevant information on key issues to those
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 Impact of Information Technology on Organizational Effectiveness: A Conceptual Framework 17
concerned, streamlining procedures work flows and job geographical expansion of the business of the
designs and providing operational flexibility in the organization, enhance interaction with the external
organization. agencies and promote synergy of operations between
various parts of the organization.
(b) IT’s ability to provide timely and relevant information
helps in enhancing intra-organizational communication (h) These impacts, in turn, help the organization in
and communication with external agencies. enhancing customer services and in providing a
competitive advantage.
(c) IT’s ability to enhance intra-organizational
communication and communication with external (i) The above impacts promote achievement of current
agencies facilitates improvement in the quality of organizational objectives, increase the ability of the
decision-making at top management, middle organization to adapt to its environment and help in
management and operating levels. increasing the match between organizational objectives
and the personal objectives of the organizational
(d) IT’s ability to streamline procedures work flows and job
personnel.
designs and to provide operational flexibility, coupled
with its ability to enhance intra-organizational (j) Thus, on the whole, these impacts result in enhancing
communication and communication with external the overall organizational effectiveness.
agencies facilitate enhancement in the monitoring and
Additionally, there exist several contingency factors,
control methods.
which influence the way IT has an impact on the
(e) Improvement in the quality of decision-making at organizations. These factors can be defined as those, which
various levels, coupled with enhancement in the exert a significant influence on the possible direction in
monitoring and control methods, facilitate adoption of which the impacts of IT on various organizational variables
participative management, rationalization of the may take place. These include: top management style and
manpower strength and reducing the number of commitment, organization culture and value system,
hierarchical levels in the organization. adequacy of financial resources, training of personnel,
involvement of external change agents and meticulousness
(f) The above structural changes facilitate either
of planning. These contingency factors influence how IT is
decentralization or centralization of decision-making and
used for changing the process and/or structural variables.
creation of innovative structural forms for the
organization.
Organizational
(g) These structural impacts of IT, in turn, facilitate Effectiveness

Enhance Organisational
Effectiveness Third level
Organizational impact
Promote achievement of Enhance adaptability to Increase match between Performance
current organizational external environment organizational and personal
objectives objectives

Enhance Customer Provide competitive Innovative

B
Services
Transformed
advantage Organizational
Organizational
Enhance Synergy of Processes Structural
Operations Changes

A
Promote Decentralization Promote Centralization Creative innovative
A of Decision making of Decision making structural forms Second level
facilitates impact
B
Emergent
First level Properties of Contingency
Promote Participative Rationalize Manpower Reduce number of
Management
impact IT Factors
Strength hierarchical levels

Improve quality of Improve quality of Improve quality of Enhance monitoring &

Decision making at top Decision making at Decision making at control methods
management level middle management level operative level
Information
Technology
Enhance Intra- Enhance communication Streamline procedures,
organizational with external agencies work flows and job designs
communications
Figure 2: Generic Conceptual Framework of the Impact of IT
Provide timely
on Organizational Effectiveness
Provide relevant Provide operational
information information flexibility

This conceptual framework has also been expressed into

Introduce information a more generic framework, as diagrammatically represented
technology at Figure 2. This generic framework (Batra 1993) envisages
Figure. 1: Hierarchy of Objectives of the Impact of IT on three stages of the impact of IT on organizations. In the first
Organizations stage, IT through its emergent properties influences process
© 2006, Global Institute of
Flexible Systems Management
18 Surinder Batra
variables identified above. However, these first stage impacts financial flexibility, strategic flexibility, human resource
are enabling in nature and it is not necessary that they flexibility and flexibility in information systems. In all types
would actually take place. If, however, they do take place, of flexibility, however, the key features are openness in
a range of options is thrown open for second stage impacts, thinking, adaptiveness to changing environment,
which relate to the structural variables. These may be in the responsiveness to change, versatility of action, contingency,
nature of diverse impacts on organization structure such as non-rigidity, freedom, liberalization, adjustment, multiplicity
reduction in the number of hierarchical levels, centralization of process setting, resilience, compromise, autonomy of
or decentralization and creation of innovative structural function, broadening of the mind and vision etc. Within
forms like the matrix structure or the network organization. Manufacturing Flexibility, Gupta and Singh (2002) have
The specific changes in the structural variables, however, quoted Brown et al (1984) citing eight types of flexibilities
depend upon various contingency factors identified above. namely machine flexibility, process flexibility, product
In the third stage, the impact on structural variables is flexibility, routing flexibility, volume flexibility, expansion
expected to be symbiotic with changes in the process flexibility, process sequence flexibility and production
variables. This means that the process changes will reinforce flexibility.
structural changes and vice versa. The actual selection of
Systemic Flexibility and SAP-LAP Framework
the combination of various possible options will be,
however, based on a conscious need for enhancing the According to Sushil (2000), flexibility has multiple
achievement of organizational effectiveness, triggered by the connotations as per the situation. Some of the important
understanding of the environment by the management. This ones are: adapativeness to the changes in environment,
is manifested through its adjustment to situation,
three dimensions, Both the concepts rely on the connotation of a paradox. agility in action,
namely, achievement of
While Sushil’s framework mentions about the paradox of amiability in
current organizational relationships, autonomy
objectives, adaptability a thesis and an anti-thesis, Volberda refers to the paradox in functioning, balance
of the organization to its of change and preservation, as desirable consequences of in competing opposites,
external environment flexibility. broadening of mind,
and match between compromising for
organizational objectives and personal objectives of the betterment, contingency in planning etc. This is only a
individual employees. Thus eventually organizational representative list. Besides, there are various types of
effectiveness may be enhanced as a result of IT applications. flexibilities in an enterprise, such as strategic flexibility,
In this third stage also, the contingency factors play a organizational flexibility, manufacturing flexibility,
prominent role. If they act favourably, they will facilitate information systems flexibility, operational flexibility,
transformation of organizational processes and emergence of technology management flexibility etc. Under each category,
organization structures, which promote achievement of the there are further many types of flexibility. For example, the
conceived performance variables. However, if they act in a manufacturing flexibility encompasses product flexibility,
counterproductive manner, IT may fail to have any process flexibility, volume flexibility, routing flexibility,
significant impact on various organizational variables and tooling flexibility, labour flexibility, etc. Thus, the concept
organizational effectiveness. of flexibility is multi-dimensional in nature.
Concepts on Flexibility Sushil uses the concept of paradox to further elaborate
this multi-dimensionality of flexibility. A paradox is in the
This section outlines a brief overview of the general concepts
form of a pair of polar opposites: a thesis and an antithesis,
of flexibility followed by the frameworks proposed by Sushil
forming a continuum from thesis to antithesis. In the
and Volberda respectively. In Webster’s Collegiate Dictionary,
organizational context, some leading paradoxes are
flexibility is defined as the quality of being capable of,
centralization-decentralization, continuity-change, stability-
responding to or conforming to changing or new situations.
dynamism and so on. He argues that simply by moving from
Upton (1994) defines flexibility as “the ability to change or
the thesis to the anti-thesis, one does not necessarily bring
react with little penalty in time, effort, cost and performance”.
in flexibility; rather the system may lose its identity if
According to Bahrami (1992), flexibility is “a multi-
pushed to anti-thesis. For example, if an organization with
dimensional concept demanding agility and versatility,
high degree of centralization opts for extreme
associated with change, innovation, and novelty, coupled with
decentralization, it may lead to disintegration or
robustness and resilience, implying stability, sustainable
fragmentation of the organization. A flexible organization
advantage and capabilities that may evolve over time”. Both
would be a collective bimodal or multi-modal organization
these definitions suggest a positive connotation of
having centralization and decentralization at the same time
flexibility.
and changing their degree over time as per the requirement.
In the context of organizations, different types of From the above elaboration, Sushil defines flexibility as
flexibility have been discussed in the literature. Prabhat “the exercise of free will or freedom of choice on the
Kumar in his paper (2002) lists various types of flexibilities, continuum to synthesize the dynamic interplay of thesis and
namely, manufacturing flexibility, organizational flexibility, anti-thesis in an interactive and innovative manner, capturing
giftjourn@l
 Impact of Information Technology on Organizational Effectiveness: A Conceptual Framework 19
the ambiguity in systems and expanding the continuum with approach assumes that effective organizations have to cope
minimum time & efforts.” with the acceleration of change in the business environment,
and need flexibility to adapt to the environment. However,
Sushil has developed a flexible systems methodology
in this approach, the underlying concept of flexibility is too
or a methodological construct, which has been used by a
abstract to have any descriptive or prescriptive value. In the
number of management researchers in real life organizational
second, functional, approach, organizational flexibility is
cases. This methodology envisages a SAP-LAP framework.
reduced to certain aspects of the organization such as
The SAP (Situation – Actor - Process) analysis first maps
flexible employment contracts, labour flexibility and flexible
these three components, namely, “situation”, “actor” and
forms of financing etc. However, organizational flexibility
“process” out of the existing organizational state to define
cannot be divided into isolated functional elements. Finally,
the dynamic interplay of reality. “Situation” is the present
the actor approach postulates that special personal traits of
status, potential for growth or decay and present and future
actors such as the entrepreneur, management, employees or
state-of-the-art etc. The participants who influence the
customers endow an organization in stimulating or
situation and alter it by their actions or inaction are termed
restricting flexibility. This approach assumes that if we want
as “actors”. The procedural steps taken by the “actors” who
flexible organizations, we must first have flexible
alter the “situation” are termed as the “process”. Any
individuals. This approach according to the author
dynamic behaviour that alters the “situation” has the
substantially under-estimates the impact of managerial and
potential of being a “process”. The situation, actor and
organizational traits, as it holds individual variables more
process and their interplay comprise the SAP framework,
important than
where the freedom of
structural and cultural
choice lies with the Both the frameworks give pre-eminence to the role of variables.
actors. If the actors have
more freedom, the
“actors”, who are instrumental in bringing about the right The author
processes will become kind of flexibility. In Sushil’s terminology, an “actor” is provides what he calls a
flexible and adaptive to inherently embedded in the SAP (Situation- Actor-Process) more integrated
cope with the changing framework. In Volberda’s framework, the managerial task approach to flexibility
situation. or the task of actors is a core component in endowing and elaborates a
strategic framework,
The SAP analysis flexibility to the firm.
which can help
leads to the second phase
managers to organize
of the analysis called
for flexibility. He argues that while organizations cannot
LAP synthesis, which has three components, namely,
survive without changes to adapt to changing conditions,
“learning issues”, “actions” and “performance”. Learning
yet they must also be stable enough to exploit the changes
issues emphasize the typicality of the situation as well as
they have made. The organizations need to reconcile these
some features of its uniqueness. One has to learn about the
conflicting forces. Thus, the concept of flexibility is
situation, actor and process and bring out key learning issues
inherently paradoxical. It requires change as well as
of interest. Based on the learning, action is to be taken on
preservation. The flexible organizations are able to manage
the fronts of the situation, actor or process or the relevant
opposing forces. On the one hand they facilitate creativity,
interfaces. Depending upon the effectiveness of actions,
innovation, and speed while on the other hand they maintain
performance is generated in terms of improved processes/
coordination, focus and control.
actors and better situational parameters. In a business
situation, the performance parameters could be market share, The framework suggests two important tasks to resolve
profitability, quality, productivity, competitive advantage, the paradox of flexibility. First, it is argued that flexibility is
core competence etc. Improved performance results from the a managerial task, and managerial capabilities endow the firm
sum total of the SAP analysis and LAP synthesis. with flexibility. Secondly, flexibility is also an organisational
design task, and is concerned with the controllability or
Volberda: Building the Flexible Firm
changeability of the organization, which depends upon the
According to Volberda (1998), managers intuitively creation of right conditions to foster flexibility. Combining
understand flexibility to mean mobility, responsiveness, these two tasks involves a process of matching and resolving
agility, suppleness or litheness. The term has a positive paradoxes. Management must develop dynamic capabilities
connotation, and flexibility seems to be the answer for the that enhance flexibility, and the firms must have an adequate
turbulent, competitive context that organizations face. organizational design to utilize those capabilities. In the light
However, from the existing frameworks of flexibility, there of the above framework, the author defines flexibility as
appears to be no added value in providing answers to the “the degree to which an organization has a variety of
questions such as what exactly a flexible firm is; how can managerial capabilities and the speed at which they can be
flexibility be diagnosed or measured; and how a more activated, to increase the control capacity of management
flexible organization can be developed. He examines three and to improve the controllability of the organization.”
existing approaches to the issue of flexibility, namely, the
The author distinguishes between three types of
“general”, the “functional” and the “actor”. The general
flexibility namely operational flexibility, structural
© 2006, Global Institute of
Flexible Systems Management
20 Surinder Batra
flexibility and strategic flexibility. Commonalities in the Two Schools of Flexibility
(a) Operational flexibility consists of routine capabilities A close look at the above two concepts of flexibility
for alternative actions that are based on present provides several interesting revelations regarding their
structure or goals of the organization. It relates to the common characteristics. Some of these are as follows:
volume and mix of activities rather than the kind of
(a) Both the concepts consider flexibility as multi-
activities undertaken within the firm. The routines used
dimensional and not just the opposite of rigidity.
are directed primarily at the operational level and are
reactive. The operational flexibility provides rapid (b) Both the concepts rely on the connotation of a paradox.
responses to changes that are familiar, and often lead While Sushil’s framework mentions about the paradox
to a temporary change in the level of activity of the of a thesis and an anti-thesis, Volberda refers to the
organization. The combinations of conditions are paradox of change and preservation, as desirable
sufficiently predictable to develop routine capabilities consequences of flexibility.
to reduce uncertainty. There is no substantial shift in
(c) Both frameworks are open-ended, accommodating
the relationship between an organization and its
within them different types of flexibility, such as
environment.
operational flexibility, structural flexibility and strategic
(b) Structural Flexibility consists of managerial capabilities flexibility.
for adapting the organization structure and its decision
(d) Both the frameworks give pre-eminence to the role of
& communication processes to suit changing conditions
“actors”, who are instrumental in bringing about the
in an evolutionary way. When faced with revolutionary
right kind of flexibility. In Sushil’s terminology, an
changes, management needs greater internal structural
“actor” is inherently embedded in the SAP (Situation-
flexibility to facilitate the renewal or transformation of
Actor-Process) framework. It is the actors’ role to deal
current structures and processes. It can also be external
with the situation, and he/she has the requisite freedom
in terms of inter-organizational leeway in supporting
of choice to initiate the processes, which will alter the
and sheltering new technologies or developing new
situation. In Volberda’s framework, the managerial task
products or markets. Structural flexibility facilitates
or the task of actors is a core component in endowing
restructuring of the organization in line with new
flexibility to the firm. It is through the managerial task
opportunities or ideas.
that the organization design task is also performed.
(c) Strategic flexibility consists of managerial capabilities
related to the goals of the organization or the
Organizational Flexibility as a Strategic Asset
environment. This Volberda also puts forth
most radical type of the concept of
flexibility is much While on the one hand, some IT applications have o r g a n i z a t i o n a l
more qualitative promoted operational flexibility, some other IT applications flexibility as a strategic
and involves at operational level have focused on streamlining business asset in situations where
changes in the processes and/or optimizing solutions. anticipation is
nature of impossible and strategic
organizational surprise likely. In the
activities. It is necessary when the organization faces linear model of strategic management described by him, the
unfamiliar changes that have far-reaching consequence focus is on planning strategies and deciding the direction
and needs to respond quickly. The issues and in which the organization’s position in the environment
difficulties related to strategic flexibility are should change. In this model, strategic flexibility is
unstructured and non-routine. Strategic flexibility essentially the capacity of management to quickly develop
encourages the exploration of new opportunities or new strategic plans. He also describes a second model called
ideas. adaptive model of strategic management, which focuses upon
The author argues that the organization structure the ways of configuring organizational resources for
indirectly influences the potential for operational and effective responses to unanticipated changes. In this model,
strategic flexibility. When only operational flexibility is the goal of strategy is to develop flexible resources and
required, the need for structural flexibility is minimal. capabilities, and flexibility is an organizational capability
Operational flexibility can therefore be found in a for facilitating emergent spontaneous strategies. He also
mechanistic structure with low potential for flexibility. On defines a third, interpretive model, which beckons the
the other hand, strategic flexibility can be found only when organization to have more foresight, and be capable of
there is structural flexibility and it can therefore be imagining products, services and entirely new businesses
developed only in an organic structure with a large potential that do not yet exist. It still requires flexible configuration
for structural flexibility. of resources, but for facilitating emergent strategies and
creating strategic schemas, which enhance the creation of
multiple interpretations. The organization can respond to
surprises and initiate novel action, but is also able to resist
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 Impact of Information Technology on Organizational Effectiveness: A Conceptual Framework 21
certain changes or squash destructive initiatives. Flexibility computerized inventory and production control systems in
in this model is an imaginative capacity for creating manufacturing aim at optimum decisions at the operating
strategic schemas broad enough to encourage strategic level. Business Process Reengineering (BPR) aims, not at
initiatives. automating the existing business processes, but in
streamlining the business processes, using IT as an enabler.
Impact of IT on Organizational Flexibility: Empiri-
Hammer & Champy in their classical, “Reengineering the
cal Evidence Corporation” (1994) have documented case studies of several
Substantial empirical evidence already exists to demonstrate companies, such as Hallmark, Taco Bell, Capital Holding and
that IT has an impact on different types of organizational Bell Atlantic, where IT has led to successful re-engineering
flexibility, namely, process flexibility, structural flexibility of business processes. The point to be noted is that IT had
and strategic flexibility. In this section, examples of the the ability to provide operational flexibility, but the BPR
impact of IT on these three flexibility types have been cited. application focused on utilizing this operational flexibility
for zeroing in on the best processes, which yield greatest
IT has an Impact on Operational Flexibility results in terms of performance variables. Enterprise Resource
There exist innumerable examples of the impact of IT on Planning (ERP) applications in manufacturing enterprises
operational flexibility, particularly in service sector aim at institutionalizing the best practices already coded
enterprises. The simplest example of operational flexibility into the ERP software, derived from the experience and
achieved through IT relates to the redesign of front-end requirements of several organizations. While many
customer interface counters such as airline reservation organizations implement ERP modules as provided by the
systems at travel agents’ offices; railway reservation systems vendors, thereby changing their processes according to the
of Indian Railways; check-in counters at almost all airports; available packages, many other organizations seek a re-
and service counters at Banks. It may appear unlikely today, engineering of the existing processes before implementing
but not very long ago, one could still find service sectors a package, and also seek to customize the packages
dedicated to a particular sector or customer segment or according to their unique optimized internal processes. Thus,
specific service at these the managerial team of
organizations. Successful the organization can
applications of IT Structural flexibility implies that, depending upon the exercise operational
enabled the provision of contingencies of the situation and the organisation’s value flexibility available
whole sets of services at system, the management may move the organization from IT.
each counter, providing
towards greater participative management, may rationalize IT has an Impact on
flexibility to the
customers to chose any its manpower strength and/or may reduce the number of Structural Flexibility
counter at their will or hierarchical levels. Structural flexibility
c o n v e n i e n c e . encompasses several
Additionally, this meant flexibility in allocation of customer structural variables, such as participative management,
service employees at any of the counters. In fact, the rationalization of manpower strength, number of hierarchical
introduction of PNR System in airline bookings (and later levels, decentralization/ centralization and creation of
in Railway reservations) and the resultant capability of the innovative structural forms for the organization. Structural
ticket booking staff to offer changes in travel itineraries flexibility implies that, depending upon the contingencies
based on latest updated information on seats availability is of the situation and the organisation’s value system, the
an excellent example of operational flexibility through IT. management may move the organization towards greater
Placing reservation terminals at travel agent desks, loaded participative management, may rationalize its manpower
with globally accessible computerized reservation system strength and/or may reduce the number of hierarchical levels.
with information on travel schedules of different airlines is These actions are, however, guided by management’s
an example of operational flexibility. Another example philosophy on whether decentralization or centralization (or
comes from the flexibility of on-line stock trading, which a mix of the two) would be most desirable and whether any
has picked up in the last decade, and has almost totally innovative organizational form is favoured. The flexibility/
replaced the floor-based trading. Ability to order books on- freedom of choice lies with the management in deciding the
line through websites such as amazon.com, Internet auctions most desirable structural form, which can range from
through E-bay and various other e-commerce/ e-business mechanistic to organic corresponding to the opportunities
transactions highlight the operational flexibility impact of for adaptive capabilities.
IT. Use of computer-aided design software for design work
That IT has an impact on structural flexibility has been
demonstrate yet another form of operational flexibility
well documented in the management literature. The debate
achieved through IT.
on whether IT promotes centralization or decentralization in
While on the one hand, some IT applications have organizations was initiated by Leavitt and Whisler (1958)
promoted operational flexibility, some other IT applications in their first classical paper on this subject. The key
at operational level have focused on streamlining business predictions in this paper were that as an impact of IT, the
processes and/or optimizing solutions. For example, jobs at middle management level will become highly
© 2006, Global Institute of
Flexible Systems Management
22 Surinder Batra
structured, and IT would promote centralization of outsourcing their business processes are saved the need of
organizations. Several other authors supported this hiring high cost employees and can keep their internal
hypothesis through empirical observations. Contrary views organization structures lean and mean. The call centres set
were also expressed by several researchers. However, the up by Airlines such as Indian Airlines, Jet Airways and Air
most prevailing view appeared to be that IT is a “malleable” Deccan and telephone service companies such as MTNL,
tool, which can be used to achieve whatever form (whether illustrate structural flexibility achieved through IT.
centralization or decentralization) is intended to be achieved.
Enterprise-wide applications such as ERP have also an
(See, Batra, 1994 for a comprehensive literature survey).
impact on structural flexibility. These applications
Later, Hammer & Champy (1994) made the point that with
necessitate a change in the roles of different departments
the help of IT as a disruptive technology, businesses can
requiring different skill sets and changes in authority and
simultaneously reap the benefits of centralization and
responsibilities. The resulting changes may promote
decentralization. Lucas (1997) provided examples of virtual
centralization in procurement, or may provide a means of
organizations – networks of people working from home
injecting greater discipline into decentralized organizations
(telecommuters),
– reflecting the
“negotiated agreement”
structural flexibility
organization and E-business technologies influences all strategic aspects of
advantage. Use of IT-
“vertically integrated the enterprise such as redefining the products/ services
enabled Supply Change
conglomerates”, all IT- offered by incorporating IT-enabled features to add value
Management, enabled
enabled structural forms. to the product; redefining the marketing strategies;
by new technologies
The author referred to
redefining the market itself; and redefining the way such as RFID, have
“ Te c h n o l o g y - f o r m
provided large retail
organizations”, which products/ services are delivered to the customer, including
organizations the ability
have a flat structure, how the financial transactions related to e-business are
to track status of
made possible through handled.
inventory and closely
use of e-mail and
monitor various
groupware to increase the span of control and reduce
decisions related to supply chain management without
managerial hierarchy. In such organizations, employees
having an elaborate structure in place for these functions.
coordinate their work with the help of e-communications and
Overall, IT applications offer organizations the opportunity
linkages. Supervision of employees is based on trust because
of functional integration, multi-skilled staff, rapid & flexible
there are fewer face-to-face encounters with subordinates and
decision making structures, greater autonomy of operating
colleagues. Managers delegate tasks and decision-making to
units and a more flexible and organic approach.
lower levels of management. IT is used to form temporary
task forces focused on a specific project. The organization IT has an Impact on Strategic Flexibility
is linked extensively with customers and suppliers.
Strategic flexibility may be manifested through variables
A number of examples of structural flexibility through such as geographical expansion of the business of the
IT can be empirically observed. For example, the ability of organization; enhancement of customer service and
no-frills airlines such as Air Deccan to successfully operate provision of competitive advantage to the organization.
without city offices signifies structural flexibility, facilitated Achieving geographical expansion of a company’s business
by IT. DELL sells its computers directly through internet- is a click away from designing and hosting appropriate
based systems, without field based sales persons, branch websites for such e-business applications. Customer
sales offices or sales agents to support sales. Amazon sells Relationship Management (CRM) is another good example
books without having bookstores anywhere, again through of achieving strategic flexibility through IT. The Banking,
Internet. Banks offer ATM-based and internet-based banking Insurance & Financial Services Sectors, known as most
services, supplementing the traditional banking outlets and aligned to CRM applications, showcase how IT helps in
thereby reducing demand for physical outlets and customer providing customer-oriented services to meet the life time
interface personnel. The software development companies are needs of the customers through better understanding of and
known to adopt matrix kind of organizations to support addressing customers’ preferences and priorities. This CRM
formation of project teams with a variety of specializations philosophy is ably supported by business intelligence
in accordance with the skill requirements of the projects. applications such as data mining. Another example of
These specializations range from functional to sectoral to strategic flexibility through IT is provided by designing and
geographical to hardware/ software platform etc. The ability implementing Knowledge Management (KM) systems in
to form matrix structures with ease, considering their having organizations. By imaginatively designing KM systems and
large numbers of software professionals (in several aligning them with business strategy, it can be ensured that
thousands), geographically spread all over the country and IT is used for acquiring, consolidating, transferring and
abroad and available dynamically with projects getting utilizing organizational knowledge in a strategic manner. In
completed and new projects ready to start, is achieved with the Indian context, companies such as Infosys Technologies
the help of IT. Business Process Outsourcing (BPO) represents Ltd., and Wipro Technologies Ltd. in the computer software
another form of structural flexibility as the organizations industry are known to have successfully leveraged their
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 Impact of Information Technology on Organizational Effectiveness: A Conceptual Framework 23
organizational knowledge through IT for gaining In addition, IT has an impact on all the other process
competitive advantage (Lahiri, 2005). Decision support variables.
systems (DSS) developed by various companies for specific
(b) IT also has an impact on structural flexibility. This is
business decisions provide another example of strategic
manifested in the form of IT’s impact on centralization-
flexibility through IT. Many airlines, for example, have
decentralization and creation of innovative
developed DSS for flexi-fare modeling, aircraft and crew
organizational forms. As observed earlier, IT provides
scheduling etc., which provide them several decision-making
the ability to move in any of these directions, which
options.
might be in conflict with each other. The actual
It has been mentioned earlier that BPO represents a form direction is based on the decisions made by the
of structural flexibility. More importantly, BPO also reflects management, and depends upon management’s style
strategic flexibility. The need for BPO arises out of strategic and organization value system.
considerations, both for the outsourcing client and the BPO
(c) IT also has an impact on strategic flexibility. Strategic
service provider. It is a strategic initiative to improve
considerations governed by the organizational
competitiveness through focus on core competencies and
effectiveness criteria help define various strategic
ability to serve larger markets. It gives the advantage of
options to be pursued for achieving competitiveness.
capitalizing on the low cost structure of the outsourcing
The top management exercises strategic flexibility in
service provider, and thereby reducing operational costs.
choosing the desirable strategic options and even
However, in absence of
creating new strategic
enablement through IT,
options. This choice is
BPO as a strategic It is obvious that IT has an impact on all three types of
facilitated by IT’s
option wouldn’t have flexibility, namely, operational, structural and strategic
impact on structural
been available. flexibility. The combination of operational, structural and flexibility, and its
E-business provides strategic flexibility, or the overall organizational symbiotic relationship
another important flexibility, has an impact on organizational performance, with operational
example of the strategic flexibility and other
eventually leading to organizational effectiveness.
flexibility provided by process variables.
IT. It covers business Jointly these flexibilities
processes along the whole value chain, including e- facilitate strategic flexibility to the organization.
procurement, supply chain management, electronic order
(d) The combination of operational flexibility, structural
processing, customer service and cooperation with business
flexibility and strategic flexibility can be called
partners. E-business technologies influences all strategic
organizational flexibility. This organizational flexibility
aspects of the enterprise such as redefining the products/
has an impact on organizational performance, which
services offered by incorporating IT-enabled features to add
value to the product (e.g., advanced versions of computer
Organizational
software); redefining the marketing strategies (for example Effectiveness
through various nuances of internet marketing); redefining
the market itself (e.g., auction sites) and redefining the way
Overall Organizational
products/ services are delivered to the customer (e.g., Organizational Performance Third level
upgrading anti-virus software over the net), including how Flexibility impact
................................................................................................................................................................................................................
the financial transactions related to e-business are handled
.........................................................................................................

.........................................................................................................

Strategic
(e.g. e-money). E-business strategies must address how Flexibility
various internal and external processes can be e-business
enabled or improved via technological advances. E-business
strategy must also integrate various other strategies like the
Operational
IT strategy and organizational strategy (Sharma and Gupta, Flexibility & Structural
2004) Other Process Flexibility
Variables Second level
Proposed Revision in the Conceptual Framework impact

................................................................................................................................................................................................................
The analysis of various forms of flexibility and empirical
Emergent Contingency
evidence of the impact of IT on various forms of flexibility First level Properties of Factors
suggests that there is a scope for revision of the original impact IT
conceptual framework to incorporate operational, structural
and strategic flexibility. Specifically, the following
Information
hypotheses are proposed: Technology
(a) IT has an impact on operational flexibility, which had
been identified as one of the process variable in the Figure 3: Revised Conceptual Framework of the Impact of IT
existing conceptual framework proposed by this author. On Organizational Effectiveness
© 2006, Global Institute of
Flexible Systems Management
24 Surinder Batra
eventually leads to organizational effectiveness. competitive advantage, and a key strategic initiative
necessary to meet the competition, was to concentrate on
Figure 3 diagrammatically represents the proposed revised
the speed of delivery and customer-focused supply chain
conceptual framework of the impact of IT on organizational
management. The company developed what it called its e-
effectiveness.
nervous system to integrate the supply chain. The key
Interdependence of Strategic, Structural and features of this e-nervous system were that: (a) it delivered
Operational Flexibilities manufacturing information to key managers like human
nerves relay instantaneous information to the brain; (b) it
The above framework suggests that organizations would first was responsive to changing user demands; and (c) it was
focus on their effectiveness needs and use the strategic scalable to meet future needs of the company. The managers
flexibility enabled by IT to innovate and identify desirable were able to access results on-line and then make important
strategy. This then becomes the starting point for making decisions related to scheduling, quality control and
structural changes compliant with the proposed strategy, manufacturing processes in a flexible manner. The company
taking advantage of the enablement of operational and also switched over to flexible manufacturing systems,
structural flexibility by IT. For example, a company providing agility in producing wider range of products. The
venturing into e-business may first take strategic decisions system acted as IT enabled supply chain integrator providing
on products/ services offered through e-business, the CRM connectivity with supply chain members, thus shifting the
methodologies adopted and business models used for competitive advantage from low labour cost to high customer
Internet marketing etc. This is followed by decisions on response. No significant structural changes were reported, as
organization structure, hierarchical levels, span of control making structural changes didn’t appear critical for adopting
etc. – such decisions being influenced by the power of IT the desired strategy.
to provide timely and relevant information, better monitoring
and control and operational flexibility, as well as the Conclusions
corresponding structural flexibility to make structural
It is obvious that IT has an impact on all three types of
changes. However, some deviations may occur in practice,
flexibility, namely, operational, structural and strategic
when structural changes may be bypassed, or may be
flexibility. The impact on operational flexibility is enabling
marginal in nature. For example, while giving a historical
in nature. The impact on structural flexibility is manifested
account of strategy-structure interrelationships, Kaplan and
in the form of centralization-decentralization and creation of
Norton (2006) have given examples of organizations
innovative organizational forms. The symbiotic relationship
avoiding structural changes. According to them, corporations
of structural flexibility with operational flexibility provides
have usually attempted to match their structures to strategies.
to chose structural variables in accordance with management’s
They have created business units structured around products
style and organization value system. In this process, strategic
and geographical markets, which became more flexible and
considerations governed by the organizational effectiveness
adaptable to local conditions. Next to follow has been the
criteria help define various strategic options to be pursued
BPR model, in which the corporations have organized
for achieving competitiveness. The top management exercises
around processes. However, reorganization often creates
strategic flexibility in choosing the desirable options. This
more problems than it solves, because (a) it takes time for
choice is facilitated by IT’s impact on structural and
employees to adapt to new structures; (b) loss of tacit
operational flexibility, and jointly in a symbiotic manner these
knowledge occurs due to exit of key personnel; and (c) the
flexibilities provide strategic flexibility to the organization.
organization is saddled with vestige of previous
The combination of operational, structural and strategic
organizational decisions. Hence, companies do not always
flexibility, or the overall organizational flexibility, has an
need to find the perfect structure for their strategy; they rather
impact on organizational performance, eventually leading to
chose an organization structure that works without major
organizational effectiveness. However, situations do arise
conflicts and then design a customized strategic system to
when major structural changes may be avoided or may not
align that structure with the strategy. In this regard, the
be considered critical, and the strategy may be chosen based
authors have given examples of two organizations, namely,
on its compatibility with the existing structure.
Du Pont and Royal Canadian Mounted Police, which made
strategy choices aligned with the existing structure. This References
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deciding not to make structural changes. Structures and Processes – in Ghosal A. & Murthy, P. N. (Ed.), “Recent
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Mexico, which utilized the ability of IT to provide strategic Batra, S. K. (1994) Information Technology and Organisational
and operational flexibility for better organizational Effectiveness: A Diagnostic Study in the Indian Environment, Ph. D.
effectiveness, without disturbing the structure. Set up as a Thesis, Department of Management Studies, Indian Institute of
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Manufacturing Enterprise: A Case Study (2002) Global Journal of Flexible
Systems Management, Vol. 3, No. 1, 25-32 Sharma, Sushil K. and Gupta, Jatinder N. D. 2004 e-Strategy Model for
Creating Flexible Organisations”, (2004) Global Journal of Flexible
Hammer, Michael and Champy, James (1994) Reengineering the Systems Management, Vol. 5, Nos. 2 & 3, 1-8
Corporation: A Manifesto for Business Revolution, Nichola Brealey
Publishing, London. Sushil (2000) Concept of Systemic Flexibility, Global Journal of Flexible
Systems Management, Vol. 1, No. 1, 77-80
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strategy without disrupting your organization, Harvard Business Review, Sushil (2001) SAP-LAP Framework, Global Journal of Flexible Systems
March, 100-109. Management, Vol. 2, No. 1, 51-55

Lahiri, Abhijit (2005) Knowledge Management in Indian IT Companies, Upton. D. M. (1994) The Management of Manufacturing Flexibility,
MBA Dissertation, Faculty of Management Studies, University of Delhi, California Management Review, 36 (2), Winter, 72-89
March. Volberda, Henk W. (1998) Building the Flexible Firm: How to remain
Leavitt and Whisler (1958) Management in the 1980’s, Harvard Business competitive, Oxford University Press, Oxford.
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Dr. Surinder Batra is Principal Consultant, Centre for Interactive Management India (CIMI), a management consultancy
and research firm based in New Delhi. He is a doctorate in Management from IIT Delhi; and MBA from Faculty of
Management Studies, Delhi University. His research, teaching and consultancy interests include information technology,
organizational development, knowledge management and training & development. He has been a senior consultant with
Tata Consultancy Services and a senior faculty with Administrative Staff College of India, before establishing CIMI.

© 2006, Global Institute of

Flexible Systems Management
 27
giftjourn@l
Simulation Global Journal of
Flexible Systems Management
Model 2006, Vol. 7, Nos. 1&2, pp 27-35

Impact of Supply Chain Collaboration on Customer Service Level

and Working Capital
S. Wadhwa
IIT Delhi
email: [email protected]
A. Kanda
IIT, Delhi
K.S. Bhoon
IIT, Delhi
Bibhushan
IIT, Delhi
Abstract
Collaborations in supply chains as a business strategy is now getting increasing attention at business leadership level. In most
cases, collaboration appears to imply vertical integration on both ends of the supply chain, that is, collaboration with suppliers
and dealers/ retailers. Although horizontal collaboration (that is, between supply chains) is sometimes mentioned, old business
model of competition with peers still holds. While benefits of collaboration in general and vertical collaboration in particular
have been studied from different angles, research continues to focus on soft issues of collaboration like trust, building partnership
and so on because benefits of collaboration are taken for granted. Considering the disorganized retail industry in India which
is close to Rs 5,00,000 crores today, we feel there is substantial scope for horizontal collaboration during the consolidation
phase. Industry practitioners and researchers are interested to identify quantitative benefits of horizontal collaboration. The area
offers a lot of decision flexibility that may be employed to ensure good benefits. However, as our experience indicates sometimes
horizontal collaboration may be counter-productive also. Therefore, it would be prudent to investigate its benefits in quantitative
terms. Accordingly, we construct a simulator having two parallel supply chains and run it in independent and horizontal
collaboration mode. We find that there is substantial reduction in system inventory leading to reduced working capital requirement.
More importantly, horizontal collaboration also improves fill rates, a result counter-intuitive to the well understood concept of
higher inventory needed to improve service levels. We also find that with increasing demand uncertainty, benefits of horizontal
collaboration rise significantly. In our opinion, disorganized Indian retail industry has a golden opportunity to analyze and
adopt horizontal collaborations. This paper attempts to offer suitable motivation in this direction.

Keywords : customer service level, decision flexibility, supply chain collabotation, working capital

Introduction • End customer service failures occur even when

adequate inventory exists in the network of supply
The optimal deployment of inventory is a vital business
chains.
function for an enterprise. The well-documented benefits of
running a manufacturing, distribution or retailing operation • Customers facing locations experience, undesirable
with leaner inventory is largely understood. The concept stock-outs, while service between echelons is more than
ranges from a permanent reduction in working capital to acceptable.
increased sales and higher customer satisfaction. Managing • External suppliers deliver unreliable performance,
inventory in a buyer–supplier relationship presents major because they have received unsatisfactory demand
pitfalls. One is the failure to achieve true network inventory projections.
optimization, because replenishment strategies are applied
to one echelon without regard to its impact on the other • Shortsighted internal allocation decisions are made for
echelons. A network view of inventory usage up and down products with limited availability.
the demand chain is often lacking when one is only dealing • Though there is a potential for decision flexibility to
with a single entity objectives. Optimization on a single collaborate in mutually useful directions, it is never
supply chain as a subsystem (with single entity objectives) examined.
of a larger system of many supply chains results in:
It is thus apparent that supply chains have to move much
• The single supply chain carries excess inventory in the beyond the current boundaries by adopting greater vertical
form of redundant safety stock. and horizontal collaboration opportunities.

© 2006, Global Institute of

Flexible Systems Management
28 S. Wadhwa, A. Kanda, K.S. Bhoon and Bibhushan
Supply Chain Collaboration management to evaluate the benefits or risks involved in the
horizontal collaboration.
Thomas L. Friedman (2005), the foreign affairs columnist for
the New York Times, in his about to be published book But what are the enablers for collaboration? What are
argues that “the most important force shaping global the obstacles that must be overcome to achieve this? Is it
economics and politics in the early twenty-first century” is really worth the effort? To address these issues, Mentzer,
not the admittedly important war on terrorism but a “triple Foggin and Golicic (2000) interviewed (individually or in
convergence — of new players, on a new playing field, focus groups) 20 supply chain executives from various
developing new processes and habits for horizontal companies. Their purpose was to understand what supply
collaboration.” chain collaboration is, how much is taking place, how it can
be achieved and the benefits obtained. Specifically, they
There is a general agreement on collaboration being a
explored the enablers of supply chain collaboration, its
win-win situation. Despite this, successful collaboration –
impediments. They identified 12 benefits listed in Table –
both internally and with its extended value chain – is still
1. However, as can be seen these are expressed in generic
widely uncharted territory. Charles et al (2004) argue that
terms and do not address the issue of tangible benefits in
the concept of collaboration has largely eluded most
measurable terms. In our opinion greater deployment of
companies—and there’s little evidence that anything has
decision flexibility can help improve the supply chain
changed much in recent years. Apparently, the idea of
performance by exploiting the benefits of supply chain
working with willing business allies to advance the supply
collaboration. It is useful to view each supply chain as a
chain remains too contemporary for many. The traditional,
flexible system. Then exploiting various types of decision
largely adversarial business model still holds sway in most
choices within the network of entity flows in the flexible
organizations. Part of the reason is that today’s definition
system can result in improved performance. This has been
of collaboration goes far beyond what companies have been
shown by Wadhwa and Browne (1989) using three basic
striving for over the last few years. Manufacturers have spent
types of decision points for guiding the entity flows. Similar
the better part of the last decade applying principles of lean
concepts can be evolved for guiding the entity flows
manufacturing and collaboration techniques within their own
between different supply chains to promote horizontal
organizations to improve efficiencies and streamline
collaboration. Wadhwa and Rao (2004) have shown such
processes, all with an eye towards reducing cost and
decision flexibility use within supply chains with a focus
eliminating waste. Collaboration today, however, is a totally
on lead time reduction. However, it is useful to enrich the
different ball game. It means opening up these same
study by focussing on cost benefit parameters also.
processes and sharing critical information with suppliers,
partners and sometimes customers. This has dramatically Table-1 Supply Chain Collaboration Benefits
changed the collaboration equation, forcing companies to
• Reduction in inventory
deal with even more complex business and information
technology problems. In this context, Wadhwa et al (2002) • Reduction in personnel
and Wadhwa and Rao (2003) have promoted the idea of
• Improved customer service
developing demonstration models to promote the benefits
of decision and information sharing in supply chains. • Better delivery through reduced cycle times
In addition to internal collaboration within a company, • Increased speed to market of new products
there is also a growing interest in collaboration among
• Focus on core competencies
different companies on various supply chain functions, such
as demand forecasting, product design, transportation and • Public image
procurement. This type of collaboration is referred to as • Strengthened trust and interdependence
horizontal collaboration. Such inter-company collaboration
is sometimes enabled by market intermediaries in the • Increased sharing of information, ideas, and technology
industry. In the petroleum sector in India, oil companies • Working toward the goals of the supply chain and not
freely enter into swap arrangements supplying their products the individual companies
from each other’s refineries. This substantially reduces the
amount of product moved, saving on distribution costs, • Increased shareholder value
compressing delivery times and benefiting the environment. • Competitive advantage over other supply chains useful
However, it tends only to happen during periods of crisis, to enrich the study by focusing on cost-benefit
when companies assist each other in the event of production parameters also.
or supply chain breakdowns.
Horizontal Collaboration
Being a new research area, horizontal collaboration has
not received due attention of the researchers. This paper Horizontal collaboration differs from vertical in the sense
aims to fill this gap by developing useful insights in the that it considers collaboration among only those on the
area of horizontal collaboration by the use of demonstration buyer side or the supplier side. In many companies,
models. These demonstration models could be used by the purchasing is done by multiple functional divisions (or
purchasing organizations within the company) which either
giftjourn@l
 Impact of Supply Chain Collaboration on Customer Service Level and Working Capital 29
act independently or have minimal interaction with each perspective. Ledyard, Banks and Porter (1989) test allocation
other. For example, until very recently, purchasing was done mechanisms with uncertain resources and indivisible
locally by managers at each of the Ashok Leyland Plants. It demand. The results indicate that high efficiency could be
was typical for buyers at one plant to buy the same raw obtained if collaboration is enabled among buyers. Griffin
material as a buyer at another plant from two different (2004) studied the interaction between multiple buyers and
suppliers at different prices. This approach was ineffective multiple suppliers, where horizontal collaboration is enabled
in taking advantage of Ashok Leyland’s volume and by a central mechanism or an intermediary.
corporate-wide buying power. One prospective solution was
Analysis of Supply Chain Interaction and Collabo-
to rearrange decision flexibility so as to improve
collaborative buying. Similarly, until 1997, purchasing at rations – Current Research
Siemens Medical Systems was done locally, where buyers Interactions among participants of a supply chain have been
at Siemens’ ultrasound, electro-medical, computer analyzed along several directions. One line of related
tomography, magnetic resonance imaging and angiography research focuses on de-centralized versus shared information.
divisions independently bought the components and When the information is decentralized, the primary focus of
material that their individual plants needed and rarely studies is on constructing different mechanisms to enable
communicated with each other. There was no pooling of coordination in a two-stage setting and eliminating
component demand for leveraging purposes (Carbone inefficiencies stemming from double marginalization.
(2001)). Recently both companies have moved with great Cachon and Zipkin (1999) and Lee et al. (2000) analyze
success towards centralized procurement, which allows coordination mechanisms in the form of rebates or transfer
collaboration among internal purchasing units. In India, this payments. Weng (1995) considers a system where
scenario is getting repeated at many SBUs. coordination is established through quantity discounts and
In addition to internal collaboration within a company, franchise fees. Jin and Wu (2001) study supply chain
there is also a growing interest in collaboration among coordination via transfer payments in the presence of e-
different companies on various supply chain functions, such market intermediaries. See Cachon (2003) for an analysis of
as demand forecasting, product design, transportation and coordinating contracts under different supply chain settings.
procurement. Such inter-company collaboration is sometimes Another line of research focuses on collaboration. Internet
enabled by market intermediaries in the industry. For and technology have made information sharing possible at
example, the Internet-based logistics network, Nistevo, every stage and this leads to different collaborative efforts
consolidates orders from multiple shippers and creates round- in supply chains. Examples include vendor managed
trip or dedicated tours. This reduces the costs of the carriers inventory (VMI), just-in-time distribution (JITD) and
due to better utilization of truck capacity and in turn results collaborative planning, forecasting and replenishment
in lower prices for the shippers (Strozniak, 2001). Land (CPFR), in which trading partners such as vendors and
O’Lakes Inc. has saved $40,000 a month by coordinating retailers collaborate vertically.
its shipping routes with companies such as Georgia-Pacific
(Keenan and Ante, 2002). In the petroleum sector in India, Horizontal coordination and collaboration in the supply
oil companies freely enter into swap arrangements supplying chain enabled by quantity discounts is studied by Gurnani
their products from each other’s refineries. This substantially (2001) in a single supplier two buyer setting. Some existing
reduces the amount of product moved, saving on research considers the interaction of buyers and suppliers
distribution costs, compressing delivery times and benefiting from a resource allocation perspective. Ledyard, Banks and
the environment. However, such flexibility to ensure Porter (1989) test allocation mechanisms with uncertain re-
desirable entity flows is used only during periods of crises, sources and indivisible demand. The results indicate that
that is, breakdowns and so on. Based on the proactive high efficiency could be obtained if collaboration is enabled
flexibility concepts of Wadhwa et al (2005), the use of among buyers. Griffin (2004) studied the interaction between
flexibility to improve entity flow performance is useful in multiple buyers and multiple suppliers, where horizontal
normal operations too. The area offers a lot of decision collaboration is enabled by a central mechanism (or
flexibility that may be employed to ensure good benefits. intermediary).To the best of our knowledge there has not
Horizontal collaboration may also help to reduce the level been much research on investigating horizontal collaboration
of flexibility required in each chain to deal with dynamic among buyers and suppliers who are part of parallel supply
demand. Since flexibility is costly, horizontal collaboration chains.
will help decision makers to deploy judicious level of Lead time and Customer Service
flexibility in each collaborating chain.
Lead-time refers to the time lag between placing an order
Horizontal collaboration has also received the attention and receiving it (Li, 2000). It is one of the most important
of researchers recently. Horizontal coordination and causes of bullwhip effect. The safety stock component is
collaboration in the supply chain enabled by quantity derived from the lead time plus the ordering frequency and
discounts is studied by Gurnani (2001) in a single supplier minimum and maximum quantities ordered. Lead-time has
two buyer setting. Some existing research considers the established roots as a measure of order management and
interaction of buyers and suppliers from a resource allocation supply-chain performance, having been used in multiple

© 2006, Global Institute of

Flexible Systems Management
30 S. Wadhwa, A. Kanda, K.S. Bhoon and Bibhushan
studies of related phenomena (Mabert et al. 2000; McAfee to investigate the following issues in horizontal
2002). The general importance of cycle time has been collaboration
demonstrated in studies of customer service (Stalk et al., (i) The impact of horizontal collaboration on working
1990) and manufacturing performance (Hayes et al., 1988). capital in the form of inventory holding at:
Customer service and timeliness have also been identified
as primary reasons for IT investment (Brynjolfsson et al., a. Supplier/manufacturer end
1996). b. Retailer/ dealer end
Chopra et al (2004) investigated the effect of lead time c. At system level
uncertainty on safety stocks. They show That for cycle
service levels above 50%, reducing lead time variability (ii) The impact of collaboration on customer service levels
reduces the reorder point and safety stock. For cycle service at:
levels above 50%, they aver that reducing lead time a. Supplier/ manufacturer end
variability is more effective than reducing lead times
because it decreases the safety stock by a larger amount. b. Retailer/ dealer end

Cheong (2005) investigated differentiated delivery lead (iii) The impact of lead time on horizontal collaboration.
times in supply chain networks from the point of groupings (iv) Collaboration response to unexpected surges in demand
and conclude that the network cost reduces as the facility
grouping increases. This cost reduction is because more Basic Definitions
customer locations can be served from the same facility, thus Product Availability
sharing the fixed cost.
A primary objective of inventory management is to ensure
Yan (1999) studied the behaviour of supply chain that product is available at the time and in the quantities
network (SCN) under different lead-time distributions. He desired. This is commonly judged based on the probability
simulated an extendable multi-agent linear supply chain to of fulfillment capability from current stock. This probability,
evaluate the impact of different lead-time distributions on or item fill rate, is referred to as the service level, and, for a
bullwhip effect and supply chain performance under single item, can be defined as
centralized and decentralized information sharing strategies.
His findings are that given a fixed total lead-time across the  Expected Number of units out of stock annually 
Service Level = 1 -  
supply chain, centralized information sharing and  Total Annual Demand 
disintermediation improve the supply chain performance. He
concluded that though the bullwhip effect remains Service level is expressed as a value between 0 and 1. We
unchanged, different lead-time distributions will lead to will be converting it into percentages, as is the industry
different supply chain performance. norm.
Eyal Biyalogorsky and Oded Koenigsberg (2004) Reorder Point Model with Uncertain Demand
analyzed how production lead time affects decisions in a We will be using reorder point inventory control method.
distribution channel facing uncertain demand. In particular, When inventory is depleted to the point where its level is
they considered which channel member, the retailer or the equal to or less than a specified quantity called the reorder
manufacturer, should carry the inventory in the channel and point, an order of quantity Q is placed on the supplying
how lead time affects promotional activities. They found source to replenish the inventory. The effective inventory
that, in most cases, the channel, the retailer and the level at a particular point in time is the quantity on hand
manufacturer all benefit from the manufacturer carrying the plus the quantity on order. We have assumed no backorders.
inventory in the channel. However, when there is uncertainty The entire quantity Q arrives at a point in time offset by
about market size and the difference between the possible the lead time. Between the time when the replenishment
demand states is large, the channel and the retailer are better order is placed at the reorder point and when it arrives in
off if the retailer carries the inventory but the manufacturer stock, there is a risk that demand will exceed the remaining
still prefers to carry the inventory on its own. amount of inventory. The probability of this occurring is
Globalization of trade has added complexity to the lead controlled through raising or lowering the reorder point and
time. As the companies go global, they discover cost by adjusting Q as under:
competitive sources of supply with comparable quality. Reorder Point = Mean Demand x Lead Time + Safety Stock
However, lead time tends to increase manifold, specially for
bulk items like steel where only way of getting material is Safety Stock = Demand Rate Standard Deviation x Safety
though shipping which can be very slow. We need to factor Factor
in increased lead time and investigate if horizontal
collaboration can mitigate the impact of long lead time.
Demand Rate standard deviation= σ LeadTime , where
σ is the standard deviation of daily demand.
Investigation Objectives
Safety Factor - We have used 1.04 for 85% confidence level
By simulating a network of supply chains, we would attempt With this as the background, we now proceed to simulate
giftjourn@l
 Impact of Supply Chain Collaboration on Customer Service Level and Working Capital 31
two supply chains with a view to analyze the impact of times on progressively increasing lead time. The simulator
collaboration on service level and inventory holding (which is first run on independent mode and then on horizontal
translates to working capital requirement). Although we have collaborative mode as explained below.
assumed lead time to be deterministic, we will be varying
it to see the sensitivity of collaboration to different lead
Table 2: Simulation Parameters
times
Lead Mean Standard Reorder

MANUFACTURER RETAILER Time(days) Demand Deviation Point

(M1) R1
2 50 20 129
4 50 20 242
MANUFACTURER RETAILER 6 50 20 351
(M2) R2
8 50 20 459
Figure 1: Supply Chains Operating in Independent Mode
10 50 20 566
The Simulation Model 12 50 20 672
There are two supply chains with one manufacturer (M1& 14 50 20 778
M2) and one retailer (R1&R2) each as shown in Figure 1.
Both chains are in the same business and are operating in 16 50 20 883
the same market. They may belong to one company or to
18 50 20 988
two different supply chains. But we assume that all four
elements are currently operating independently, optimizing 20 50 20 1093
their own operations. Both Chains are operating under same
parameters, that is, the manufacturing capacity, lead times, Logic in Brief
all costs of retailer (Holding cost, shortage cost and
transaction costs) are assumed to be the same. We simulated (a) Independent Mode
this system for one item, as under: 1. Retailer End. The retailer starts with ROP level. The
Independent Mode (Figure 1): Here the two chains operate retailer meets the daily demand. After meeting the demand
independently. There is no interaction among the chains. if the stock falls below reorder level, an order is
Retailer1 meets the demand from own stock or by sourcing electronically placed on the manufacturer keeping the lead
it from Manufacturer1. Similarly, the other chain operates in time in view. Demand is calculated on past demand averages.
the same manner. After the lead-time is over, retailer’s stock is replenished,
provided there is no delay at the manufacturer’s end. If there
Formal Collaboration (FC) Mode (Figure 2): Here both the
is delay, day of delivery is postponed. He incurs holding
chains operate as one system. However the chains are
cost on the balance stock at the end of each day. If he
retained in the original form, that is no element is dismantled.
cannot meet any demand up to full requirement, shortage is
Simulation Parameters: Lead time, mean demand and noted and is counted for the purpose of fill rate. Shortages
standard deviation of the demand under normal distribution however, lapse.
for both chains are given in Table 2. Reorder levels have
2. Manufacturer End. The manufacturer starts with stock
been calculated as explained under Reorder Point model
equal to capacity. He constantly revises his production
above. Both chains operate under similar parameters.
targets in relation to the average demand on him. If he finds
that the order is more than the stock plus average production
MANUFACTURE RETAILER on any particular day, he is able to produce to full capacity.
(M1) R1 One order must be supplied in one lot. If sufficient stock
(including production) is not available, the whole order is
delayed by one day and he incurs deficiency in service (fill
MANUFACTURE
rate). His holding costs are calculated on the balance stock
RETAILER
(M2) R2 held at the end of each day.
3. Both chains operate similarly.
Figure 2: Supply Chains in a Formal Collaboration Mode
(b) Horizontal Collaboration Mode
The simulator is run for 200 days on daily demand 1. Retailer End. Same logic except that if the demand
generated through normal distribution with mean 50, sigma cannot be met, he checks up with the other retailer. The
20 and ROP as above. Each simulation run of 200 days is other retailer checks if there will be surplus stock left after
for one fixed lead time. Thus, simulation is carried out 10 he has met his demand, which is known by now. Whatever
© 2006, Global Institute of
Flexible Systems Management
32 S. Wadhwa, A. Kanda, K.S. Bhoon and Bibhushan
he can spare is passed on to the other retailer.
2. Manufacturer End. The two chains take join production
decisions based on one consolidated demand from both
retailers. Thus manufacturing facility becomes one, although
physically they may continue to work from two locations.
The total manufacturing capacity is considered to be
doubled. In essence there is now one manufacturer and two
retailers
Results
Impact of Horizontal Collaboration on Working
Capital in the form of Inventory Holding - Supplier/
Manufacturer End Figure 4: Per cent Reduction in Inventory at the Manufacturer
End
While the build up of Inventory with lead time in both cases
is apparent, there is a distinct reduction in inventory with
collaboration. This is both due to pooling of demand and
pooling of resources. In percent terms, however, the reduction
is not uniform as depicted in Figure 3. It varies from a high
of 28% to a low of 14%. It tends to reduce with longer lead
time. We feel this is happening because of aggregation in
demand occurring at longer lead times.

Figure 5: Per cent Reduction in Inventory at the Retailer End

Impact of Horizontal Collaboration on the Supply

Chain System – Working Capital
Since both chains have gained, it is obvious that there is
overall working capital reduction on account of inventory
holding cost.
Impact of Horizontal Collaboration on Fill Rates-
Supplier/Manufacturer
Figure 3: Per cent Reduction in Inventory under Horizontal
Collaboration
Refer Figure 6 below. The manufacturers are able to maintain
100% fill rates even when not collaborating because the
Impact of Horizontal Collaboration on Working demand pattern is stable (we will see the impact of
perturbation later). However, this is possible till the lead time
Capital in the form of Inventory Holding - Retailer/
Dealer End
Refer Figure 4 and Figure 5. We find that not only is
working capital saving occurring at manufacturer end, the
retailer is also benefited. It has often been propagated that
collaboration helps only the manufacturer in reducing
inventories. This is sited as one of the reason why
collaboration has not taken off in a big way despite apparent
benefits. Moreover, additional benefit to manufacturers in
vertical collaboration is possible because of so called arm
twisting by them. Logical models apportion benefits on both,
especially in horizontal collaboration where, each of them
work as equals. Thus, this model is more likely to be a win-
win situation.

Figure 6: Fill Rates at the Manufacturer End

giftjourn@l
 Impact of Supply Chain Collaboration on Customer Service Level and Working Capital 33
is short. As the lead time increases, fill rates drop drastically,
despite the fact that inventory holding goes up. This is
because, demand comes in larger batches and full batch
satisfaction is postponed by a day or two. However, in the
collaboration mode, the demand pattern of the two retailers
tend to smoothen out (orders do not land up on the same
day) thus ensuring 100% fill rates even for longer lead
times. This outcomes appears to be interesting in the global
context. If two manufacturers export to two retailers/
companies in another country with inherent long lead times,
it would be prudent for them to enter into horizontal
collaboration, thus ensuring better fill rates.
Impact of Horizontal Collaboration on Fill Rates-
Retailer/ Dealer
This is a counter-intuitive result. While the fill rates were Figure 8: Service Level with Different Lead Times at the
very good for shorter lead times in the case of manufacturer, Manufacturer End
the picture at the retailer end is reversed (See Figure 7). As
the lead time gets longer, fill rates become better even when improve from 85% to 100% on horizontal collaboration.
no collaboration is taking place. This is occurring because This is a useful deduction for low cost items. It means
inability at retailer end arises only at the fag end of the lead we can accept longer lead times in such cases as service
time period. On other days, demand is fully met. In the levels will actually improve with lead time.
model, aggregation of demand is already incorporated in the
form of aggregated standard deviation (). Therefore, that
Collaboration Response to Unexpected Surges in
cannot be sited as the reason for higher fill rate for longer Demand
lead times. Coming to the impact of horizontal collaboration So far our demand, although varying, was stable with
per-se, it appears to improve fill rates significantly. For constant mean. With sufficient reserves, predicable and
example, fill rate for two days of lead time improve from constant lead times and aggregation of demand over longer
91% to 96%. time periods, fill rates tend to be very good. We therefore
wanted to investigate the impact of lumpy demand on
certain days. Accordingly, the demand data generated by the
normal distribution was perturbed to include demand for 250
items against mean of 50 on 50th, 100th and 150th day of
simulation. The results on service level at the retailer end
with lumpy demand are presented in Figure 9.

Figure 7: Fill Rates at the Retailer End

Impact of Lead time on Horizontal Collaboration

From the simulation output generated so far, lead time
impact appears to have ambiguous nature as discussed
below:
(a) Horizontal collaboration reduces inventories marginally
as the lead time increases. The impact is not very Figure 9: Service Level with Different Lead Times at the
Manufacturer End
significant. In fact in percent reduction, there is a
degradation although in absolute terms there is a gain We find that horizontal collaboration response to fill
(b) Service levels at both ends of supply chain become rates at retailer end appears to be too good to be ignored.
significantly better with longer lead time (refer Figure 8 While in the independent mode, fill rates ranged from low
and 9). In the case of manufacturer, impact at very long of 86% to high of 93%, these tend to improve to 92% to
lead time is significant as service level was seen to 98% in the collaborative mode. Thus collaboration response

© 2006, Global Institute of

Flexible Systems Management
34 S. Wadhwa, A. Kanda, K.S. Bhoon and Bibhushan
to fill rates appears to be even better under lumpy demand Implication for Indian Retail Industry
case. However, phenomena of fill rates improving with lead
According to a survey by AT Kearney, an overwhelming
time is again observed. Reasons for this have been explained
proportion of the Rs 400,000 crore retail market in India is
earlier under steady demand case.
unorganized. In fact, only a Rs 20,000 crore segment of
The situation is vastly different at the manufacturer’s the market is organized (Ganguly (2004)). This is expected
end. There seems to be a complete chaos. Independent mode to increase by 20% (yoy). Thus there is a Rs 5,00,000 crore
appears to be a full-scale disaster as fill rates plummet to plus business opportunity in horizontal and vertical
3.5 on 20 days lead time. In collaboration mode, fill rates collaboration. As per our findings, there is 7% to 17%
come out lower than even independent mode for shorter lead reduction in inventory at retailer end and 14% to 28% at
times. But they never seem to drop below 60%. Therefore, manufacturer end as a result of horizontal collaboration,
horizontal collaboration continues to present a robust picture under stable demand pattern. In the case of lumpy demand,
on fill rates under the simulated conditions earlier specified. the savings could be in the region of 12% to 27% at retailer
On a more practical note, it can be noted that it is the end and 29% to 57% at the manufacturer end. Let us assume
retailer who is facing the customer and he offers better that 50% of the sector gets organized through horizontal
service under horizontal collaboration. In the case of collaborations. Further assuming optimistic inventory turns
manufacturer, lower fill rates only imply postponement of of 20 per year and modest 20% reduction in inventory
shipment, with no denial to the end user. Therefore, through collaboration, there would be working capital saving
horizontal collaboration is a superior model at the system of 2500 crore for the retail industry alone. It is useful to
level. point out that collaboration in evolving dynamic
environment needs greater decision flexibility amongst
This also brings out another important deduction; it is various chain members. The chain members may be
not possible for all components of a complex supply chain manufacturers, wholesalers, retailers and so on. This gives
system to benefit from collaboration. It could be a win some- rise to both internal chains as well as external chains.
loose some situation at individual component level, which Collaboration is useful for both these chains with suitable
needs to be underscored before embarking on any decision flexibility with different chain nodes. Wadhwa and
collaboration model. Rao (2004) proposed a unified framework to understand role
Leveraging Horizontal Collaboration of flexibility in manufacturing (can be seen as internal
chains and supply chains) can be seen as external chains. It
It is widely agreed that a vertically and horizontally is useful to use the proposed framework to apply the key
integrated multi-channel business model will become flexibility concepts towards improving collaboration
standard in the retail industry. Yet, there are a lot of between external supply chains. The area offers a lot of
apprehensions. While the strategies, business models, soft decision flexibility that may be employed to ensure good
integration issues are dominating all collaboration benefits. Horizontal collaboration may also help to reduce
discussions, there is less back up quantitative data to support the level of flexibility required in each chain to deal with
the horizontal collaborative model. Our investigation dynamic demand. Since flexibility is costly, horizontal
through simulation appears to suggest that there is a distinct collaboration will help decision makers to deploy judicious
reduction in working capital with improved service levels level of flexibility in each collaborating chain. Our research
in horizontal collaboration. This is depicted in Figure 10. is ongoing in this direction.
Limitations of the Research
Our simulation model has been constructed with many
assumptions like deterministic lead times, normal demand
distribution, IT enabled supply chain and others. Therefore,
our findings will get impacted to a certain extent, as more
realistic situations are factored in. However, we feel the
horizontal collaboration model will generate more, not less
benefits as the demand and supply uncertainties will only
increase with more variables.
Summary and Conclusions
Horizontal collaboration offers enormous opportunity in the
form of reduced working capital coupled with increased
service levels, often considered at the opposite ends of
working capital requirement (higher service levels demand
more in stock inventory). Since the model operates under
Figure 10: Reduction in Working Capital with Improved IT enabled network, the chances of human interaction
Service Levels in Horizontal Collaboration causing untold harm to the collaboration are far less. If these
supply chains are allowed to operate under defined rules of
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 Impact of Supply Chain Collaboration on Customer Service Level and Working Capital 35
forecasts, demand planning, supply management and Different Ordering Structures: Order Coordination, Order Consolidation,
manufacturing, cash flows are inherent in the model. and Multi-Tier Ordering Hierarchy. International Journal of Production
Economics, 72, pp 203-225.
However, there is a caution; the benefits may not accrue
equally. In horizontal collaboration, the retailers appear to Hayes, R.H., and Clark, K.B. (1986). Why some factories are more
productive than others, Harvard Business Review, September-October,
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Flexible Systems Management
36

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Global Journal of
Case Study Flexible Systems Management
2006, Vol. 7, Nos. 1&2, pp 37-44

Role of Organizational Flexibility for Corporate Entrepreneurship:

Case Study of FedEx Corporation
B.R. Bhardwaj
Department of Management Studies
Indian Institute of Technology Delhi
Viswakarma Bhawan, Shaheed Jeet Singh Marg
New Delhi – 110016
email - [email protected]

K. Momaya
Department of Management Studies
Indian Institute of Technology Delhi
Viswakarma Bhawan, Shaheed Jeet Singh Marg
New Delhi – 110016
e-mail- [email protected]

Abstract
In order to remain competitive in global markets, an organization needs to focus on corporate entrepreneurship. This requires
an organizational structure that allows organizational flexibility. A study on logistics and transportation organization, FedEx
Corporation has been conducted to analyze the practice of strategy formulation and implementation based on corporate
entrepreneurship. The case has been developed to find out the organizational flexibility issues in much greater depth. The study
is based on Flexible Systems Methodology and was conducted through interviews. The synthesis of the learning reveals that
there is a need for proper understanding of corporate entrepreneurship and flexible approach of organization to make the
concept more effective.

Keywords: corporate entrepreneurship, flexibility, learning issues

Introduction i) The managerial actions that can improve the odds of

success with the flexible practices and link them with
The study has been conducted to analyze the corporate
the company’s CE strategy?
practices concerning the use of corporate entrepreneurship
(CE) as a strategy for competitiveness. In this paper, the case ii) The CE process that translates a technique or the
study of a service organization has been developed. The case method into some form of utilization.
study approach allows linking theory and practice by iii) The relationship with the flexibility and CE on strategy
analyzing the strategic issues of select organizations in much formulation and implementation w.r.t to individual
greater depth. A case study can never capture fully the flexibility and organizational flexibility.
richness and complexity of real life management situations,
but it has proven effective in the area of strategic iv) The financial performances of the organization linked
management. It complements and enhances the information with CE.
by focusing attention on what a firm has done or should do Methodology
in a business situation The successful organizations have
been practicing the system flexibility in some way or the The methodology has been derived from Flexible Systems
other in their management approach. The study aims at Methodology as proposed by Sushil (1994). The study has
exploring the concept of corporate entrepreneurship for been planned through interviewing, observation and case
strategy formulation and implementation. The main objective method. The interviewing method consisted of an interview
was to get answers to the following questions: schedule (Appendix 1) with senior management level in the
select organizations. These personal interviews were
i) What do organizations understand from corporate
conducted through prior appointments. The case method
entrepreneurship?
consisted of data relating to some phase of life history of
ii) Is strategy formulation and implementation based on the organizations under study. The complex situations and
CE required for organizations? combinations of all the factors involved in the behavior
were examined to determine the existing status and to
During the course of the study, the following issues were
identify the causal factors. The study mainly revolved
addressed:
around the following queries:
© 2006, Global Institute of
Flexible Systems Management
38 B.R. Bhardwaj and K. Momaya
i) How are different companies formulating their strategies a manger to exercise his freedom of choice. The internal and
for CE? external flexibilities should resonate with each other.
ii) What are the problems faced by them? The case has been synthesized with respect to context,
situational factors; roles played by various actors and CE
iii) What are the various linkages?
strategies. Interviews were being conducted in the selected
iv) Are the companies able to define their CE strategies? organization with people in top, middle and operation level.
v) How is this The objective was to
concept helpful understand the top-
Corporate entrepreneurship refers not only to creation of level commitment and
to them?
new business ventures, but also to other innovative vision for CE, middle
In this study a activities such as development of new products, services, m a n a g e r ’ s
purposive sample of implementation
40 respondents from
technologies, administrative techniques, strategies and
strategies, and
logistics and competitive postures. operating level’s
transportation perception of these
organization, FedEx Corporation has been taken. A brief past strategies. This is important for better coordination and
history of the organization was obtained and cases were success of CE strategies.
prepared based on interviews and observations The cases
were analyzed applying the Situation-Actor-Process (SAP) In this case, the context of the situation and the roles
framework to bring out the finer issues. The paper adopts played by various people has been described. The process
single case study approach where unit of analysis are (a) firm part deals with the strategies and practices being carried out
level (its internal environment components) (b) product / by the organization. In order to get deep insight and for
service level (as number of products developed and number effective action, Figure 2 shows a SAP-LAP model of inquiry
of ideas generated (Yin, 1994). Questionnaire explored the (Sushil, 2000) has been developed by identifying critical
extent of management support, flexible organizational questions in each element of situation, actor, process, and
boundaries, intelligence generation and dissemination; work learning.
discretion is practiced within FedEx. Remaining questions
were aimed at understanding CE initiative in terms of the
number of products and services developed, markets Framework of Guiding Questions for SAP-LAP Inquiry
developed, entrepreneurial ideas and products improved. Situation
“24-hours rule” was followed in interviews. According to
• What are the major opportunities?
this rule, detailed interview notes, impressions and various
facts were cross-checked within one day of the interview. • What are the major threats?
The S-A-P analysis (Sushil, 1997) has been used to learn • What are the major change agents?
about the handling of the CE strategy in the organizations
Actor
constituting the sample for the study. The three basic
components that define the dynamic interplay in flexible • What are the main corporate entrepreneurship strategies?
management paradigm are situation, actor and process as
• Does management support corporate entrepreneurship
shown in Figure 1. The actor forms the part of the situation
initiatives?
as well as the process. The internal flexibility refers to the
capabilities of the actor and making him open-minded; the • Does it provide work discretion?
actor could be an individual or a group of persons. The • Does it practice organizational flexibility?
external flexibility provided by the situation, which enables
Process
• How the corporate entrepreneurship processes are
determined?

Situation • What are the processes dominating towards CE?

• What are the potentials to change the process?
Process Learning Learning
• What is our understanding about corporate
Actor
entrepreneurship?
• What is the role of organizational flexibility in
formulating corporate entrepreneurship strategy?
Figure 1: SAP Interaction for Learning (Sushil, 1994, 1997,
2000)
Figure 2: SAP-LAP Inquiry Schedule for the Study
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 Role of Organizational Flexibility for Corporate Entrepreneurship: Case Study of FedEx Corporation 39
Definition of New Business orientation.

New business is defined as entry into an entirely new market It has become important for the firms to operate in highly
or introduction of an entirely new product or service as new dynamic market environment to have a high degree of
business. The logic for calling such business is that entry flexibility in the product development activities. Some firms
into an entirely new market requires much new learning develop links with customers to co-develop the product in
about logistics, distribution channels, advertising, and so the iterative process.
on; and the development of an entirely new product requires Case Study of FedEx
similar new learning about design, development and
manufacturing (Dougherty and Hardy, 1996). Corporate FedEx began as a pioneering venture providing full range
entrepreneurship refers not only to creation of new business of transportation, information, and supply chain services.
ventures, but also to other innovative activities such as FedEx consists of four operating companies. FedEx
development of new products, services, technologies, Corporation has grown and diversified into a multi-business
administrative techniques, enterprise, rapidly building a
strategies and competitive An entrepreneurial firm nurtures innovation by formidable presence in ten
postures. Previous views of major areas. The details of
practicing flexibility and responsiveness. these business areas have been
corporate entrepreneurship
can be classified on four shown in Figure 3.
dimensions: (a) new business venturing, (b) innovativeness,
(c) self-renewal, and (d) proactiveness. New business FeDex
venturing is the most salient characteristic of corporate
entrepreneurship since it can result in new business creation
within an existing organization (Stopford & Baden-Fuller,
1994) by redefining the company’s products or services and/ Business Area Services Industries Applications
or by developing new markets. In large corporations, it
Aerospace & E-shipping
could also include formation of more formally autonomous Defence Tools
or semi-autonomous units or firms. In contrast, the Automation
Inbound Automotive Products Sheets
innovativeness dimension refers to product and service Logistics
Banking & Capital E-shipping
Business Unit Advisor
innovation with emphasis on development and innovation Markets
Communication
in technology (Covin and Slevin, 1991). The third Outbound Services
Logistics
dimension, self-renewal, reflects the transformation of Discrete
Manufacturing
organizations through the renewal of key ideas on which Utilities
they are built. The innovativeness dimension refers to
Healthcare
product and service innovation with emphasis on
High
development and innovation in technology (Baden-Fuller, Technology
1995). Proactiveness is related to aggressive posturing and Life Sciences
leadership relative to competitors (Covin and Slevin 1991), Consumer
risk-taking (Stopford & Baden-Fuller, 1994), initiative taking Packaged Goods

(Lumpkin & Dess, 1996) and boldness and aggressiveness

in pursuing opportunities (Covin & Slevin, 1991). This
paper has adopted corporate entrepreneurship as new
Australia, Canada, China, France, Germany, India, Italy, Japan,
business venture creation through product, service, process Markets
Switzerland, The Netherlands, UAE, UK, US and other
or market development.
Figure3: CE Initiatives at FedEx
Organizational Flexibility and Corporate
Entrepreneurship FedEx has adopted several business initiatives within the
Flexibility is defined as the degree to which a business unit firm. To remove the obsoleteness of computers and squeeze
is adaptable in administrative relations and the authority is delivery time that reduced the cost of inventory carrying
vested in situational expertise. A firm exhibiting low cost, FedEx developed customized business solutions for
flexibility has rigid administrative relations and strictly Hewlett-Packard (HP). Fred Smith, the founder of FedEx,
adheres to bureaucratic practices. An entrepreneurial firm developed and proposed the hub-and-spoke system to the
nurtures innovation by practicing flexibility and Federal Reserve System for overnight delivery of checks
responsiveness (Guth and Ginsberg, 1990). Flexibility in between their 36 locations around the country. FedEx
organization structure contributes positively towards product created a business by providing the system of home picking
success (Saleh and Wang, 1993). Entrepreneurial and solely dedicated fleet for reaching various destinations
management style and a flexible structure facilitate on time. FedEx developed the first Express Shipping
communication across the functional boundaries (Graham, Company to own and operate aircrafts, package-sorting
1995). The learning organization requires flexibility and facilities, and delivery vans in 1973. The other business
internal communication to achieve effective market initiatives include:
© 2006, Global Institute of
Flexible Systems Management
40 B. R. Bhardwaj and K. Momaya
• It launched COSMOS (Customers, Operations, and FedEx’s revenue was $ 8 billion in 2005 that was 9%
Service Master Online Systems, 1979) that are agents increase over previous year’s revenue of $7.34 billion
to answer customer queries about the status of their (Annual Report 2005). Its net operating income has been
package and was the first Express company to install over $713 million, up by 29% from $552 million. Its net
electronic communication system in Delivery Vans income was $428 million, up by 35% from $317 million.
(DADS, Digitally Assisted Dispatch System, 1980). FedEx has been recognized as one of the 100 best
companies to work for in America (Fortune, 1998-2004) and
• FedEx offered 10:30 am delivery service (1982), where
also as one of America’s Most Admired Companies (2001-
competitors were offering noon or later deliveries. It
2004).
introduced a PC-based automated shipping system, a
super tracker, a hand-held bar code scanner system SAP Analysis
(1986), developed an integrated, seamless international
Prevailing Situation
and domestic network (1989).
Opportunities
• It offered online tracking (1994) which helped
customers better manage their business processes. • The demand for courier services was constantly
increasing.
• FedEx Express, FedEx Grand, FedEx Freight, FedEx
Kinko’s were developed to offer comprehensive and • The customer demand changed over a period of time.
complete logistics solutions. There was a demand for more customized solutions.
• In 2000, FedEx teamed with Mazon.com to design and Threats
deliver a customized solution for ‘Harry Potter’ and
• There is presence of global logistics and supply chain
‘Goblet of Fire’.
management serve providers backed up by their hi-tech
The challenge of successfully managing diversified products and services.
businesses has been met by decentralization into focused
Change Agents
profit centers in each business area. Each profit centre is
fully equipped and manned to handle its own marketing, • The changing environment in the business atmosphere
distribution, and of the globe,
service development. p a r t i c u l a r l y
FedEx has captured a For successful corporate entrepreneurship practice, the liberalization, is
share of market by internal environment must be open and supportive which opening up the
recognizing the allows employees to be entrepreneurial at all levels. overseas market for
importance of listening high quality
to the customers and customized solutions,
then responding quickly to meet their needs. Customer care thus ensuring growth in this category.
has become an acknowledged success factor for each
Main Actors
business. Innovation and experimentation to create
competitive edge are actively pursued, not just in product Main Corporate Entrepreneurship Strategies
and process development, but also in all aspects of life. The
• The key actors of the CE activities include the
group as lean corporate team coordinates a whole that
employees who implement the ideas and managers who
manages strategy, performance and culture. The internal
supported these ideas.
environment of FedEx is open and supportive which allows
employees to be entrepreneurial at all levels. FedEx has PSP • Service personnel and station dispatch personnel are
(People, Service, Profit) culture and its “people first” important for CE activities, since they informed the
philosophy, which are the key success factor for CE. bottlenecks in the service deliveries.
A deep commitment to a decentralized organizational • ‘Large’ number of service is developed. For example it
structure brings decision-making as close to customers as introduced super tracker, a hand-held bar code scanner
possible. The ability to listen to customers, to innovate system (1986) that was used for scanning the package
product, process and service in response, the ability to build status on real-time basis. It also developed an
strong international presence, a commitment to quality, and integrated, seamless international and domestic network
managerial credibility based on high degree of knowledge (1989) that helped to obtain these valuable landing
and awareness, and an ethical approach, are the critical rights. It helped to establish higher standard of service
success factors that gave FedEx a competitive edge. The in the international arena.
future strategy of the company is determined by the
• ‘Newer’ markets are being identified. For example, it
collective thinking of a group of managers gifted with
launched COSMOS (Customers, Operations, and Service
imagination, courage and intelligence. The internal culture
Master Online Systems, 1979). These were agents to
respects individuals, enhances professional awareness and
answer customer queries about the status of their
credibility, and emphasizes that total quality lead to
package.
continuous improvement in all aspects of company life.
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 Role of Organizational Flexibility for Corporate Entrepreneurship: Case Study of FedEx Corporation 41
• ‘Large’ number of process applications are adopted worked together to solve common problems.
including TQM, Six sigma etc. For example, it was the
• FedEx focuses on building mutually trusting
first Express company to install electronic
relationships with the management of the transportation
communication system in Delivery Vans (DADS,
company and customs. For example there was a goal
Digitally Assisted Dispatch System, 1980). It allowed
of reducing the time for clearance through customers
carriers to receive on-call pick-up requests on a display
by 50%. Three organizations- FedEx, the local
monitor in their vans.
transportation company (contracted by LOL), and the
Management Support for Corporate Entrepreneurship Indian customers department involved in the customs
clearance process worked in tandem to reach this goal.
• Recognition and publicity is given to improve the
This led to the development of a model for future
group efforts.
collaboration.
• The internal leadership provides direct access and
•
FedEx encourages inter-departmental cooperation and
guidance to executive management. Organizational
coordination. To facilitate interdepartmental
support system is also provided for entrepreneurial
collaboration, it regularly organized interdepartmental
activities.
picnic and BBQ picnic contest, softball, basketball, golf
• Company’s value proposition is used as a common leagues, and community volunteer programs. Officers
language across and directors
all departments organized recreational
Encouraging inter-departmental cooperation and
and divisions. activities day and
coordination is an important aspect of corporate lunches with peers to
• Work group, entrepreneurship.
departmental and facilitate creative
divisional goals environment. FedEx
are all aligned and directly related to improving recognized and celebrated teamwork in developing
customer service and customer experience. ideas.

• A percentage of company’s profits are shared with • The employees know about the risk tolerant behavior
employees to encourage them and make them of the organization, which motivates them to take risks
understand their efforts’ contribution to the company’s with innovative ideas.
competitive edge. Change Agents
Providing Work Discretion for Corporate Entrepreneurship • FexEx is a company of young professionals, unafraid
of change, who feel responsible for the work they are
• The employees are empowered for executing work.
entrusted to perform, each ensuring that his work carries
• They have the autonomy to take their own decisions his personal stamp of quality.
about following their ideas but had to update the top
• The speed of response, open and honest
management with their decisions.
communication, and a positive determined attitude are
• Employees’ suggestions and recommendations are evident all over the group. The universal values inspire
always included. a humane and vibrant work environment where all strive
• FedEx involves everybody in decision-making. constantly to improve the level of customer care.

Practicing Organizational Flexibility for Corporate Processes

Entrepreneurship Strategic Processes
• FedEx provides freedom to explore options to meet the • The processes are to be evolved by the management
customer requirements. For example, almost 25yrs ago, by using flexibility for managing the situation. The
FedEx adopted bar code system when it was not strategic processes were determined by the collective
available widely. FedEx employees worked with Mead, thinking of group of managers. For example, to ensure
3M and Standard Register for developing the bar code this, manager-level meeting LRPC (Long Range
printing technology. The goal was to implement Planning Committee) were conducted regularly. Group
station-to-station positive tracking initially and then to meetings were dedicated each quarter to discuss the
drive the technology to expand door to door tracking. competitive environment, the company’s strategy, and
Team breakfast meetings were scheduled during which the previous quarter performance.
everyone had a chance to voice their opinion and ask
questions. • Encouraging inter-departmental cooperation and
coordination is important aspect for corporate
• FedEx focuses on alignment between departments- entrepreneurship.
between design and marketing, design and logistics,
and so on. This pollination of disciplines has helped A decentralized management structure, essential for quick,
to breed innovation. People from different backgrounds focused decision-making, and appropriate systems carefully
© 2006, Global Institute of
Flexible Systems Management
42 B. R. Bhardwaj and K. Momaya
designed to support and optimize autonomous working are proprietary information pertaining to customer value.
in place, supported by information technology and Project adoption Just-in-Time (JIT) inventory
communication tools. FedEx created process and management practices adopted in the manufacturing
infrastructure for collaboration through networked sector reduced the delivery time from eight weeks to
computers. For example MBO program helped to align two weeks.
department objective with corporate strategies and goals. The
• Making people feel more responsible towards their
directors met every month to get an update on the progress
work. By sharing the information about profits and
and asked them to help. To manage the ever-changing
financial data, FedEx makes the employees understand
business needs, a team was formed consisting of
the difference they were making. Based on the company’
representatives from Materials Planning, Procurement, the
profitability, all employees receive cheque before
MIS group etc. Together, they came up with several creative
Christmas as part of the current profit-sharing plan. At
solutions to address the lack of communication.
the end of the fiscal year, another distribution was made
Processes Dominating Towards Corporate as part of the deferred profit-sharing accounts.
Entrepreneurship
Learning Issues
The processes dominating towards corporate
The data collected has been analyzed and interpreted in the
entrepreneurship that enable the company to achieve its
light of flexibility. The corporate entrepreneurship happens
competitive edge are:
to be one of the qualitative aspects of business environment;
• Imparting training to the people. FedEx encourages therefore, a qualitative analysis is being carried out using
employees to undertake various training programmes different heads as the basis of analysis.
to increase experience and knowledge base. For
Understanding Corporate Entrepreneurship
example Marco Chan, and Operations’ Director for
FedEx, joined the Leadership Institute. During this The corporate entrepreneurship at FedEx Corporation is an
time, LOL was integrated teamwork so
having an as to have quality
increase in Unlimited ‘cross-mobility of persons’ among the various products and services.
shipments of developmental centers is a critical success factor for The concept of CE as
equipment and corporate entrepreneurship. such has not been
supplies coming formally introduced in
into New Orleans. the company. There is
This large volume of inbound logistics on Fridays no social emphasis on CE at present but if some formal
created bottleneck for operations. To meet the delivery system is available to management which exposes this
target, Marco, who was Managing Director of district concept with formal methodologies it would certainly like
operations, along with his operations manager and sales to have such teams in the organization for constant training
executives, along with the team thought to separate programs followed by implementation programs thereafter.
conventional packages from the rest of the New Orleans
packages in different containers so that these containers Table 1: Learning Issues in Case of FedEx
can simply bypass the station completely. The Corporation
operations group in the hub accepted the idea and CE Team spirit, interdepartmental collaboration.
worked together to implement it. Implementation
required collaboration among five departments sales Processes Impart training to people, increasing
(identifying the convention customers), engineering communication levels, making people feel
(working out the logistics), hub operations (training responsible towards their work.
the package sorters), New Orleans airport (loading the Corporate Achieve objectives and execute strategies
containers on the trucks), and station operations performance efficiently with the help of collective thinking
(meeting the truck at the convention centre). That of intellectual people, group turnover is
solution significantly improved the service levels and increasing ($6 - $8 Bn in seven years).
reduced costs at the same time.
Strategy Collective thinking of intellectual people
• Increasing the communication level between the formulation formulates strategies.
management and workers. FedEx uses all available and CE
communication media, such as newsletter, closed
circuits television, and email broadcasts. A close Flexibility Strategies are formulated as per needs.
collaborative relationship was among the staff and the in strategy
key players in legal, finance, and marketing was done. formulation
Work group, departmental, and divisional goals were
aligned and directly related to improving customer The inhibitor of CE is the comprehensive level of executing
service and customer experience. Sales and marketing team.
department circulated non-confidential and non-
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 Role of Organizational Flexibility for Corporate Entrepreneurship: Case Study of FedEx Corporation 43
Use of Organizational Flexibility in Formulating views during the interviews while conducting the field study
Corporate Entrepreneurship Strategy for this research work. Thanks are also due to the top
management of the organization that was taken up for the
The existing system is flexible as it absorbs new
study.
technologies and offers no resistance to innovation. While
comparing the amount of flexibility as an individual or as References
a system, it is more flexible as a system but within a given
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framework only. The top management practices and Matching Outside-in to Inside –out Approaches to Strategy Research,
decentralization of powers, which help in reduction in Br. J. Manage. Rev., 23, 305-324.
decision-making levels. It also provides unlimited ‘cross- Covin, J.G., & Slevin, D.P. (1991) A Conceptual Model of
mobility of persons’ among the various developmental Entrepreneurship as Firm Behavior, Entrepreneurship Theory and
centers. FedEx has cross-functional teams. The organization Practice, 16(1), 7-25.
focuses on creating sustaining corporate culture and values. Dougherty, D., & Hardy, C. (1996) Sustained Product Innovation in
The employees had faith in the corporate leadership. The Large, Mature Organizations: Overcoming Innovation-to-Organization
organization has an employee-orientated environment Problems. Academy of Management Journal, 39, 200-218.
including opportunities for varied work experience and Graham, P., (Ed.) (1995) Mary Parker Follet - Prophet of Management,
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Guth, W.D., Ginsberg, A. (1990) Corporate Entrepreneurship, Strategic
Conclusions Manage. J., 11, 5–15 (special issue).
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synthesis of learning issues presented. There is need for Orientation Construct and Linking it to Performance, Academy of
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Appendix 1: Interview Schedule

1. What is your understanding bout CE?

2. Since how long the concept of CE has been introduced in your organization?
3. What are the tools and techniques being used to enhance the CE within thw organization?
4. What are the inhibitors of CE?
5. What is your future plans for CE?
6. What role does your organizational environment play in facilitating CE process?
7. How would you define existing flexibility in the organization?
8. While comparing the amount of flexibility, is it more flexible as an individual or as a system?
9. How is flexibility and CE related to strategy formulation?
10. How CE provides a cutting edge for competing in the market?
11. In what way is your organizational performance linked to CE?

© 2006, Global Institute of

Flexible Systems Management
44 B.R. Bhardwaj, K. Momaya

Flexibility Mapping : Practitioner's Perspective

1. Which variants of flexibility do you envision in a practical situation of identifying “Strategy based on
Corporate Entrepreneurship and Flexibility” on the following planes:
! Flexibility in terms of “options”
! Flexibility in terms of “change mechanisms”
! Flexibility in terms of “freedom of choice” to participating actors.
2. Identify and delineate the types of flexibility pertinent to establishing a regime for competitive strategies
based on corporate entrepreneurship and flexibility appropriate to your organization. On which planes, the
flexibility needs to be enhanced?
3. Attempt mapping the socio-technical system of your organization on the following continua.
(Please tick mark in the appropriate box (es)).

Strategy Formulation

Completely Rigid Completely Flexible

Strategy Implementation
Completely Rigid Completely Flexible
New Business Creation
Completely Rigid Completely Flexible
Innovativeness
Completely Rigid Completely Flexible

4. Develop a SAP-LAP (Situation Actor process –Learning Action Performance) model of “Corporate
Entrepreneurship and Flexibility based strategy" appropriate to your organization's competitiveness.

Reflecting Applicability in Real Life:

1. Implement the methodology of identifying the “issues” for enhancing the corporate entrepreneurship of
your organization.
2. Identify the change agents and processes appropriate to enhancing the overall competitive edge of
your organization.

B. R. Bhardwaj is pursuing PhD student at IIT Delhi. She was also working as a faculty in Bhararti Vidyapeeth Institute of
Management & Research, New Delhi. She is teaching marketing and entrepreneurship. She has authored a book on Marketing
of Services: Growth Strategies and published papers in International conferences. She received engineering degree in
Biochemical Engineering and MBA from IIT Delhi. Her interest areas include corporate entrepreneurship, entrepreneurship,
knowledge management, international marketing and retailing management. Contact: [email protected], Phone: 312
208 7502

Dr. K. Momaya is an Associate Professor in Strategic Management Group at the Department of Management Studies (DMS),
IIT Delhi. His core research areas of interest are Competitiveness, Strategic / Technology Management. He has worked on
projects for Shimizu Corp., APU and Rikkyo in Japan, ICICI-Knowledge Park, Sona Koyo, Vidyatech Solutions, DST,
TVTC and Gherzi Eastern. He has published (singly / jointly) more than 35 papers in refereed journals and authored/edited
2 books. He can be reached at [email protected]

giftjourn@l
 45
giftjourn@l
Global Journal of
Review Flexible Systems Management
2006, Vol. 7, Nos. 1&2, pp 45- 60

Management of Change – A Comprehensive Review

R.K. Garg
Department of Industrial Engineering,
Dr B R Ambedkar National Institute of Technology (Deemed University), Jalandhar
e-mail: [email protected], Phone: 0181-2690328

T. P. Singh
Professor
Department of Mechanical Engineering
Thapar Institute of Engineering and Technology (Deemed University), Patiala (Punjab)
e-mail: [email protected], Phone: 0175-2211094

Abstract
Globalization and liberalization of Indian economy has brought with it an unprecedented level of competition in the industry.
To respond to the situation, the industry has to successfully change from the old ways of working to be more productive, cost
efficient and competitive. Managing change is posing a big challenge to many Indian firms, as there is a great inertia and
resistance to change and also lack of knowledge of globalization and liberalization. It is realized that managing change successfully
in an organization requires change in various areas, i.e. technology, systems, structure, people and culture. All these areas are
interwoven and interrelated. A successful change programme addresses all these areas and determines a sequence in which
these are to be changed, with bigger changes intercepted by many small changes. Further, care has to be taken to use facilitators
for change and minimize the effect of potential inhibitors to change. In this paper, an exhaustive review of literature concerning
change management has been presented. Present status of change management and limitations of the present approaches are
also discussed.

Keywords: flexibility, management of change, organizational change

Introduction Competitiveness in short-term depends on the development

of factors that give more profits without new resources.
In recent years, researchers have been concerned with
Dynamic competitiveness involves the continuous
understanding why some organizations perform better than
improvements and innovations for the growth of
others. According to the resource-based perspective,
organization.
successful organizations have unique capabilities or
resources that give them an advantage over their competitors. Fink and Schlake (2001) have studied competitiveness
Gersick (1994) has found that these resources are valuable of an organization and stated that enterprises must identify
when they are rare, inimitable and non-substitutable. upcoming opportunities and threats very early and integrate
Consistent with resource-based view, the author maintains them into strategic planning on time. The authors have
that the development of social capital within an organization given the concept of scenario management, which is based
is the source of competitive advantage for a firm. Winning on systems thinking, future open thinking and strategic
in business today demands innovative culture. According to thinking, and result in organization success.
Kanter (1999), the need of the companies is to serve the Nohria (2002) has concentrated on leadership, human
social sector and gain competitive advantage. For the success performance, and corporate renewal for competitive
of a business, social acceptance of innovations especially advantage in Indian context. He has emphasized on three
technological changes is a must. He further states that things for staying ahead than others, i.e. shareholder value,
companies should view community needs as opportunities consolidation, and fast pace of change. Corporate education
to develop ideas, serve new markets, and solve long-standing programme can help the people in reducing resistance to
business problems. The best way to ensure full commitment change. Through these techniques, an organization can
is to make parity between corporate and the community. achieve success as per expectation.
There are three types of competitiveness in an
Change Management
organization (Canada, 2002): competitiveness in short-term,
competitiveness in long-term and dynamic competitiveness. The content or subject matter of change management has
In the long-term, competitiveness depends on the ability to been drawn from psychology, sociology, business
develop the factors that sustain productivity growth. A administration, economics, industrial engineering, systems
dynamic process of creation of new resources, technological engineering, strategy, structure, and the study of human and
innovations, development of new markets, new skills and organizational behavior. For many practitioners, these
competences leads to long-term competitiveness. component bodies of knowledge are linked and integrated

© 2006, Global Institute of

Flexible Systems Management
46 R.K. Garg and T. P. Singh
by concepts and principles. The literature on change has organizational change as being largely acontextual,
been characterized as “a few theoretical propositions, ahistorical, and aprocessual. Since considerable
repeated without additional data or development; a few bits advancement has been made in these areas, some writers
of advice reiterated without proof or disproof; and a few have acknowledged that context and action are inseparable
sturdy empirical observations quoted with reverence but and that time must be an essential part of investigations of
without refinement or explication” (Macy, 1993). change if processes are to be uncovered (Greenwood, 1996;
Weick, 1999).
The study of change and its development has been one
of the greatest themes in the social sciences. Many social From the literature, three basic definitions of change
science disciplines have developed theoretical literature and management have been obtained (Nickolas, 2002). The first
empirical findings about the birth, development, and most obvious definition of “change management” is that
transformation, decay and decline of human and natural it refers to the task of managing change. ‘Managing change’
systems. A recent tradition of research in various fields of has two meanings. One meaning refers to making changes
organizational science has grappled with organizational in a planned and systematic fashion. The aim is to
change and developments (Woodman, 1989; Van, 1995; effectively implement new methods and systems internally
Quinn, 1995). The development theories of change in the in an organization. These (internal) changes have to be
organization studies have been faced with the hurdle of triggered by events originating outside the organization,
scholarly quality and practical relevance (Pettigrew, 1987). what is usually termed “the environment.” Second meaning
It has not been possible to define the term change accurately of managing change refers to the response of the change over
owing to the broad spectrum of change and its heterogeneous which the organization has to exercise little or no control
character. Change management is viewed from two (e.g. legislation, social and political upheaval, the actions
perspectives: implementing change and adapting change. of competitors, shifting economic tides and currents and so
Process of change has been found to vary dramatically if on). The second definition of change management refers to
one executive demands an area of professional
the change practice. There are a
(implementing) versus Process of change has been found to vary dramatically if large number of
front line operators one executive demands the change (i.e. implementing) independent consultants
(adapting) who may be
versus front line operators (adapting) who may be unsure around the world who
unsure about the need/ are engaged in planning
adaptation of change about the need/ adaptation of change. change for their clients.
(Robbinson, 1995). Stemming from the view
of change management as an area of professional practice,
Mainly two perspectives of change have been studied:
there is a third definition of change management. This
organizational change and individual change (Robbinson,
definition consists of the models, methods and techniques,
1996). Organizational change has been associated with the
tools, skills, and other forms of knowledge that goes into
visible changes in the organization. Efforts are made in
making up any practice a body of change.
various areas like technology, structure, system, strategy,
culture, etc. On the other hand, individual change represents Another important definition is given by Prosci (2002).
the change in attitude, vision and target of an individual in He states, “change management represents the processes,
the organization. Change management is defined as the tools and techniques to manage the people-side of business
effective management of a business-change. Executive change to achieve the required business outcomes and also
leaders, managers and front line employees have to work in to realize that business changes can be met effectively
a team to successfully implement the needed processes and within the social infrastructure of the workplace”. This
require technology for the organizational change. According definition has been commonly used among practitioners and
to Scott (1997), it is possible for individuals to manage end-users.
change and develop a greater sense of career focus in the
Categorization of Literature
midst of dynamic environment by examining three
principles, i.e. firstly, “principle of centeredness” which The review of literature has been divided into the following
means that as a centered person, you have a strong mission categories:
or purpose in life, values to help you in your decision-
• Organizational change
making efforts, and a vision to steer your future; secondly,
“principle of limits” that means that you can’t do everything • Facilitators for change management
but must focus on what is important versus what is urgent.
• Inhibitors to change
Create a greater sense of balance to the physical, mental,
social, and spiritual aspects of your life; thirdly, “principle • Change strategies
of fun” which means keeping life in its proper perspective • Major focus areas of change
by having fun. These principles have been helpful in
implementing change in various areas in an organization. All these categories are described in the following sections.
Pettigrew (1997) has critiqued the literature on

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 Management of Change – A Comprehensive Review 47
Organizational Change organizational support system that facilitates change
process in an organization. The area includes
Descriptive research by Tichy et al (1990) suggests that
hierarchical levels, cadres, span of control, manpower
transformation of an organization follows a process, which
utilization, administration, communication, integration,
includes a sequence of phases: recognizing the need for
coordination, learning and so on.
change, creating a new vision, and then institutionalizing
change. Saeed et al (1993) have recommended a “focused iv. People: This area is related to management attitude,
manufacturing knowledge” in manufacturing area than vision, objectives, resistance to change, motivation,
making many engineering changes. The engineering developing skills, coordination, mindset of individual
changes have been the primary means for most mid- to high- and impact of group dynamics on change process.
volume product-oriented organizations to modify existing v. Culture: Culture includes flexibility, work environment,
product designs in a controllable, coordinated, and team spirit and behavior of individuals, group behavior,
methodical manner. In this way, the organization can save management commitment, belongingness, leadership
substantial amount of engineering time while simultaneously and interpersonal relationship in an organization.
developing higher quality, reducing cost, and reducing
product time. To accomplish change in an organization, Facilitators for Change Management
traditional measures need to be controlled with an Facilitators for change management include suitable change
empowered workforce that is more self-directed, self- agents, their capabilities, role of management, information
managed and self-controlled. Special considerations are technology and organizational targets. An individual in the
needed for bringing changes in a matured organization like organization who is familiar with the process of change is
increasing their capacity, altering the hardware (strategy, assigned the responsibility of change programme and is
structure and system) and software (employees’ behaviour called as ‘change agent’. This person facilitates all the
and mindset) within the organization and by creating essential events and also intervenes whenever feels so. Skill
empowered employees who act as leaders at all levels of the and knowledge of the change agent decide the extent of
organization (Beatty and Ulrich, 1996). organizational change. An important aspect of the change
Areas of organizational change have been related to its process is ‘change target’. Target includes vision, objectives,
dynamics and effects of time, process, discontinuity and knowledge, values, beliefs, assumptions and emotions. .
context. Change Leadership plays an
management cannot be Organizational change has been associated with the visible important role in the
merely limited to changes in various areas like technology, structure, system, change process. Various
technological aspects strategy, culture, etc. facilitators for
like replacement of managing change in an
machines, equipments, organization are
instruments and practicing new manufacturing processes. discussed below.
However, it has been commonly aimed to make the Change Agents: Change agents influence employees’
processes and products more effective in an organization. readiness for adapting change. Readiness is described in
Managing change has comprised of various interconnected terms of organizational members’ beliefs, attitudes and
and interdependent areas (Garg and Singh, 2002). Each of intentions (Kavanagh, 1999). A typology of readiness
these areas need to be recognized both individually and also programme is offered taking urgency of change and
in terms of its multilateral linkages with other areas. These employee readiness. Change agent can contribute a lot in
areas are described as under: achieving various aspects like increase of morale of
i. Technology: Technology is concerned with design and employees of the organization, increase of retention (reduce
layout of production facilities, type and mix of attrition), instill high organizational commitment, allow for
machines and equipments, product mix, flow of data and greater creativity and innovation through HR alignment,
sharing of information, inventing new materials, develop a culture that is proactive and receptive to change.
automation, using computer softwares and hardware, All these aspects result in achieving success in an
monitoring and control of production processes, organization.
maintenance and simulation of operations and facilities Transition Management Teams: Beckhard and Harris (1987)
and others. have recommended a transition management team (TMT)
ii. Organizational systems: This area is concerned with composed of leaders who are influential in the organization
working practices related to production, maintenance, and have wisdom, objectivity and effective interpersonal
marketing, sales, information technology, material skills. This team must also have the resources and clout to
procurement, inspection, quality, etc. on the one hand manage change process. Duck (1993) expanded on Beckhard
and their interconnection on the other. Both technology and Harris approach, highlighting the dynamic nature of
and systems can be made/changed simultaneously in change and the importance of an effective transition
“reengineering” to achieve success. management team (TMT) composed of people who report
directly to the CEO and can commit all their time and effort
iii. Organizational structure: Structure is related to
© 2006, Global Institute of
Flexible Systems Management
48 R.K. Garg and T. P. Singh
to manage change process. From Duck’s perspective, it is cadres has been proposed to allocate the duties and
critical for TMT to manage the ‘dynamic’ aspects of change. responsibilities (Lijnse, 2002). The amount of work for a
The cornerstone of this process is effective communication change manager is staggering. He has to approve changes,
throughout the organization. TMTS are also responsible for record changes, manage meetings, control the process,
managing emotional connections so that are essential for improve the processes, and lots more. The best way to cope
successful completion of the transformation. with this challenge is to introduce different cadres within
change process like the ‘process owner’ owns the process
Leadership: Armenakis et al (1993) have defined the role
and supporting documentation for the processes, oversees
of various persons in the organizations for change
the process, and ensures that the process is followed by the
programme. The facilitation works between the social and
organization. ‘Change manager’ is responsible for ensuring
mythic realities enable the emergence of new symbols as the
that all changes are reviewed. He can approve minor changes
success of change programme. According to Nohria and
if found necessary. ‘Change Coordinator’ ensures that all
Berkley (1994), decision-leadership of managers in a
changes are recorded, scheduled, and that all parties
company keeps them competitive. The authors have stated
involved with the change have the information that is needed
that effective managers play with the possibilities of change,
through the process. The role of the ‘change owner’ is to
tinker with systems and use all the resources to find
make a change through its life-cycle. The ‘change sponsor’
workable solutions. By frequently changing, it becomes a
is the individual that approves the change from business
tool that creates a balance of needs of organization and
perspective.
conflicting modes of organizational behavior, such as
flexibility and consistency. When the leader takes as given Inhibitors to Change
his mythic reality, the facilitation gains acceptance in the
It is a universal truth that people do not like/ favour change.
community for the new symbol. The leader charms the
Any change has been found to disturb the status quo, adds
members into the feeling of ‘co-ownership’ in the symbol’s
problems and fear into the daily lives and requires changes
creation and propagation (Pawar and Eastman, 1997).
in ‘overall behavior’. As a result, a poorly managed
External Agents: Kronenberg (1989) has emphasized the organization results in a ‘force’ that slows down or in some
close co-operation between universities and industry and cases even stops the change process.
considered it as the key requirement to intensify dialogue
Ford and Ford (1994) have used logical models to
that can result in accomplishing change in the organizations.
provide different understandings of the hindrances to the
Spann et al (1995) have considered the role of sponsors,
change process. They have found that change has been
developers and adopters as external agents for the effective
dependent upon conflict or struggle. The conflict between
technology transfer in a change programme.
the forces for or against change have been two opposing
Organizational Learning: Kanter (1999) has recommended actions that work at each other until one dominates, and the
“learning in the resulting outcome has
organizations” for
Individual change represents the change in attitude, vision been a synthesis that is
change successfully. He distinct but contains
has stated that and target of an individual in the organization. elements of the forces
traditionally business for and against change.
viewed the social sector as a dumping ground for spare-cash, This model has been based upon the assumption that
obsolete-equipment and fired-executives. But today, smart dissatisfaction with status quo has been necessary before
companies are approaching it as a learning laboratory where change can occur. They have further added that changes do
they can stretch their thinking, extend their capabilities, not result from “pushes” or pressure to move away from the
experimentation with new technology, get feedback from present situation, but instead result from being “pulled”
early users about product potentials, and gain experience towards or attracted to different possibilities.
working with underserved and emerging markets. He adds
There are strong arguments as to why resistance to
that a company has a better chance of making a change if
change occur (Kavanagh, 1999). Political arguments are
it knows how its business agenda relates to specific social
connected with the interests of individuals/ groups against
needs.
the changes of losing status or power. Emotional arguments
Information System: Role of information system has been relate to personal fear of individuals into account that result
found crucial in change process (Stenzel et al, 1997). After in reduced feeling of involvement in the change. Rational
laying the foundation of strategic vision, constructing a arguments are concerned with the role of specific
robust set of measures, and ensuring a consistent leadership, organization for change (Kavanagh, 1999). Managing the
an efficient and effective information system helps to resistance by human beings has been the major part of any
facilitate communication, understanding, and organizational change process. Chakravarty (2000) is of the opinion that
intelligence. An effective information system creates a sense change can be initiated, planned, directed and controlled.
of organizational community and facilitates in He adds, “Bureaucracy is generally regarded as biggest
organizational change. resistance to change”. Management of change, therefore,
Advisory Board: An advisory board consisting of various involves identification of winners and losers and developing

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 Management of Change – A Comprehensive Review 49
strategies for building and managing coalitions. learning organizations cultivate the art of open and attentive
listening. A learning organization takes account of carefully
Dasgupta (2002) has studied the cultural change with
cultivated attitudes, commitments and management processes
respect to the revolution in information technology. She has
that have accrued slowly and steadily over time.
found people itself as the biggest problems encountered in
the global change. Employees are dealing with attitude, A systematic method for promoting climate for
behavior and expectations that are extremely different from innovation by designed interactions and preparing a
their routine. The revolution in telecommunication, banking, summary of best ideas for innovations was suggested by
postal delivery and information technology has demanded Humble and Jones (1989). Their argument about the
a permanent cultural change. incremental innovation also seems quite plausible, since
radical innovations or technological breakthroughs can be
Change Strategies, Tools and Techniques
realized once in a while but incremental innovation in the
For making a successful change in an organization, various existing products can go on almost on a regular basis. Many
types of changes, e.g. incremental, episodic, discontinuous a times, it is not possible to realize radical innovations
and continuous have been suggested by many researchers. within the existing firm’s setup. In such cases, contract
According to Quinn (1985), incremental change should be research consultants and universities can be funded for
preferred for making change. Successful managers in a specific research projects or long-term contract may be
company act logically and incrementally to improve the signed with any of the above or with any combination of
quality of the information used in key decisions to overcome the above organizations.
the personal and political pressures giving resistance to
Hatch (1993) and Gersick (1994) have offered two
build organizational awareness, understanding and
distinct mechanisms – temporal pacing and event pacing that
psychological commitment essential to effective strategies
modulate the speed and course of organizational change.
to make the organizations successful. Episodic changes are
They further say that temporal pacing is well suited to the
organizational changes that tend to be infrequent,
non-routine situations. In contrast, event based pacing is
discontinuous and intentional changes. Episodic changes
shown to be well suited to fostering incremental change.
occur as organization
Here the focus is on the
moves away from
specific events that
equilibrium stage, or Change management represents the processes, tools and
signal when actions
change as a result of techniques to manage the people-side of business change
should be initiated or
misalignment or to achieve the required business outcomes, and also to
corrections made. Its
e n v i r o n m e n t a l realize that business changes can be met effectively within
focus is on keeping a
encroachment (Miller,
the social infrastructure of the workplace. given track and is
1994). Continuous
motivated by the desire
changes are those
to achieve specific outcomes.
changes, which are ongoing, evolving, and cumulative in
nature (Orlikowski, 1996). Any equilibrium of change Some researchers have discussed ‘readiness for change’
emphasizes the discontinuous nature of changes (Greenwood as a strategy to change process. Beer and Walton (1987) and
and Hinings, 1996). Further, long periods of small Armenakis et al (1993) have examined the influence of
incremental change need to be interrupted by brief periods change agents on organizational members for change. The
of discontinuous and radical changes. Brown and authors find that the primary mechanism for creating
Eisenhardt(1997) have found that organizational survival readiness in an organization is the message, which
depends on the firm’s ability to make rapid and continuous incorporates organizational needs and its ability to change.
change in contrast to episodic change. The occasional They add that management of information, internally and
dramatic revolutions or punctuations overcome externally, is very important and needs to be controlled by
organizational inertia that alters the organization frame (Beer top management.
and Nohria, 2000). Kotter (1995) after studying many successful as well as
Kotter and Schlesinger (1989) have discussed several unsuccessful organizations concluded that change process
strategies to deal with resistance of individuals in the goes through a series of phases that in total, require a
organizations, e.g. upgrading education and communication, considerable length of time. He adds that skipping steps
boosting participation and involvement of individuals at all creates only the illusion of speed and never produces a
levels, facilitation and support by top management, satisfying result. He has offered eight steps to transform an
negotiation and agreement between employees and organization in a phased manner. These steps are:
management. According to Kronenberg (1989), continuous establishing a sense of urgency, forming a guiding coalition,
improvement helps an organization in doing better and creating a vision, communicating the vision, empowering
gaining an edge. Continuous improvement requires a others to act on the vision, planning for and creating short-
commitment to learning. In the absence of learning, term wins, consolidating improvements and producing still
companies and individuals may repeat old practices and more changes and lastly institutionalizing new approaches.
change remains cosmetic only. It is further stated that He further adds that transformation of an organization is

© 2006, Global Institute of

Flexible Systems Management
50 R.K. Garg and T. P. Singh
dependent upon a good leader who looks the need for a flexibly and systemically evolve a management process in
major change. an interactive and innovative manner.
Porter (1996) has considered ‘operational effectiveness’ Grover (1999) has developed “business process change
as a change strategy to get superior performance, which is management” for the success of the organization. According
the primary goal of any enterprise. Operational effectiveness to him, reengineering focuses radical changes over broad
means, “performing similar activities better than rivals core entities and is related to organizational processes
perform them”. He added that a company might have to whereas process change management involves the
change its strategy if there are dramatic changes desired in management of the multiple facets of process change. He
it. adds that global economy has mandated greater operational
effectiveness and efficiency, and imposed tremendous
Brynjolfsson et al (1997) introduced a new tool “ the
pressures for cost reduction. The conclusion is to go for
matrix of change” that can help managers anticipate the
strategic changes for the firm to survive and prosper for the
complex relationships surrounding change. It is found that
success of reengineering phenomenon.
the matrix can help managers determine how quickly change
should proceed, in what order changes should take place, Eric (2000) has developed a theory for changing the
whether to start a new site, or whether the proposed systems organizations without ‘pain’. The author states that to
are stable and coherent. Specifically, “the tool helps manage change successfully, companies should impress major change
concerns about feasibility (stability of a new system of initiatives among carefully paced periods of smaller change,
practices), sequence (which practices to change first), using “tinkering and kludging”. He adds that company can
location (Greenfield or Brownfield sites), pace (slow or fast), manage change with an approach called dynamic stability.
and stakeholder interests (sources of value added)”. The tool Dynamic stability is a process of continual small change
involves four steps. “First, managers determine which efforts that involve the reconfiguration of existing practices
business practices matter most for their business objectives. and business models rather than the creation of the new
Second, the matrix ones. Tinkering is
highlights interactions
To accomplish change in an organization, traditional concerned with the
among these practices minor changes in the
and possible transition measures need to be controlled with an empowered products, motivating the
difficulties from one set workforce that is more self-directed, self-managed and self- existing manpower of
of practices to other. controlled. the organization.
Third, it encourages Kludging is tinkering
various stakeholders to provide feedback on proposed but with a college (formal) education. It takes place on a
changes. Finally, it reveals process interactions that can large scale and involves many more parts. Organizations that
provide guidelines for the pace, sequence, feasibility, and have consistently avoided changes may need to undergo
location of change”. rapid, destructive change. He adds that the companies
already changing rapidly face a different challenge, i.e. they
The need for flexibility in management has been
must learn to shift down from highly destabilizing and
emphasized by researchers as well as practitioners. A
disruptive change to tinkering and kludging. This thinking
‘flexible managerial approach’ has been reported by Baker
helps an organization to change without pain.
(1985) with long-term financial planning having a full
understanding of the dynamic nature of business Pattanayak (2000) thinks that with the changing business
environment. The concept of ‘flexibility management’ has environment, organizations must focus on their employees
been outlined by Armstrong (1993) as a flexible approach in order to ensure that they move ahead together. He states
to organization management to ensure that the organization that focus today is on becoming learning organization where
will be able to adapt to change, respond quickly to new new concepts like BPR, TQM, Benchmarking etc. are
threats and opportunities, and manage diverse and practiced. He found that “reengineering of organization
decentralized operations. Mintzberg (1994) has suggested behaviour can be achieved by a thorough understanding of
that managers need not always program their strategies an organizational culture, its effect on organizational change,
formally; sometimes strategies must remain flexible, as broad employee empowerment and by integrating HRM with
visions, to adapt to a changing environment. A flexible corporate strategy”.
system methodology (SAP-LAP) has been developed by
The decades-old paradox of great software promise and
Sushil (1997). This methodology tries to resolve the end of
its disappointing practice in organizations has been recently
continuum paradoxes, by treating all the system based
increased by the appearance of enterprise-wide systems often
methodologies, and techniques as lying on a continuum
called “enterprise resource planning or ERP” (Taylor, 2002).
ranging from well structured to unstructured. The three basic
Obtaining effective user involvement has been problematic
components in flexible systems management paradigm are
in the past and it promises to become worse in the future
situation, actor and process. The situation is to be managed
with larger, more comprehensive software applications.
to an organic order by an actor through flexibly evolved
Business process re-engineering (BPR) adds to this
self-organizing management process, which recreates the
significant problem by exhorting managers to undertake
situation. The actor exercises the freedom of choice to

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 Management of Change – A Comprehensive Review 51
massive change - including new information systems - using firm is found to make a decision to adopt a new advanced
autocratic methods whereas socio-technical systems (STS) manufacturing technology. This is followed by adjustment
design combines user-involvement in design with structural of the labor force in the second stage. Much technical
change and the effective use of technology. The author advancement has been found as labor-saving innovations
explores the successful application of STS with its local enabling companies to eliminate less-skilled positions. This
participation in organization design to a centralized and has led to a shift in labor composition in favor of more
autocratic application of BPR and SAP enterprise-wide highly educated workers. Furthermore, technology change
software. has increased the wage premium associated with additional
investment in education or skill acquisition. Indeed, as noted
Major Focus Areas of Change
by Berman et al (1998), numerous studies have attributed
From the literature, it is found that managing change both the greater wage premium for skill and recent increases
successfully in an organization requires changes in various in unemployment in “Organization for Economic
interconnected areas. The important areas are technology, Cooperation and Development (OECD) countries” to skill-
structure, systems, people and culture. In addition, impact biased technological change. It is essential to see the needs
of entrepreneurial abilities and flexibility has also been of the organization before changing technology. This can
found on change management. All these areas are described be possible by establishing a meaningful dialogue,
below. preferably with a group of three or four persons at different
hierarchical levels (Misra, 2002).
Technological Change: Need of technological change for
organizational development was analyzed by Ramo (1989). Structural Change: Organizations have various structures
He commented that the twenty first century would be totally based on the optimal coordination of interactions amongst
dominated by technological change. Also, the global various activities. Many structures are designed in the
characteristics and fast changing nature of the world organizations based on number of levels, authorities and
economy has demanded sophisticated and conscious responsibilities of individuals. There are six elements of
technological changes structures: work
(Greis, 1995). The specialization, chain of
factors affecting
Areas of organizational change have been related to its command, span of
technology change have dynamics and effects of time, process, discontinuity, and control, authority and
been availability of context. responsibility,
resources, availability of centralization and
data, credibility of sources of data, similarity in present and decentralization, and departmentalization (Robbins, 2001).
future technologies, and variables affecting the development Based upon the elements, the organizational structure has
of new technology. been categorized into six types. An organization with
‘simple structure’ is low in specialization and formalization,
Managing a technological change pro-actively has always
but high in centralization. In ‘functional structure’, activities
been a big challenge for any firm. Hayes (1991), Langowitz
pertaining to a particular function are organized into various
(1992) and Katz et al (1996) have studied the technology
departments, e.g. departments dealing with distribution,
transfer in a multinational cooperative joint venture and
styling, engineering, manufacturing, research, public
concluded that technology change depends upon type of
relations, and personnel relations (Harris and Raviv, 2002).
technologies, methods used to transfer them, their degree of
In divisional structure, all the activities pertaining to a single
success, and the organizational, national and cultural
product, set of products, or types of customers are grouped
differences. Developing countries have been relying heavily
into a division/ department/ section. An organization, in
on technology transfer from abroad. Indigenous
which specialists from functional departments are assigned
technological innovations are based on local needs and
to the work on one or more projects led by a project
availability of resources whereas the developed countries
manager, represents a matrix structure. In a team-based
have been emphasizing exploitation of technology and
structure, the entire organization consists of work groups or
introduction of new products and processes. They have
teams that perform the organization’s work. Such an
given high priority to management of research and
organization is also termed as flat organization.
development and commercialization of new technologies.
A process focused organization is usually characterized
Malthus (1978), Marx (1987), and Ricardo (1995) have
by a large central staff coordinating the plants throughout
expressed concern about the effects of innovation, especially
the functional areas, whereas a product focused organization
in the form of new technology machinery, on the
is highly decentralized, flexible, and has a large number of
displacement of labor. According to them, new technology
staff functions in each plant. The later structure is needed
is concerned with labor saving and quality-enhancing
when the firm’s strategy emphasizes product innovations
innovations, such as computer-aided design/computer-aided
rather than efficiency (Haynes and Schmenner, 1982). Kanter
manufacturing systems, computer numerically controlled
(1985) has studied the impact of organizational structure
machines, just-in-time inventory systems, flexible
change on innovative abilities. The author has indicated
manufacturing systems and robotics. Technology change has
that most of the best innovative ideas in an engineering
been derived as a two-stage process. In the first stage, the
© 2006, Global Institute of
Flexible Systems Management
52 R.K. Garg and T. P. Singh
organization are interdisciplinary and inter-functional. He Organizations are composed of informal structures, rules and
has indicated that an innovative company needs to assemble norms as well as formal practices and procedures. These
a group of talented people who are eager to do new things informal rules, patterns of behavior and communication
and put them in an environment where innovation is norms and friendships are created by people to meet their
expected. own emotional needs. Because of this, they can have more
influence on individual behavior and performance, and
Changing structure in a company includes alteration in
ultimately on overall organizational performance than the
any authority relationships, coordination mechanisms,
formal structure and control mechanisms laid down by
degree of centralization, job design, or similar other
management.
structural variables. Process reengineering, restructuring,
downsizing and empowering have resulted in more Mitchell and Mulherin(1996) and Mulherin and Boone
decentralization, wider spans of control, reduced work (2000) have pointed out broad economic shocks in
specialization, and cross functional teams. These structural restructuring at industry level. Industries are affected by
components have given employees the authoritative specific shocks (rapid changes) in terms of deregulation by
flexibility and ease to implement process improvements government policies, technology transfer, foreign
(Robbins, 2001). competition and energy price volatility. Shocks have been
studied with respect to various factors like growth,
The need of structural change of a high technology firm
opportunities, profitability, availability of cash and industry
is reflected directly from the environment of the firm and
concentration (Jensen and Ruback, 1989; Jensen, 1993) and
the characteristics of the technology (Moharman et al, 1990).
also technology, industry deregulation and foreign
New technology can have different levels of impact
competition (Mitchell and Mulherin, 1996; Mulherin and
depending on their pervasiveness and the structure of the
Boone, 2000). Powell (1997) has studied the restructuring
organization and society (Rao, 1990). The interpersonal
at the industry level for a sample of U.K. firms over a period
behavior in an organization has been taken as the
of 10 years and concluded that deregulation is very much
‘momentum’ for change (Clarke, 1994; Dawson, 1994).
significant in explaining takeover activity for 1990s period.
Therefore, an appropriate organization structure can be an
Pattnayak (2000) has advocated downsizing and delayering
important lever for
for reengineering in the
making the change.
However, its
Change management cannot be merely limited to companies. He has
emphasized that
effectiveness has been technological aspects like replacement of machines,
successful reengineering
dependent upon the equipments, instruments and practicing new
requires a change in the
recognition of its manufacturing processes.
company’s whole
informal as well as
structure.
formal aspects. Bartlett and Ghoshal (1995) expressed that
formal business structures create barriers between themselves Role of management style on structural change has been
and their customers, take initiative away from those who studied by Covin and Slevin (1998). They have offered that
need to exercise it and promote the people who operate well an entrepreneurial management style will have a positive
in that environment. They emphasized for need of an effect on the performance of organically structured firms and
organizational structure with the opposite characteristics. negative effects on the performance of mechanistically
The changing scenario requires a new management structured firms. They further commented that an organic
philosophy on organizational structure that is based on structure can facilitate innovation through its flexibility and
purpose, process, and people. Calori et al (2000) gave a ability to respond to a turbulent environment.
different meaning to the concept of structural change and
Michael (2001) popularized the concept of business
its effect on competitiveness. The authors have shown that
process reengineering (BPR). According to him, BPR refers
structure of a company is changed by changing manpower
to fundamental rethinking and radical redesign of work
strength, layers and levels, and their skill.
processes so that the company becomes lean and develops
Structural changes in global firms have been discussed quick response capabilities, to face competition and to
by Birkinshaw (1988). He has expressed that the strategic exploit new opportunities. Abrahamson et al (1999) have
and structural changes are being manifested in large given the steps for designing a new logistics structure:
multinational corporations (MNCs) to locate more and more calculate the total cost and delivery service of the existing
value-added activities outside the home country. Further, structure, making calculations for alternative structures, and
‘subsidiary development’ initiative is an important driver of make calculations on dimensions and size of facilities. First
the process of structural change - through which the two steps directly deal with the organizational structure
subsidiaries expand their scope of activities and whereas the third one deals with operational part.
responsibilities within MNCs.
Kohn (2002) has described the changes in the logistical
Drucker (1990) has stated, “Structure is a means for concept and studied its impact on the environment. In a
attaining the objectives and goals of an organization. Any model developed, he has illustrated the creation of
change in structure must start with objectives and strategy”. opportunities and limitations on account of structural

giftjourn@l
 Management of Change – A Comprehensive Review 53
changes in an organization. He has concluded that changes Hicks and McGovern (2000) have classified processes
on a structural level surely influence time, cost and into three categories: nonphysical, physical and support
environment. processes. The first category relates to information and
knowledge-based processes, second group involves the
Systemic Change: Mumford (1983) and Pava (1983)
physical realization of the product through manufacturing,
developed socio-technical systems design approach for
assembly, and construction, and the third category includes
process redesign. They have stated that performance of the
staff functions such as finance and human resource
organizations is dependent upon technical and social
management. They have concluded that in addition to
dimensions. They further considered that technology
coordinating marketing and supply, systems related to
dimension is concerned with its technology and procedures,
procurement, product development, and manufacturing
and social dimension denotes people who work for the
activities need to be changed for success in a business.
organization and focuses on their psychological needs for
fulfilling and satisfying work. They have concluded that French (2000) has found the impact of the new processes
socio-technical systems involve the joint design of the on the survival of the organization. Further, he has
technical subsystem (optimized for efficiency) and the social demanded new processes to be developed for cost reduction
subsystem (optimized for job satisfaction and motivation) through value engineering activities, also reduction in
in such a way that they support each other. product-life cycle through research and development, and
improving confidence of its vendors through revitalization
Van (1992) have stated that process (system) has been
of the company. Carr and Gabriel(2001) have considered the
used in three ways in literature: as a logic used to explain
systemic change responsible for competitiveness of an
a casual relationship in a variance theory, as a category of
organization. He has demanded a shift from crisis
concepts that refers to individuals or organizations, and as
management to long-term process of stabilizing the
a sequence of events that describe how things change over
organization, sustaining progress and ensuring the success
time. Out of these three, only the third permits explicit and
of the company in a rapidly changing environment.
direct observation of the process in action, and thereby
allows describing and accounting for how some entity or Adrian and Yiannis (2001) have considered three
issue develops and subsystems in a system
changes over time. Managing change has comprised of various interconnected namely technical, social
Thus, the definition of and interdependent areas. Each of these areas need to be and power. They found
process used in change recognized both individually and also in terms of its that no change could
management should multilateral linkages with other areas. convert an entire system
refer to the sequences of instantaneously. They
individual and collective events, actions, and activities. portrayed reorganizations as beginning with a nucleus where
Wastell, White and Kawalek (1994) have been of the opinion the change must first become established firmly before it
that efficiency, effectiveness and adaptability of business propagates to rest of the system. They also found that if
processes (systems) improve the organizational performance. communication mechanism gets more efficient, then nucleus
Also, processes are argued to be inherently vulnerable becomes larger and stronger resulting in a systemic change,
because they flow horizontally, cutting across vertical instead of being damped by its surroundings.
functions and are prone to atrophy due to departmental
Pattanayak and Misra (2002) have considered
rivalries, bureaucracy, lack of coordination and loss of
reengineering responsible for a successful change in an
customer focus.
organization. According to the authors, reengineering
Ghoshal and Bartlett (1995) have classified the represents rapid and radical redesign of strategic, value added
company’s core organizational systemic processes into three business processes and the systems, policies and
parts: the entrepreneurial process, the competence building organizational structure that support them. They have
process, and the renewal process. An entrepreneurial process emphasized that dramatic changes and dramatic results are
deals with the changes in organizational structures, possible through systemic changes in an organization.
relationships, and values to create an environment of
Chaudron (2002) studied the impact of various change
innovation and risk taking. The competence building
efforts in various organizations. Based on this study, he
considers flexibility, responsiveness, learning, skill,
determined several causes to organization’s change efforts
information sharing, cost reduction, increasing overall
to stumble or stagnate. One of the important causes has been
equipment effectiveness, openness in decision-making,
lack of systemic changes. He has stressed that management
technological changes, and culture. The renewal process
must focus on customer satisfaction, and should promote
includes data processing, system support process, new
teamwork in the entire organization. Profit sharing may be
strategies, motivation, and building core competencies. The
introduced; individual performance appraisals may be
authors have considered that systems help companies to
radically changed or eliminated; organizational structure
decide strategies for their competitive strengths. Managers
may be realigned away from functions (production, quality,
are expected to design systems, procedures, and policies that
engineering) to a customer-, process- or geographic-based;
ensure all the employees conformed to the company way.
information may be disseminated to all the employees than

© 2006, Global Institute of

Flexible Systems Management
54 R.K. Garg and T. P. Singh
to reserve it for senior management. Significantly, more and implementation of technological innovations at various
authority must also be extended to the line employees. If stages. He has concentrated on four factors namely new ideas,
management does not align these systems, the effect will be people, transactions and organizational context, and
like “Dr. Doolittle’s Pushme-Pullyou” animal (a horse with problems related to them. According to Bardwick (1991),
two heads, each pulling in the opposite direction). many organizations and their employees are mired in the
mentality of entitlement. As a result, there is low
Garg and Singh (2002) are of the opinion that system
performance, lack of commitment and accountability, little
pertains to the existing practices in an organization. In
risk-taking and scant enthusiasm. The opposite of
making systemic changes, the efforts are needed to eliminate
entitlement is fear. Duck (1993) has described the need to
the unnecessary procedures, complicated reports, formal
take people into confidence while introducing change in any
approvals, formal meetings, enforced policies, or other formal
area. The author has emphasized the change paradoxes and
activities, which generally create backlogs/ bottlenecks. Red
mentioned that trust is hardest to develop and achieve when
tapism and other bureaucratic procedures also need to be
you need it most. Hazen (1994) explains how to overcome
changed which cause frustration amongst employees as their
both the lethargy of entitlement and the paralysis of fear
capabilities and roles are not judged significantly. Proper
and to move into the energy of earning in order to create a
training needs to be given to the organizational members
work environment of high confidence and high performance.
as a team so that they can become self-managed. Simulation
based guidance can add more value to it. The authors have According to Beatty and Ulrich (1996), the greatest effort
stated that systemic changes result in saving of power, time, involved in making change in an organization is to change
cost and effort leading to increased competitiveness. It is the mindset of employees at all levels. The mindset
further added that systemic changes in an organization can represents a shared way of thinking and behaving within an
be made through bold leadership and commitment from top organization. Further, they added that mindset is
authority. institutionalized in vision, value and mission. As an
organization becomes mature, it has a relatively fixed
Manfred and Elizabeth (2002) have emphasized upon the
mindset, and becomes a liability. With time, its intensity may
need of the employees to match the desired changes in the
hinder the ability to
organizational systems.
change.
They have indicated Change agent facilitates all the essential events and also
that by soft process intervenes whenever feels so. In an interview
changes like training, with Jaques Naseer, CEO
transfers, teamwork and travel, hard results can be easily met of Ford Motor Company, Wetlaufer (1999) has discovered
out in an organization for global leadership. Role of change that no company driven by rapid changing customer needs
agents, cheerleaders, coaches, teachers, mentors, process and tastes can survive without having competent leaders
consultants and integrators has been very important in capable of fast decision making. It has been emphasized by
selecting the new systems for motivating the manpower to CEO that need of the organization is to make quick changes
reframe their mindset. in the fundamental approach. Employees should think like
shareholders, and the company as a whole must be able to
Lamb and Leisch (2002) have offered an approach to
respond swiftly to customers needs. All this is possible
reframe the relationships between three constructs – market
through a change in the mindset of people. It is further
commitment, market knowledge and market involvement, in
added that change in mindset is possible by involvement
the process of internationalization of a small firm. They have
and commitment of top management, sharing their views and
added that as the firm grows, organizational resources
vision with the people of the organization.
become a great issue requiring increased management
attention and coordination. This situation requires a change Carr and Gabriel (2001) have referred the notion of
in its existing systems and structure. Kampas (2003) has unconsciousness contextualized as psychodynamics relevant
found that it is the necessity of the present industry to to managing people. According to the authors, the concepts
orchestrate transition from product-innovation culture to of identity (individual, group and organizational), groups,
process-innovation culture, which focuses on systems change culture, motivation, emotion, rationality, ethics, leadership,
like product development, procurement, manufacturing, sales, commitment, psychological contract, role, power, and
distribution and marketing. conflict acquire a deeper meaning when enriched with
psychoanalytic insights and help in getting success in an
People Change: Change in people refers to changes in
organization.
employee attitudes, expectations, perceptions, or behavior.
The human dimension of change requires a workplace Friedman (2002) has studied the role of individual in
committed to the organization’s objectives, targets and organizational change. Organization learning occurs when
vision. This dimension has necessitated proper education individuals within an organization experience a problematic
and training for the manpower. It has also demanded a situation and enquire about it on organization’s behalf.
performance evaluation and reward system that supports and Further, involvement of people results in change of
encourages continuous improvements. individuals’ mindsets as well as organization culture. He has
further stated that programmes like TQM and reengineering
Van (1986) has considered people for the development

giftjourn@l
 Management of Change – A Comprehensive Review 55
transform people at all levels into agents of organizational are pouring executive energy for higher levels of quality,
change. service and overall business agility. Companies achieve real
agility only when every person makes efforts to rise to every
Bogley and Boyd (2003) have felt the importance of
challenge. This type of fundamental change is called
developing a global mindset requiring changes of
“revitalization or transformation”.
organizational structure, process and systems. It requires a
balanced formalization with flexibility through modular Jick (1998) has stated that despite the entire corporate
networks and communities of practice, balancing benchmarking and academic wisdom, companies are not
standardization with customerization through disruptive happy with the prospect of 5-7 years time frame. He states
management, centers of excellence and corporate vision. that “the quicker a company adapts a new culture based on
the competitive needs, the greater is the likelihood of its
Cultural Change: Organizational culture denotes a system
succeeding”. He has found people of the organization as the
of shared meaning within an organization that determines
bottlenecks and tollgates in an organization to change. Thus,
to a large degree how employees behave. New systems or
challenge involves changing the hearts called “Software of
patterns of values, symbols, rituals, myths, and practices have
the company”. A cultural change is very much comparable
evolved over time in the industry. Organizations around the
to a product launch. A new product is launched based on
world are experiencing changes in the culture, and the trend
what customers want now, not later. If it arrives too late, it
is towards even more changes as countries continue to
may no longer serve its purpose, or customers may be lost
undergo changes in the cultural composition of their general
to a competitor. A cultural change has the same sense of
populations (Erez and Somech, 1996; Hambrick, et al, 1998;
urgency. If it arrives too late, an enterprise business may be
Wenting and Palma,
lost to a competitor
2000).
Change agent can contribute a lot in achieving various (Jick, 1998).
Cultural orientation aspects like increase of morale of employees of the
Morrison and
can be assessed by organization, increase of retention (reduce attrition), instill
Phelps (1999) have
collecting data on issues
relating fear/ risk
high organizational commitment, allow for greater studied factors to
motivate employees for
taking, communication/ creativity and innovation through HR alignment, develop
cultural change. They
feedback, flexibility/ a culture that is proactive and receptive to change.
have found an important
structure, stress/ peer
factor called “taking
support, learning, continuous improvement, managing
charge” which in turn effects organization functions. As
orientation and involvement, and operating norms. Dance
reported by coworkers, taking charge is related to feel
(1991) has related total quality with the process of cultural
responsibility, self-efficacy and perceptions of top
change. He has stated that cultural change process is
management. It entails voluntary and constructive efforts, by
developed by a management style based on clear objectives,
individual employees, to effect change with respect to how
effective organization structure, clear and simple cultural
work is executed within the context of their jobs, work units,
values, and efficient management and procedures.
or organizations. They have concluded that employees can
There are basically two types of approaches for cultural be motivated to go beyond the boundaries of their jobs for
change in an organization, i.e. the team approach (Heavens, cultural change. Also, the employees are likely to be
1993) and the committee approach (Quinn and Brian, 1995). motivated when they perceive top management as open to
Participation on committees means to bring people together employee.
to share ideas on a particular project. The committee
Kozan (2002) goes beyond the current practice of treating
approach has been superseded by the concept of shared
cultures as uniform entities, and investigates the influence
management. Teams have been encouraged in order to work
of sub-cultures on the styles used during conflicts. He has
collaboratively using team problem-solving techniques.
identified three distinct subculture clusters in addition to the
Teams tend to have more responsibility, more authority, and
main culture of an organization. The traditional culture
the team approach tends to be more proactive than the
preferred avoiding, while power seekers preferred competing,
committee approach. Impact of information technology on
and egalitarians preferred accommodation in comparison to
cultural change was studied by Davenport and Thomas
other subcultures. It has been emphasized that an
(1994). According to the authors, by paying attention to how
organization practicing these subcultures can acquire
people share information, management can use all the
success. Hopkins and Hopkins (2002) further emphasized
resources to its fullest potential. The authors have spoken
that employees should be engaged as meaningful
of integrating human behavior into information systems and
contributors to cultural change.
at the same time, changing employee behavior to meet
technology halfway. Entrepreneurial Aspects: Covin and Slevin (1988) have
indicated that an entrepreneurial management style will have
Pascale et al (1997) and Meek (1998) have stressed on a
a positive effect on the performance of organically structured
fundamental change in the companies operations. Earlier the
firms and a negative effect on the performance of
tendency was to improve functions and process to meet the
mechanistically structured firms. An organic structure is
objectives. With the accelerating pace of change, companies
© 2006, Global Institute of
Flexible Systems Management
56 R.K. Garg and T. P. Singh
expected to facilitate innovations through its flexibility and process owners and other response characteristics. These
ability to respond to a fast- changing and turbulent indirect effects reflect a more organizational perspective of
environment. It has been emphasized that the synthesis of flexibility (Nelson et al, 1997).
skills and collaborative efforts for team building along
Dixon (1992) feels that there is a linkage between
horizontal and vertical levels would be effective.
flexibility and competitiveness of an organization. With
Lee and Peterson (2000) have evolved a cultural model respect to avoiding product changes, the ultimate level of
of entrepreneurship. They have proposed that a society’s flexibility is achieved when the need for change itself has
prosperity to generate autonomous, risk taking, innovative, been eliminated. Three strategies have been evolved for
competitively aggressive and proactive entrepreneurs depend improving flexibility- choosing flexible technologies, lower
on its cultured foundation. Role of economic, political/legal, the cost of change, and product architectural choices that
and social factors are moderators in the relationship between allow the product to easily accommodate change.
culture and entrepreneurial orientation. Finally they have
Present Status and Limitations of Existing
concluded that a strong entrepreneurial orientation will
ultimately lead to increased competitiveness. Approaches
Michael et al (2001) have defined entrepreneurship as There is a good amount of literature available on the issues
the process of storytelling that mediates between extant related to socio-technical change management in context of
stocks of entrepreneurial resources and subsequent capital technology, system and culture in developed countries.
acquisition and wealth creation. The authors have proposed Authors in the areas have tried to capture different problems
a framework that focuses on how entrepreneurial stories faced by technology based firms and have thrown light on
facilitate the crafting of a new venture identity that serves various aspects of change management function. Today,
as a touchstone upon which legitimacy may be conferred technology change is a buzzword. A good deal of work has
by investors, competitors, and consumers, opening up access been reported to develop technologically advanced
to new capital and market opportunities. machines, CAD/CAM practices, CNC machines, robotics,
FMS, new tools, dies and fixtures, etc. Emphasis has been
Flexibility: A flexible system is one that is able to respond given to enhance quality, minimize waste, customer delight
to changes, and flexibility is the ability of the system to and increasing productivity by replacing manpower by
respond effectively to change. The ability of the machines.
organization to cope
with the internal changes ‘Change Coordinator’ ensures that all changes are It is learnt that
require a degree of recorded, scheduled, and that all parties involved with the systemic changes have
redundancy in the change have the information that is needed through the been adopted even by
system, whereas the process. the companies, which
ability to cope with the are technologically
external change require that the systems be versatile and poor. One or more
capable of producing wide variety of parts with minimal amendments in systems like JIT inventory to reduce
change over times and costs (Buzacott, 1982, Chung and investment on inventory, 5S for better house-keeping,
Chen, 1990). ISO9000 for international process standards, QS9000 for
automobile industry, Kaizen teams, Quality Circles, TQM
The concept of systemic flexibility was introduced by and TPM have been adopted by most of the companies and
Sushil (1994). Systemic flexibility is the exercise of free will have added success to them.
or freedom of choice on the continuum to synthesize the
dynamic interplay of thesis and antithesis in an interactive Structural change has been crucial in recent times. With
and innovative manner, capturing the ambiguity in systems, developed technology and multi-skilled manpower, most of
and expanding the continuum with little penalty in time and the companies have extra manpower and are finding it
effort. Such a systemic concept of flexibility will have major difficult to reduce it. Many joint ventures and public sector
attributes of spectral, integrative, interactive, innovative and units have offered voluntary retirement schemes (VRS) and
fuzziness character, and lead success to the organization. early separation schemes to get rid of excessive manpower.
A virtual ban on recruitments has been imposed in a number
Technology flexibility is the technology characteristics of organizations. For new systems and culture, delayering
that allows or enables adjustments or other changes to the is desired in the Indian context. Efforts have been made to
business process. Technology flexibility has two dimensions, enlarge vendor base, suppliers and ancillaries for quality
structural and process flexibility. The flexibility of improvement and cost reduction. This aspect is also
technology that supports business processes can greatly adequately covered in literature.
influence the organization’s capacity for change. Existing
technology can present opportunities for or barriers to Mindset of people and cultural change is considered
business process flexibility through structural characteristics critical for a successful change management programme. At
such as language, platform, and design. Technology can also international level, various theories have been developed for
indirectly affect flexibility through the relationship between group dynamics, teamwork, belongingness, ownership and
the technology maintenance organization and the business rich work culture. Literature pertaining to these studies is

giftjourn@l
 Management of Change – A Comprehensive Review 57
readily available. major areas should be changed for a successful change
programme based on the present status of the organization,
Change management publications at national and
has also been discussed. Further, the literature emphasizes
international level mostly deal with technology, system, and
on an approach of changing with stability, which demands
culture. Publications dealing with highlighting
that bigger changes are intercepted with small changes. Need
technological change, systemic improvement, restructuring,
of flexibility in the process of change management and
and cultural modification of Indian industries are rare. A lot
adopting an entrepreneurial approach have also been
is said about motivation, labor unrest, time standards, labor
brought out. Comprehensive studies for an organization’s
laws, technology adaptation, market competition and similar
change programme involving all these aspects have not been
aspects but, it is seen that each of these aspects is described
evidenced. Such studies need to be undertaken for an
in isolation. Studies aimed at finding out the interplay of
organization or a class of industry.
all the factors and forces involved in the change process are
scant. References
Some of the major limitations of the existing approaches Abrahamson, M. and Aronsson, H. (1999), “Measuring logistic structures”,
towards management of change are highlighted as follows: International Journal of Logistics: Research and Applications, 2(3), pp.
111-132.
• There is a heavy emphasis on technology management Adrian and Yiannis, (2001),The psychodynamics of organizational change
and systemic improvement. Organizational structure, management, Journal of Organizational Change Management, 14(5),
mindsets of people, attitude and culture have not been 415-421.
addressed in an integrated manner alongwith Armenakis A., Harris S. and Massholder K. W. (1993), Creating readiness
technological and systemic changes. for organizational chang, Human Relations, 46(6), 681-703.

• In technological change, emphasis is on technical Armstrong, G., and Kotler, P., (1993), “Marketing: An introduction”, 3rd
Edition, Prentice Hall NY.
collaboration or technology-acquisition from MNCs.
Innovation and technology development aspects have Baker, (1985), “The marketing handbook”, 5 th edition, Butterworth-
not been fully addressed. Heinemann, An imprint of Elseveir Science, Linacre House, Jordan Hill,
Oxford.
• The aspects of supporting change in the systems and Bardwick J. M. (1991), Danger in the Comfort Zone, New York: American
structure required as a result of major technological Management Association.
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to the extent of efforts required and the results thereof. Harward Business Review, May-June1995, 132-142.
• In case of manpower utilization, various techniques Beatty R. W. and Ulrich D. O. (1996), Re-engineering the mature
have been developed for manpower-optimization, but organization, IEEE Engineering Management Review, Fall 1996, 60-69.
no model or methodology has been devised which Beckhard R. and Harris R. T., (1987), Managing complex change,
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• The research on change management is concentrated on Beer M. and Walton A. (1987), Organizational change and development,
Annual Review of Psychology, 38, 339-367.
quality improvement, increasing production rate,
reducing scrap rate etc. Literature on interactions of Beer M. and Nohria N. (2000), Cracking the code of change, Harvard
Business Review, May-June 2000, 133-141.
various areas of change management is scant.
Berman, E.M., (1988), “Productivity in public and non-profit
• Literature on Indian manufacturing sector, in general, organizations: Strategies and Techniques”, Sage Publications INC.
deals with financial aspects, market share, profitability Bogley and Boyd (2003), The Need for a Corporate Global Mindset, MIT
and launch of models/variants. Research on Sloan Management Review, 44(2), 25-32.
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Brown S. L. and Eisenhardt K. M. (1997), The art of continuous change:
Indian context. Thinking complexity theory and time-paced evolution in relentlessly
shifting organizations, Administrative Science Quarterly, 42(1), 1-34.
• Research work taking individual aspects of change is
available in abundance but it does not present a Brynjolfsson E., Renshawamy A. and Marshall V. A. (1997), The matrix
of chang, Sloan Management Review, Winter 1997, 37-54.
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© 2006, Global Institute of
Flexible Systems Management
60 R.K. Garg and T. P. Singh

Flexibility Mapping : Practitioner's Perspective

1. What types of flexibilities you see in the practical situation of “Organizational Change” on the following
points:
! Flexibility in terms of “options”
! Flexibility in terms of “change mechanisms”
! Flexibility in terms of “freedom of choice” to participating actors.
2. Identify and describe the types of flexibilities that are relevant for your own organizational context? On
which dimensions, flexibility should be enhanced?
3. Try to map your own organization on following continua
(Please tick mark in the appropriate box(es))

Non-flexible Flexible System Total flexible

Reactive Innovations Proactive

Low Readiness to change High

Vertical Organizational structure Flat/Matrix

Rigid Mindset of people Flexible

4. Develop a SAP-LAP (Situation Actor Process-Learning Action performance) model for "change mechanism"
relevant to your organization.

Reflecting Applicability in Real Life

1. How do you find the study presented in this paper relevant to your organization? Critically examine and use
the relevant findings.
2. Based on the parameters in this paper, is it possible to use it for benchmarking purposes?
3. To what extent the findings of this paper are relevant for managing change in your organization?

Dr. Rajiv Kumar Garg Assistant Professor in Industrial Engineering Department at Dr. B. R. Ambedkar national Institute
of Technology (Deemed University) Jalandhar, India. His areas of interest are change management, operations management,
supply chain management, and systems dynamics. He holds a B. Sc. Engg. Degree in mechanical Engineering from Regional
Engineering College Kurukshetra, and M.E. degree in Industrial Engineering and a Ph. D. from Thapar Institute of
Engineering and Technology (Deemed University) Patiala (India). He has previously taught at Thapar Institute of Engineering
dna Technology (Deemed University) Patiala, and Technical Teachers' Training Institute Chandigarh. He has over 18 years
of industry and teaching experience. He has published in Global Journal of Flexible System Management, Industrial
Engineering Journal, and a number of national journals. E-mail: [email protected], [email protected]

Dr Tejinder Paul Singh is Dean of Academic Affairs at Thapar Institute of Engineering and Technology (Deemed University)
Patiala (India). His areas of interest are cange management, operations management, waste management, technology
management and productivity enhancement. He holds a B. Tech Degree in Mechanical Engineering, M. E. degree in Industrial
Engineering and a Ph. D. from Thapar Institute of Engineering and Technology (Deemed University) Patiala (India) He has
over 28 years of professional years. He has been Head of Mechanical and Industrial Engineering department, and head of
CII TDB TNET at Thapar Institute of Engineering and Technology (Deemed University) Patiala. He has published in Global
Journal of Flexible Systems Management, Industrial Engineering Journal, Productivity Journal and a number of national
journals. E-mail: [email protected], [email protected]

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