Business restructuring for competitive advantage in the global economy

Rationale/Background

Due to the increasingly competitive and evolving environment of modern business, a significant focus now lies on business restructuring in order for firms to meet the demands of the global economy. Buhalis and Owen (2010) see this necessity as the driver behind business process reengineering and as a result the practice is widespread, for instance Attaran (2004) highlighted a study in which 87% of businesses were found to engage in the process. Much research has been conducted in this area (see Kettinger and Grover 1995), which points towards competitive advantage as the primary focal area. Based on Porter’s original five forces model (Porter 1979) companies now look to business process reengineering to create a sustainable competitive advantage for their firm. Whilst research done by Ansoff and McDonnell (1990) focuses on more traditionally held beliefs about a firm’s unique resources, many has since changed their beliefs on what is considered a dynamic capability worthy of creating a sustained competitive advantage. Meed et al (1994) cited a company needs to transform in order to adapt to its environment, and Osborne (1997) suggested that the very nature of the issue requires ever evolving material. Thus there is becoming an increased focus on the more subjective capabilities of modern organizations, as Barney’s 1999 article noted how strategic resources tend to be evenly distributed across firms and so there is a new focal point of knowledge being central to the business reengineering process and to creating a sustained competitive advantage for modern businesses.

According to Grint (1994) reengineering quickly became the buzzword for businesses in the 1990’s, set on organizational improvement and change. Business process reengineering is defined as “a requirement to study fundamental business processes, independent or organization units and information systems support, to determine if the underlying business processes can be significantly streamlined and improved” by Langer (2008) and is based on operational objectives in order to improve performance. For instance a firm may wish to simplify their processes, improve communication procedures or speed up their operational turnover (Sayegh 2005.) As mentioned previously the very nature of business process reengineering requires a circular flow of communication in order for business processes to continuously improve, as Guha et al (1993) suggested the process reengineering cycle to be implemented into organizations in order to quickly tweak any issues with a new process with a minimal delay on output. The subject of business process reengineering is still relatively new and so there are suggestions for future improvements, as a significant focus now lies on not only creating the information systems but using them effectively. This requires what Earl et al (1995) called alignment, that a process must not only be operationally efficient it must also be aligned not only with the company’s other materials and systems but also with the existing knowledge of the firm’s staff.

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This view is supported by Burgelman et al (2008) who focused on the links between not only different management levels but also between different strategic levels of the business. The suggestion by Burgelman et al being that organizational knowledge is unevenly spread and so needs to be aligned more thoroughly. According to Brynjolfsson and Renshaw (1997) business process reengineering does suffer from low success rates, due to a lack of tools for managing the change process. Brynjolfsson and Renshaw proposed utilising a matrix of change in order to help managers identify and deal with critical issues. In this sense the importance of organizational knowledge is evidently the weak link in making business process reengineering reach its potential. Therefore much work has been done to attempt to bridge this success gap between the operational processes of a business and people’s ability to use them (see Khosrowpour 2006.)

Attaran (2004) believed information technology to be a key element of a successful reengineering approach, citing Bill Gates’ comment on the 2000’s focus being on velocity. Therefore it is feasible for a company to rely on information technology to understand processes if they operate in a particularly fast paced industry like the example Bill Gates was referring to. In fact Johnson and Vitale (1998) believed innovations in information technology to be the future source of competitive advantage for firms, using examples of where it has been essential for business success for instance linking systems between an organizations diversified functional areas.

Organizational knowledge is therefore seen to be one of few sources of a sustainable competitive advantage for modern firms. Tacit knowledge means that no two companies are the same (Collis and Montgomery 1995) and so as a dynamic capability knowledge appears to fulfil the necessary criteria, seen by Ambrosini and Bowman (2002) as being difficult to imitate, difficult to substitute or transfer and being scarce. Especially vital in the modern business environment is the speed in which knowledge can be created or transferred, as Saint-Onge (1996) noted how a company’s intellectual capital needs to be in line with rapid technological developments. This focus on human capital led Saint-Onge to cite the “knowledge era” of modern times. A key application for business process reengineering of this focus is the need to constantly reinvest in organizational knowledge, due to the attrition effects of competition decaying the casual ambiguity that knowledge creates (Reed and Defillippi 1990.)

Therefore the real challenge for modern companies is how to undertake this required reinvestment in business process reengineering. Cavusgil and Calantone (2003) pointed out in their study on tacit knowledge that the primary issue is sharing knowledge throughout the firm. Howells (1996) noted that in order to be fully utilised tacit knowledge can be transferred on a variety of levels as in many cases knowledge should not only be transferred horizontally but vertically in firms, i.e. that managers must pass on their knowledge to their staff and vice versa. This vertical transfer is vital for informational systems as in many cases practicalities experienced by lower level staff are not considered by upper management. Due to the difficulty in representing tacit knowledge acknowledged by Lubit (2001) the suggestions on how to transfer knowledge throughout the firm focus on more informal means. Lubit believed social mechanisms to be the best option, citing how formalised processes will always leave gaps. Similarly Ambrosini and Bowman (2002) found that techniques such as individual questionnaires and storytelling were most suitable for demonstrating tacit knowledge.

Description

Project Aims and Objectives:

• To uncover relevant links between organizational knowledge and the firm’s business process reengineering, and the role of knowledge management in facilitating the reengineering process.
• To examine theoretical approaches to business process reengineering and empirical evidence of their respective success rates.
• To investigate the impact of business process engineering on sustainable competitive advantage from a theoretical standpoint.

Research Methodology

Due to the theoretical approach being adopted in this study, secondary research would be utilised in accomplishing the aforementioned research objectives. Based on this approach, the study would adopt an interpretivist epistemology. According to Saunders et al (2007), “Interpretivism is an epistemology that advocates that it is necessary for the researcher to understand differences between humans in our role as social actors”. Interpretivism relates to how people make sense of the world around them, and how they interpret social phenomena.

Compared to the positivist view, the interpretivist view relates essentially to the interpretation of findings by those collecting data, and a common risk is that there may be issues of reliability and validity due to its subjective nature (Collis and Hussey, 2003). Based on recommendations by Collis and Hussey (2003), an inductive approach would also be utilized in conducting the research, as this involves analyzing the theoretical data concerning business process reengineering and competitive advantage, and drawing up a conclusion (after indepth analysis), on how both factors may be related.

Data collection and analysis within this study would involve the systematic review of literature, reviewing previous studies on business process reengineering, knowledge management and competitive advantage to establish the relationship between all 3 variables, and ascertain if and how they the reengineering of business processes could actually lead to an improved competitive advantage within an industry. Through the combination of a number of results from a number of studies, the researcher hopes to uncover reasonable, reliable and valid insights into the subject area.

Relevant databases such as Business Source Premier, Ingenta Connect and Emerald Insights would be utilized in finding these researches. Further research would also be conducted on institutes of business, such as those who may have statistics on how business processes affect competitive advantage. An entire subchapter would also be devoted to critiques of business process reengineering, particularly in its relevance to competitive advantage, as this allows for a balanced critical research and helps support the study’s reliability. Secondary research has been adopted as opposed to primary research, as it essentially bases our findings on more extensive research that may have been done in the past. These literatures are usually wider ranging and cover a lot more aspects of BRR than this research could have, if it adopted a primary approach.

Deliverables

This project intends to deliver clear conclusions and recommendations on the following:

• The relationship between business process reengineering and knowledge management within organisational settings. Do they necessarily impact on one anotherDoes effective knowledge management particularly promote better results when processes are reengineered
• Empirical findings on the success and / or failure rates of business process reengineering activities that have been conducted over the past decades. These could be differentiated based on industries, and conditions, such as whether the organisations properly utilised information technology or knowledge management systems.
• Empirical or theoretical evidence suggesting that business process reengineering does promote sustainable competitive advantage. Particular emphasis would be placed on how it was accomplished and the secondary factors (such as information or knowledge management technology) that may have acted as catalysts.

Schedule

• Secondary research (literature search) to be completed within two weeks of the project’s start.
• Cross-examination of literature is to be completed within a week of the final data being collected. This will encompass all of the data to spot any clear patterns.
• Checking of the discovered patterns to ensure their viability, reliability and generalisability will also be aimed to be completed within the same week that the original cross examination has been completed.
• The Introduction and Methodology chapters would be written within a week from when the data has been gathered. This would help in the structure of these chapters.
• The systematic literature review would be written up and conducted using the thematic approach. Meaning that each of the project deliverables would be separated into different themes and analysed as such.

Overall project timeline – A maximum of 4-5 weeks from starting to accumulate the relevant data to having a clear, presentable set of results.

Resources Required

No hardware resources are required, except for computer hardware to use in researching, analysing and writing up the project.

Access to literature sources such as the journals mentioned above, and empirical results on business process reengineering may require library access to such journals and in-depth Internet research. The researcher is confident that he has the skills to accomplish all of these.

References

1. Ambrosini, V. And Bowman, C. (2002) Tacit Knowledge: Some Suggestions for Operationalization. Journal of management studies, Vol 38, Issue 6, pp 811-829.
2. Ansoff, H.I. and McDonnell, E.J. (1990) Implanting strategic management. Prentice Hall New York.
3. Attaran, M. (2004) Exploring the relationship between information technology and business process reengineering. Information and management, Vol 41, pp 585-596.
4. Barney, J. (1999) Firm resources and sustained competitive advantage. Journal of Management, Vol 17, No 1, pp 99-120.
5. Buhalis, D. And Owen, R. (2010) Business Process Reengineering. Business Process Management Journal, Vol 6, Issue 2, pp 113-121.
6. Burgelman, R.A. Christensen, C.M. and Wheelwright, S.C. (2008) Strategic management of technology and innovation. McGraw- Hill / Irvin.
7. Cavusgil, S.T. Calantone, R.J. Zhao, Y. (2003) Tacit knowledge transfer and firm innovation capability. Journal of business and industrial marketing, Vol 18, Issue 1, pp 6-21.
8. Collis, D.J. and Montgomery, C.A. (1995) Competing on Resources: Strategy in the 1990s. Harvard Business Review, July-August.
9. Earl, M.J. Sampler, J.L. and Short, J.E. (1995) Strategies for business process reengineering: evidence from field studies. Journal of Management Information Systems, Volume 12, Issue 1 (June 1995.)
10. Grint, K. (1994) Reengineering History: Social Resonances and Business Process Reengineering. Organization, Vol 1, No 1, pp 179-201.
11. Guha, S. Kettinger, W.J. and Teng, J.T.C. (1993) BUSINESS PROCESS REENGINEERING Building a Comprehensive Methodology. Information systems management, Vol 10, Issue 3.
12. Howells, J. (1996) Tacit knowledge, innovation and technology transfer. Technology analysis and strategic management, Vol 8, No 2, pp 91-106.
13. Kettinger, W.J. and Grover, K. (1995) Special section: toward a theory of business process change management. Journal of management information systems, Vol 12, Issue 1 (June 1995.)
14. Khosrowpour, M. (2006) Advanced topics in information resources management. Vol 5. Idea group publishing.
15. Langer, A.M. (2008) Business process reengineering. Analysis and design of information systems.
16. Lubit, R. (2001) Knowledge Management : The Keys to Sustainable Competitive Advantage. Organizational dynamics, Vol 29, Issue 3, pp 164-178.
17. Meed, J.W. Bots, P.W.G. and Sol, H.G. (1994) A hard core for soft problems: A business engineering case study within the Amsterdam municipal police force. TCBAUS IFIP Information systems international working conference, Gold Coast, Australia.
18. Osborne, T. (1997) Business process reengineering. PACIS 1997 Proceedings.
19. Porter, M.E. (1979) How competitive forces shape strategy. Harvard business review. Cited by Smit, P.J. (2000) Strategic planning: Readings. Juta and Company Ltd.
20. Reed, R. and Defillippi, R.J. (1990) Causal Ambiguity, Barriers to Imitation, and Sustainable Competitive Advantage. The academy of management review, Vol 15, No 1 (January 1990) pp 88-102.
21. Saint-Onge, H. (1996) Tacit knowledge the key to the strategic alignment of intellectual capital. Strategy and leadership, Vol 24, Issue 2, pp 10-16.
22. Sayegh, F. (2005) Business process Reengineering. EFS Technical report No.21. (December 15th 2005.)

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