Managing cross-functional interdependencies - the contingent value of integration

This research focuses on designing organizations, especially on the integration of functional units (e.g., manufacturing, R&D, marketing/sales). Cross-functional integration is one of the focal concepts in Operations Management (OM) and it has been approached both in the context of on-going operations as well as in the context of new product development. The existing literature on cross-functional integration focuses primarily on assessing the performance effects of integration and often takes the benefits of integration for granted. Some recent literature, however, suggests that there are costs related to integration. Hence, integration can be considered as an investment, inducing significant financial and managerial costs to the organization. Therefore, it is of fundamental importance to assess when integration is needed and the conditions under which it is essential. In order to understand the value of integration, the antecedents and effects of integration are addressed in this research. The research focuses on cross-functional integration at the manufacturing plant level. A theory-driven empirical research approach is taken. The theoretical basis of this research is in the contingency theory of organizations, especially the work of the early structural contingency theorists. In this research, integration is approached as an information processing phenomenon. Following the arguments of contingency theorists and information processing scholars, the research makes a distinction between three integration constructs: achieved integration, integration mechanisms, and requisite integration. Furthermore, it is suggested that organizations vary in terms of their needs for integration, and emphasis on complex lateral integration mechanisms is needed only when the requirements for integration are significant. The first main finding of this research is that the integration dimension of achieved integration has direct consequences in terms of performance; a high level of achieved integration has a positive effect on comparative manufacturing performance. The effect of cross-functional integration on different dimensions of performance is not similar, however; integration provides more value on some dimensions. The second finding is that plants differ in terms of the requirements for integration, and subsequently in terms of the use of integration mechanisms; when the requirements for integration are substantial, more emphasis is needed on lateral integration mechanisms, including cross-functional job rotation and cross-functional teams. Finally, the results indicate that especially a high emphasis on the development of new technology and product customization increase the need for cross-functional integration at manufacturing plant level. This research contributes to both Operations Management (OM) and Organization Theory (OT), although the main contribution of the research is to OM. To OM literature, this research contributes by (i) providing conceptual clarity to the concept of integration, (ii) conceptualizing and empirically assessing integration as an endogenous variable, and (iii) discussing and assessing the intra-organizational variant of the contingency theory, introduced by Lawrence and Lorsch (1967), in the OM context. Hence, the contribution to OM literature is empirical and theoretical by nature. The contribution to OT literature, on the other hand, is highly empirical by nature. This research contributes to the contingency theory by providing a holistic empirical assessment of the intra-organizational contingency theory argument on integration, including the empirical assessment of the concept of requisite integration. The research results have implications for practice as well. The concept of requisite integration is highly relevant for managers. Because of variations in the requirements for integration, lateral integration mechanisms are not equally important to all organizations; in certain conditions the integration challenge can well be managed with traditional vertical mechanisms like centralization and standardization. The results also imply that managers' need to pay attention to cross-functional integration depends on which performance dimension is strategically important; integration is more valuable on some dimensions of performance than on others

Globaali tuotantostrategia ja tuotannon sijaintipäätökset

Even though multinational companies have played a role in international trade for more than 300 years, the issue of globalisation of companies has become very important during the past few decades. Currently more and more manufacturing companies establish their operations in foreign countries, especially in Asia. Globalisation of manufacturing is a current topic in Finland also, because it is predicted that in 2004 already 75% of manufacturing activities of Finnish companies will be located outside of Finland. There are two research questions to be answered in this thesis: (1) what economic and managerial issues affect manufacturing companies formulating a global operations strategy? and (2) what factors in the business environment are viewed as especially important when making the decision of plant location? The thesis can be divided into three separate parts. The research questions are first addressed by a literature study. After that, a preliminary empirical study is carried out to form a thorough picture of the problems that companies face today when dealing with plant location decisions. The third part of the thesis is a real-life case study of a Finland-based company in the metals industry. The study deals with the expansion of the case company's manufacturing activities in Asia during the past ten years and it includes a deeper analysis of two plant location decisions made in Asia. Many companies mistakenly believe that the manufacturing location decision is primarily a cost-driven process, but in fact it is a much more complex decision. When making the decision of plant location, it is important to consider whether the company can remain competitive in the location for a long time rather than whether it is cheaper to do business in the location. Based on the literature, a new framework is constructed to structure the plant location decision-making process and it is tested in the case study. The results of the thesis show that low costs are not the driving force for plant location decisions but, however, quantitative analysis is to be included when making the decision. The study also points out that the location of markets and market growth are among the most important globalisation drivers. In addition to these, several strategic and environmental factors affect the decision of plant location. Also, two potential future research areas are identified. A deeper analysis of plant location decisions within the case company could be carried out or in order to get a more generalisable picture of plant location decisions, other manufacturing companies could be investigated.Vaikka monikansalliset yritykset ovat olleet osana kansainvälistä kaupankäyntiä jo 300 vuoden ajan, yritysten globalisaatio on ollut erityisen tärkeä puheenaihe vasta muutamana viimeisenä vuosikymmenenä. Tällä hetkellä yhä suurempi osa tuotantoyrityksistä perustaa toimintojaan ulkomaille, ennen kaikkea Aasiaan. Aihe on erityisen ajankohtainen myös Suomessa, sillä ennusteen mukaan vuonna 2004 jopa 75% suomalaisten yritysten tuotantotoiminnasta on Suomen ulkopuolella. Diplomityön tutkimuskysymyksinä on selvittää: (1) mitkä taloudelliset ja liikkeenjohdolliset tekijät vaikuttavat tuotantoyritysten globaaliin tuotantostrategiaan ja (2) mitkä liiketoimintaympäristön tekijät ovat erityisen tärkeitä tehtäessä päätöstä tuotannon sijainnista. Diplomityö voidaan jakaa kolmeen osaan tutkimusmenetelmien perusteella. Ensimmäinen osa on kirjallisuustutkimus tekijöistä, jotka vaikuttavat globaaliin tuotantostrategiaan ja tuotannon sijaintipäätöksiin. Toisen osan, alustavan empiirisen tutkimuksen, tavoitteena on saada kattava kuva ongelmista, joita yritykset kohtaavat nykyaikana tehdessään päätöksiä tuotannon sijainnista. Tutkimuksen kolmas osa on tapaustutkimus suomalaisen metalliteollisuuden yrityksen tuotannon laajentamisesta Aasiaan viimeisen kymmenen vuoden aikana. Tutkimuksessa tarkastellaan lähemmin kahta tuotannon sijaintipäätöstä kyseisenä ajanjaksona. Monet yritykset luulevat harhaisesti, että päätös tuotannon sijainnista on pääosin kustannusten sanelema, mutta kyseessä on itse asiassa paljon monimutkaisempi päätös. Tehtäessä päätöstä tuotannon sijainnista tulee pohtia, onko yrityksen mahdollista säilyä kilpailukykyisenä sijaintipaikassa, ennemminkin kuin sitä, onko sijaintipaikassa halvempaa toimia. Diplomityössä esitetään kirjallisuuden perusteella luotu uusi malli strukturoimaan päätöksentekoa tuotannon sijainnista ja malli testataan tutkimuksen kohteena olevassa yrityksessä. Diplomityön tulokset osoittavat, että alhaiset kustannukset eivät ole taustalla oleva voima sijaintipäätöksiä tehtäessä, mutta kvantitatiivinen analyysi on kuitenkin huomioitava päätöksentekoprosessissa. Tutkimus osoittaa myös, että markkinoiden ja markkinakasvun sijainti ovat erityisen tärkeitä yritysten globalisaation taustavoimia. Näiden lisäksi havaittiin useiden strategisten ja maakohtaisten tekijöiden vaikuttavan päätöksiin tuotannon sijainnista. Myös kaksi jatkotutkimuksen aihetta esitetään. Tutkimuksen kohteena olevassa yrityksessä voitaisiin tehdä syvempi analyysi useista muista sijaintipäätöksistä, tai yleisemmän kuvan saamiseksi voitaisiin tutkimukseen ottaa mukaan muita tuotantoyrityksiä samalta tai eri teollisuudenalalta

Managing integration in outsourcing relationships - The influence of cost and quality priorities

Outsourcing has become increasingly popular in the contemporary business context. This study aims to develop the understanding of outsourcing by addressing the management of integration in the outsourcing relationship between buyers and contract manufacturers. Specifically, we address the effect of strategic priorities of cost and quality on how different modes of integration are used both before and in the early phase of production. The paper elaborates the strategic contingency argument by analyzing qualitative data from eight cases in the food and electronics industries. The results indicate that managing the outsourcing relationship requires considerable resources after the decision to outsource has been made. The results show that integration in the outsourcing relationship evolves over time and the use of integration modes is contingent on the strategic priority. The study provides an understanding of the contextual nature of integration in the outsourcing relationship, as well as a contextualized understanding of buyer-supplier relationships. It also provides an illustration of theory elaboration research.Peer reviewe

It takes two to tango

Purpose: The purpose of this paper is to develop further understanding of the interdependence between product and organization subsystems in the context of major projects by empirically elaborating the volume-variety matrix. Design/methodology/approach: Projects are perceived as systems that include a product subsystem (the project outcome) and an organization subsystem (the temporary multi-firm organizational network that produces the project outcome). This study addresses product-organization interdependence by analyzing product and organization subsystem components in terms of their uniqueness and reuse across multiple projects. The empirical analysis focuses on four global renewable fuels refinery projects implemented by Neste from 2003 to 2011. The refineries are based on the same proprietary technology but are unique at the project level. Findings: The findings indicate interesting interdependencies between product and organization subsystems when analyzed at the component level: the findings suggest both diagonal and off-diagonal positions in the volume-variety matrix. An example of an off-diagonal position is a reused organization subsystem component associated with a unique product subsystem component, meaning that choosing the same organization in a future project can be used for acquiring an improved and, thereby, unique product subsystem component. Originality/value: The study elaborates upon the volume-variety matrix in the context of major projects. The findings related to off-diagonal positions in the matrix provide new knowledge on combinations at the component level where a reused organization can be associated with a unique product, and vice versa. This has direct implications for management of projects.Peer reviewe

The Contingent Value of Organizational Integration

We elaborate the link between organizational design and effectiveness by examining organizational integration and performance in the context of modern manufacturing. Through careful contextualization and empirical analysis of 266 manufacturing organizations in three industries and nine countries, we uncover a joint effect of integration and complexity on organizational effectiveness. The results extend structural contingency theory, in particular the mechanisms that link organizational integration to organizational effectiveness. We conclude by discussing the continuing relevance of structural contingency theory

Creating relational capital through socialization in project alliances

Abstract Purpose: The purpose of this paper is to elaborate the understanding of socialization in the context of temporary operations and organizational settings, using project alliance — the most contemporary approach to the management of large and complex projects — as an example. In particular, the paper also assesses how informal and formal socialization mechanisms are used to facilitate relational capital in such a setting. Design/methodology/approach: Data were collected by two case studies of complex infrastructure projects in a Northern European city. The analysis focuses on how socialization is managed across organizational interfaces within the alliance organization during the project tendering and development phase to create relational capital. Findings: The findings indicate that significant emphasis is put on socialization in project alliances. However, while in the tendering phase both informal and formal socialization mechanisms are used to create relational capital; in the development phase informal socialization mechanisms are associated with higher levels of relational capital and formal socialization mechanisms are used to maintain the level of relational capital. Originality/value: While operations and supply chain management research argues that socialization is critical to manage organizational interfaces and to create relational capital in buyer-supplier relationships, research has mainly focused on ongoing operations. This study complements the prior research by developing further insight into socialization in the context of temporary operations and organizational settings; such settings create a unique empirical context, posing different managerial challenges as the results also indicate

Institutionalization of a collaborative governance model to deliver large, inter-organizational projects

Abstract Purpose: In this study, we develop further understanding of how institutional change is created within a mature and local industry. In this pursuit, we examine how a collaborative large project governance model was institutionalized at an industrial sector-level through both industry-level activities and “institutional projects”. Design/methodology/approach: This study builds on the foundations of institutional fields and institutional change, suggesting that projects are not only shaped by their contexts but also produce institutional change themselves. We conducted extensive fieldwork on the institutionalization of a collaborative project governance model in Finland. Findings: The findings illustrate how institutional change in governance of large and complex interorganizational projects is created at the institutional field level. The institutionalized collaborative project governance model includes aspects of both relational and contractual governance. The change was facilitated by temporal links between the institutional projects as well as vertical links between the institutional projects and the field-level development programs. Originality/value: This is one of the first studies to address how a collaborative large project governance model becomes the norm at the institutional field level beyond the boundaries of an individual project or organization

Haaga-Helian tutkimus-, kehitys- ja innovaatiohankkeet tuottavat vaikuttavia ratkaisuja – näkymiä vuoden 2022 tuloksiin

Korkeakoulujen yhteiskunnallinen vaikuttavuus syntyy osaamisesta ja tiedosta, jota muodostuu oppimisen, tutkimisen, kehittämisen ja innovoinnin tuloksena. Koulutus ja sen hankkimisen myötä kehittyvä uuden oppimisen kyky on keskeinen yksilöä työuralla eteenpäin kantava taito ja samalla monen yrityksen elinehto. Ilman osaamista ei synny uusia palveluita, ratkaisuja ja tuotteita, joilla rakennetaan edelleen toimivia menestyskonsepteja. Laajasti ottaen osaamisella synnytetään työtä, menestystä ja hyvinvointia sekä kansakunnan menestyksen kannalta tuiki tärkeää tuottavuutta

Business models in project-based firms - Towards a typology of solution-specific business models

Peer reviewe