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2. Literature Review
This section addresses the literature related to control and flexibility in enterprise systems and management practice to establish a research framework for this paper. First, by understanding the advantages, disadvantages, and conflicts between coercive and enabling (Adler and Borys, 1996) settings of integrated information systems, we acquire a fundamental understanding of the interests that enterprises should evaluate regarding these systems. Second, to obtain a more systematic point of view regarding the conflicts between the two contrary information system configurations, a typology should be established to categorize the different types of conflicts. Finally, possible solutions to many of the conflicts that are proposed in existing studies are investigated to build assumptions about the actual approaches that enterprises apply to resolve these conflicts.
2.1 Integrated System Control and Flexibility
Adler and Borys (1996) proposed the concepts of coercive and enabling, which are the two types of formalization that are often believed to be in conflict with each other; however, some contingency studies have discovered that these two formalizations do not appear to be opposites and could be applied at the same time in many businesses (Brown and Eisenhardt, 1997). There is also evidence that implementing both formulizations could yield better enterprise performance (Chenhall, 1986;
Adler, 1999) and that, in terms of integrated systems, an organization can achieve the objectives of both efficiency and flexibility with the simultaneous use of both mechanisms in its enterprise system (Simons, 1990). This research draws on these concepts to develop a fundamental framework and applies the terms control and flexibility to represent the two, often contrary, enterprise system settings and business objectives. Furthermore, to picture the circumstances of misuse, this research introduces the terms over-control and over-flexibility, which are the key issues the study attempts to address and resolve.
2.2 Control versus Over-Control
The idea of control can be traced back to Frederick Winslow Taylor’s work “Principles of Science Management”, which applies scientific approaches to formalizing procedures, specializing
employees’ tasks, and standardizing outputs. By utilizing control mechanisms in management practices, enterprises have acquired numerous advantages, such as bringing order to activities (Jørgensen and Messnerk, 2009), enhancing efficiency, and ensuring output quality (Lee, 2003).
Additionally, by further enforcing control through integrated information systems, enterprises can also improve data reporting quality and inter-organizational collaboration (Nicolaou, 2010; Chen and Li, 2013), reduce dependency on employees (Shaw, 1999), and gain competitive advantage (Roberts
& Wood, 1997). Organizations can enjoy the abovementioned benefits if their integrated systems are designed to fit their primary tasks (Adler, Goldoftas, and Levine, 1999): for instance, when an
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organization’s tasks are simple and its goal is efficiency, the organization will benefit from adopting a mechanistic form of control (Burns and Stalker, 1961). Strong control has also proved to be essential in organizations with strict budget or schedule constraints and those that require high-quality results (Harris, Collins, and Hevner, 2009).
However, when too much control—that is, over-control—is enforced by integrated systems, enterprises may lose the flexibility to nimbly reallocate resources and smoothly adjust processes;
hence, they may also lose the capability of flexible responses to business changes (Kurke, 1988). The centralized nature of bureaucratic control has often reduced personal discretion by specializing employees’ tasks to certain scopes, and this type of mistrust lowers employees’ commitment to finding alternative solutions to resolving new business problems and improving current business operations (Jørgensen and Messner, 2009). In terms of local operations, a case study on a UK restaurant chain presented the concern of local restaurant managers that the meal portions and
accounting methods that had been defined by the central office and the information system might not comply with local operations and customer services (Ahrens and Chapman, 2004). Other backfire effects can also be identified in numerous studies that have found that over-control in enterprise systems caused by restrictive information and inter-department links could delay decision making, slow the responses to customers’ needs (Goodhue et al., 1992), increase the complexity of issue sourcing (Singletary, 2003), and reduce the ability to manage unanticipated situations (Shang and Liao, 2006). To that end, bureaucratic forms of management and control have often been criticized as not being appropriate for organizations that require flexibility (Burns and Stalker, 1961; Mintzberg, 1979), and these organizations therefore encounter a dilemma between efficiency and flexibility.
2.3 Flexibility versus Over-Flexibility
Flexibility is the ability to respond to new situations with little time or effort (Upton, 1995); it provides more freedom and options for employees to complete their tasks (Noori and Radford, 1995). Enterprises pursue flexibility for purposes of fulfilling new business requirements and constantly changing customer demands and thereby ensure their agility and advantage over competitors (Leana and Barry, 2000; Chen et al., 2009; Kumar and Stylianou, 2014). In terms of information system flexibility, Easton and Rothschild (1988) described it as the ability of a system to take different forms. With adequate information system flexibility, enterprises could extend their systems’ periods of use and gain more IT investment efficiency (Chang and King, 2005; Moitra and Ganesh, 2005; Gebauer and Schober, 2006). In today’s constantly changing business environment, the tendency toward enterprise system flexibility rather than control is addressed in multiple studies across different industries (Adler et al., 1999; Ahrens and Chapman, 2004; Zhang, 2006). With manufacturing, for instance, the combination of flexibility and traditional control in enterprise systems will bring the industry greater product variety, faster response times, and increased
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productivity (Chase and Garvin, 1989; Pine, 1993; Hayes and Pisano, 1994; Goldhar and Lei, 1995), which can be found in practice as well at New United Motor Manufacturing Inc. (NUMMI) by Adler et al. (1999). In other areas such as the service industry, businesses can also benefit from flexible enterprise systems in the form of innovation capability in providing services, which is especially important in today’s changing environment (Ahrens and Chapman, 2004; Zhang, 2006)
Although the majority of contemporary research focuses on the benefits of flexibility, there is another voice that claims that too much flexibility, which is referred to as over-flexibility in this research, may be detrimental to organizations with regard to budget and outcome control, business objective alignment, employee behavior management, and investment efficiency (Minic, Petrovic, and Ilic, 2013). Jørgensen and Messner (2009) state that enterprises may risk not reaching expected business outcomes when too much flexibility is allowed, and this flexibility also comes at the price of additional investment and complexity in enterprise systems (Gebauer and Schober, 2006). At that point, given the input and compromise required for flexibility, it is difficult to verify whether this flexibility can generate practical benefits for enterprises (Chen et al., 2009). On an individual level, over-empowerment among employees may lead to feelings of confusion, especially at lower levels of a given hierarchy (Leana and Barry, 2000). Although contemporary studies address in only a limited fashion to the issues that arise from over-flexibility, Ahrens and Chapman (2004) addressed the concern of a head office manager who indicated that an over-flexible enterprise system configuration could allow for malicious employee behavior such as tampering with data in the system.
2.4 Conflicts between Integrated Information System Control and Flexibility
To conceptualize the abovementioned conflicts between integrated information system control and flexibility, this research establishes a typology framework to categorize different types of conflicts from either the organizational or the operational perspective, within which the different system configurations would make positive or negative impacts. Why? A review of a number of studies in the literature also found that the configuration of integrated information systems plays an important role in organizational and operational success or failure (Upton, 1995; Lei et al., 1996; Palanisamy and Sushil, 2004; Zhang, 2006). In other words, integrated system configurations can bring about advantages and disadvantages from both the organizational and the operational perspectives.
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Table 2-1: Pros and Cons of Integrated System Configurations
Integrated System
Organizational Perspective
Control Over-Control
Access to more and better information for decision making
Gain competitive advantages in price and quality
Reduce dependence on employees
Improve data-reporting quality with transparent information
Limited response to business environment changes
Lose the agility to reallocate resources and adjust processes
Increase the complexity of issue sourcing and delay decision making because of tight inter-department links
Flexibility Over-Flexibility
Respond to new situations with little time or effort
Increase competitive advantage with greater product variety and faster responses
Gain investment efficiency and extend the use of enterprise systems
Poor budget and outcome measurement
Decreased business objective alignment because of excessive decentralizing
Risk of not reaching expected business outcomes
Added complexity of and
investment in enterprise systems
Operational Perspective
Control Over-Control
Bring order to activities with formalized rules and processes
Enhance operation efficiency with specialized tasks
Ensure work quality with standardization
Inconveniencing local operations
Inability to manage unanticipated situations
Low employee commitment to problem solving
Poor responses to customer needs
Flexibility Over-Flexibility
Offer more freedom and options for employees to complete their tasks
Fulfill constantly changing customer demands
Acquire innovation capability in processes and services
Low work quality because of poorly defined procedure
Feelings of confusion among lower-level employees
Malicious employee behaviors are allowed for self-benefit
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2.5 Balancing Control and Flexibility
To address the solutions to the different types of conflicts between enterprise system over-control and over-flexibility, this research draws on three approaches that have been proposed in contingency theories (Ouchi, 1977, 1979, 1980; Adler and Borys, 1996; Adler et al., 1999): organizational, operational, and system.
The organizational approach adopts the control theory proposed by Ouchi (1977, 1979, & 1980) and aggregated by Harris et al. (2009) into three types of control, output, behavior, and clan. Output control entails measuring results by setting explicit specifications for outcomes, and it can be
performed when actual results can be verified based on definable and measurable expectations of outcomes. Behavior control is individual surveillance that involves comprehensive regulations and procedures to regulate employees’ behavior, and it can be conducted when a cause-and-effect relationship between certain behaviors and expected goals is well understood. Whereas output and behavior control are known as bureaucratic forms of control, clan control is, rather, an enabling approach that allow employees to find their own way under the assumption that they share the same goals as the organization and will work for the organization’s best interest.
The Operational approach applies the four operational mechanisms presented by Alder et al. (1999) to balance control and flexibility in individuals tasks, specifically meta-routine, job enrichment, switching, and partitioning. Meta-routines formalize the creative process by turning non-routine tasks into more routine tasks to gain more control over unstructured work under certain levels of flexibility; it is assumed that control can be enforced using the integrated information system. Job enrichment gives employees the right to take part in improvement tasks and propose solutions for optimizing their work in addition to their primary production tasks, which allows them to become more innovative and flexible. Switching allows employees to switch between improvement tasks and production tasks, which gives them the time to focus on each task by distinguishing between the two roles. Partitioning further differentiates the improvement role and the production role by separating them into respective units. It permits each unit to concentrate on its task while both units support each other and function in parallel.
The System approach highlights Adler and Borys’ (1996) four system design elements for
supporting system usability: repair, internal transparency, global transparency, and flexibility. Repair permits employees to fix system-related problems such as applying procedures to operations and breakdowns on their own rather than relying on engineers each time an issue arises. This ensures the smoothness of operations without interruptions from system configurations or fails by involving employees in problem resolutions, thereby reducing the downtime spent waiting for help. Internal
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transparency gives employees access to overall information about the local system regarding its management control processes, operation status, and functioning logic. Employees can therefore understand what should be done for the department’s best interest and what is required to be in line with customers’ expectations, and they can at the same time intelligently fix errors. Global
transparency, as opposed to internal transparency, gives employees a broader understanding of how the system works as a whole; a wide range of the information that is provided can assist with inter-department collaboration and communication and make it possible for employees to keep track of how their work fits into the entire organization. Flexibility allows employees personal discretion on how they use systems and whether those systems should be used. Employees can choose whether to apply the system’s suggestions and also to modify the system to fit their specific needs.
Table 2-2: Approaches to Balancing Control and Flexibility
Organizational Approach Operational Approach System Approach
Output Control Measuring results by setting explicit specifications for outcomes
Behavior Control Individual surveillance that holds to the complete regulations and employees to find their own way
Meta-routine
Formalizing the creative process by turning non-routine tasks into more routine tasks problems on their own rather than relying on engineers
Internal Transparency Giving employees access to overall information about the local system
Global Transparency Giving employees a broader understanding of how their system works as a whole
Flexibility
Allowing employees personal discretion regarding how they use a system and whether that system should be used
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To answer the questions of “what”, “why”, and “how” regarding the issues that arise from over-control and over-flexibility of integration systems, multiple case studies among five companies were carried out to shed light on the research questions within this work. Those companies were selected based on three criteria: First, the company has at least three years of experience with integration systems and is aware of the system’s influence on the organization. Second, the company has experienced or is currently experiencing integration system over-control or over-flexibility. Third, the interview counterpart in the company is able to recognize the issue and delve deeply into multiple dimensions for discussion.
Table 3-1: Target Case Study Company
Company Code Industry Scope of Interviewed Case
Integration Technology
Interview Time
Telecom Co A Telecommunication Customer hotline center, network
Telecom Co B Telecommunication Business services and a payment
Software Co Software Software
development and
Electricity Co Power Utility Procurement, cashier, and accounting
SAP ERP Consultant 2 hrs