行政院國家科學委員會專題研究計畫 期末報告
建構企業創新警覺以創造流程資本價值 - 總經理與資訊長
的知識跨界互動研究
計 畫 類 別 ： 個別型 計 畫 編 號 ： NSC 101-2410-H-004-008- 執 行 期 間 ： 101 年 08 月 01 日至 102 年 08 月 31 日 執 行 單 位 ： 國立政治大學資訊管理學系 計 畫 主 持 人 ： 尚孝純 計畫參與人員： 碩士班研究生-兼任助理人員：林冠宇 碩士班研究生-兼任助理人員：黃柏崴 碩士班研究生-兼任助理人員：梁凱智 碩士班研究生-兼任助理人員：陳品君 博士班研究生-兼任助理人員：吳君怡 報 告 附 件 ： 出席國際會議研究心得報告及發表論文 公 開 資 訊 ： 本計畫涉及專利或其他智慧財產權，2 年後可公開查詢中 華 民 國 102 年 09 月 22 日
中 文 摘 要 ： 流程資本，意指企業運用資訊科技、組織智識、專業技能等 一系列的數位作業來塑造企業的組織架構以應組織變革環 境。企業對流程資本的掌握反映了企業在組織的數位化經營 上的廣度（範疇）與深度（品質）。然而，建立流程資本的 價值仍視環境與策略而定。在產業環境與科技的變動之下， 流程資本的發展價值持續演變、並且需要企業以創新警覺能 力感知與掌握環境中的可行機會。創新警覺即企業檢視其內 部與外部環境、偵查未知的市場與經營領域、並且確定行動 的機會。以全球 IC 代理商為對象進行長期的縱向個案研究， 本研究發現企業創新警覺的建構即總經理與資訊長各自為逐 步培養與提拔合資領域的跨界管理者所進行的一互動漸進程 序。 中文關鍵詞： 流程資本、企業創新、企業創新警覺、知識跨界互動
英 文 摘 要 ： Process capital is the set of digitized work routines of a firm that apply information technology,
organizational knowledge and professional skills in forming an organizational infrastructure that can adapt to organizational changing environment. The capability of process capital is reflected in the established reach and richness of the digitized operation in the organization. However, the value of the established processes is yet to be developed, depending on the environment and strategy. Within the dynamics of business and technology, the
value-development of process capital evolves and requires entrepreneurial alertness for sensing and capturing feasible opportunities in the environment.
Entrepreneurial alertness is the capability of a firm to explore its internal and external environment, detect areas of market and operational ignorance, and determine opportunities for action. In a
longitudinally-studied case of a global IC
distributor this study observed that the building of entrepreneurial alertness for process capital is a gradual process of boundary spanning between CEO and CIO, who progressively cultivate and nominate
boundary spanners-in-practice for the emergent joint fields of practice.
英文關鍵詞： Process capital, Business Innovation, Entrepreneurial alertness, Boundary spanning
行政院國家科學委員會補助專題研究計畫
□期中進度報告
■期末報告
建構企業創新警覺以創造流程資本價值－總經理與資訊長的知識跨
界互動研究
（Boundary Spanning Between CEO and CIO for Business Innovation）
計畫類別：■個別型計畫 □整合型計畫
計畫編號：NSC101－2410－H－004－008－
執行期間：2012 年 08 月 01 日至 2013 年 08 月 31 日
執行機構及系所：國立政治大學資訊管理學系
計畫主持人：尚孝純教授
計畫參與人員：吳君怡、林冠宇、黃柏崴、梁凱智、陳品君
本計畫除繳交成果報告外，另含下列出國報告，共 1 份：
□移地研究心得報告
■出席國際學術會議心得報告
□國際合作研究計畫國外研究報告
處理方式：除列管計畫及下列情形者外，得立即公開查詢
□涉及專利或其他智慧財產權，□一年□二年後可公開查詢
中 華 民 國 102 年 8 月 31 日
目錄
目錄 ... 2
中文摘要... 3
英文摘要... 4
報告內容：Boundary Spanning Between CEO and CIO for Business Innovation ... 5
國科會補助專題研究計畫成果報告自評表 ... 24
中文摘要
流程資本，意指企業運用資訊科技、組織智識、專業技能等一系列的數位作業來塑造企業的組織架構 以應組織變革環境。企業對流程資本的掌握反映了企業在組織的數位化經營上的廣度（範疇）與深度 （品質）。然而，建立流程資本的價值仍視環境與策略而定。在產業環境與科技的變動之下，流程資本 的發展價值持續演變、並且需要企業以創新警覺能力感知與掌握環境中的可行機會。創新警覺即企業 檢視其內部與外部環境、偵查未知的市場與經營領域、並且確定行動的機會。以全球 IC 代理商為對象 進行長期的縱向個案研究，本研究發現企業創新警覺的建構即總經理與資訊長各自為逐步培養與提拔 合資領域的跨界管理者所進行的一互動漸進程序。 關鍵字：流程資本、企業創新、企業創新警覺、知識跨界互動英文摘要
Process capital is the set of digitized work routines of a firm that apply information technology, organizational knowledge and professional skills in forming an organizational infrastructure that can adapt to organizational changing environment. The capability of process capital is reflected in the established reach and richness of the digitized operation in the organization. However, the value of the established processes is yet to be developed, depending on the environment and strategy. Within the dynamics of business and technology, the value-development of process capital evolves and requires entrepreneurial alertness for sensing and capturing feasible opportunities in the environment. Entrepreneurial alertness is the capability of a firm to explore its internal and external environment, detect areas of market and operational ignorance, and determine opportunities for action. In a longitudinally-studied case of a global IC distributor this study observed that the building of entrepreneurial alertness for process capital is a gradual process of boundary spanning between CEO and CIO, who progressively cultivate and nominate boundary spanners-in-practice for the emergent joint fields of practice.
Boundary Spanning Between CEO and CIO for
Business Innovation
1. Introduction
Process capital is the set of digitized work routines of a firm that apply information technology,
organizational knowledge and professional skills in forming an organizational infrastructure that can adapt to organizational changing environment (Edvinsson and Malone 1997). The capability of process capital is reflected in the established reach (extent of processes connected) and richness (quality of information processed) of the digitized operation in the organization (Sambamurthy and et al., 2003, Evans and Wurster, 2000). However, the value of the established processes is yet to be developed, depending on the environment and strategy (Ansoff, 1980; Fichman, 2004; Overby et al., 2006). Within the dynamics of business and technology, the value-development of process capital evolves and requires entrepreneurial alertness for sensing and capturing feasible opportunities in the environment (Sambamurthy and et al., 2003).
Entrepreneurial alertness is the capability of a firm to explore its internal and external environment, detect areas of market and operational ignorance, and determine opportunities for action (Sambamurthy and et al., 2003).
Literature and practitioners emphasize that the building of entrepreneurial alertness for developing value from process capital is a collective effort lead by two key stakeholders in a firm: the CEO (Chief executive officer) and CIO (Chief Information Officer) (Stemberger and et al. 2011, Banker and et al. 2011, Johnson et al. 2005, Sauer and Leslie 2002). The CEO as the leader of the firm makes decisions about critical resource management and provides business direction and leadership in sensing opportunities in the environment, while the CIO plans for the exploration and exploitation of process capital. The interaction between the two leaders has been repeatedly addressed for the benefit of sensing and reacting to business opportunities (Stemberger and et al. 2011, Johnson and Lederer 2001, Reich et al. 2000, Chan et al. 1997, Kanter 2001).
By drawing on the concept of boundary spanning in practice (Levina and Vaast 2005, Marrone 2001) This study plans to examine the interaction between CEO and CIO regarding the building of entrepreneurial alertness for developing value from process capital. Boundary spanning refers to behaviors intended to establish relationships and interactions with external actors that can assist the team in meeting its overall objectives (Marrone et al. 2007, Jemison 1984). The boundary spanner plays a key role in cultivating the organizational ability to deal with the challenges of managing across boundaries (Levina and Vaast 2005). It has been suggested that by spanning boundaries, individual form and reform knowledge combinations (Swart
and Harvey 2011) and establish knowledge bases for inspiring ideas and planning feasible architectures for their execution.
In a longitudinally-studied case of a global IC distributor this study observed that the building of
entrepreneurial alertness for process capital is a gradual process of boundary spanning between CEO and CIO, who progressively cultivate and nominate boundary spanners-in-practice for the emergent joint fields of practice. The CEO, using legitimate power and authority, initiates boundary spanning by creating joint fields in practice and managing resources to enact boundary spanning among multiple agents, while the CIO, with professional resources, produces joint fields in practice and shapes the boundary spanning with forward and backward discovery of business opportunities.
2. Conceptual building about boundary spanning for entrepreneurial alertness
Entrepreneurial alertness is the firm’s ability to accumulate, transform, and select information leading to untapped business opportunities (Kirzner 1999, Tang 2008). Firms exhibiting high entrepreneurial alertness can sense product-market discontinuities and visualize how organizational resources and capabilities can be orchestrated and exploited (Kirzner 1997).
2.1 Entrepreneurial alertness for process capital
Two specific capabilities describe entrepreneurial alertness for process capital (Sambamurthy and et al., 2003): strategic foresight and systematic insight. Strategic foresight (Sambamurthy and et al., 2003) is the ability to anticipate discontinuities in the business environment, market place, or the information technology space, the threats and opportunities in the extended enterprise chain, and impending disruptive moves by competitors. Foresight (Sambamurthy and et al., 2003) includes an integrated exploration of IT and business opportunities in the conceptualization of competitive actions. Systemic insight is the ability to visualize connections between process capabilities and emerging market opportunities in constructing competitive actions. For developing operational and strategic value off the process capital entrepreneurial alertness is important in facilitating the competence of building the process, arranging effective exploitation of the process into business practice and leveraging the capability of the established processes.
The level of entrepreneurial alertness is reflected in the effectiveness of process development, operational efficiency and enablement for innovative action. The level of entrepreneurial alertness increases when the entrepreneurs have high levels of self-efficacy in performing the roles and tasks of new venture creation (Bandura 1977, Tang 2008). There are two tracks of entrepreneurial alertness for sensing opportunities, “backword” and “forward” discovery (Yu 2001). Backward discovery is an interpretation in a sense that the entrepreneur endeavors to exploit profit opportunities by doing things better. This type of discovery largely promotes change within an existing situation. Forward discovery involves a new dimension of event
interpretation. In this case, the entrepreneur explores profit opportunities by doing things differently than in the past.
2.2 CIO and CEO in entrepreneurial alertness
There are two key players in building entrepreneurial alertness for process capital: CEO and the CIO. The role of CEO has been defined as an entrepreneur who acts as initiator and designer of much of the controlled change in his/her organization (Mintzberg 1971). The CEO is responsible for boundary
management, environmental factors, and preparing for competition through management of business strategy, relationships, and resources (Friedman 1987). In today’s intensely competitive business environment the CEO is expected to be change-oriented, with the flexibility to adapt to the environment with a specific appreciation of technological options ( Moghaddasi and Sheikhtaheri 2010, Feeny et al. 1992).
At the same time, as the breadth of process impact on the firm has grown, there has been a corresponding rise of the position of the CIO (Peppard 2010). the senior information technology executive in the corporate hierarchy. The necessity of integrating information systems into corporate strategy has received widespread
attention in recent years (Johnson and Lederer 2010). Strategic planning has moved IS from serving primarily as a support function to the point where it often impacts corporate strategy. CIO leadership ( McRobbie and Wheeler 2010, Luftmann et al. 2008) has expanded from responsibility for IT, functional units, and day-to-day general managerial work to IT and business alignment, building business skills in IT, and making innovative use of IT.
On one hand, the CEO needs to lead the firm in the use of IT. On the other, the CIO needs to educate management, especially top management, and contribute beyond IT function to assure that the CEO
accurately perceives IT. This requires the CIO to work closely with the CEO to develop literacy skills about IT products and processes (Banker and et al. 2011, Kanter 2001).
The importance of the communication between the CEO and CIO for knowledge interaction in order to build mutual understanding and shared vision which in turn predicts both improved IT and business
performance, has been suggested by many studies (Reich et al. 2000, Chan et al. 1997). Convergence (i.e., mutual understanding) between an organization's CEO and CIO is critical to its efforts to successfully exploit information technology ( Gopal and Gosain 2010, Johnson et al. 2005). Such an understanding can facilitate the organization's alignment of IT with business strategy (Keen 1991). Through frequent communication, they develop common definitions of situations and build consensus (Van de Ven 1984). However, the CEO’s territory is generally competition issues, strategic action, and business design, while the CIO usually handles technology. It is a challenge for the CIO to capture the moving target of building a sensible plan to develop value from process capital (Sauer and Leslie 2002). It is also difficult for the CEO to tap the promise of information technology for process development, let alone develop innovative value off such processes. The CEO and CIO represent two distinct bounded organizational territories that require intensive interactions in building sensitivity to internal and external changes and generating the practical capability to organize resources for capturing opportunities.
2.3 Boundary spanning between individuals
The concept of boundary spanning describes activities that occur at organizational boundaries that are aimed at establishing relationships and interactions with external actors that to meet its overall goals (Ancona & Caldwell, 1992a, 1992b and Marrone et al., 2007). Effective boundary spanning not only directly benefits organizational learning (Swart and Harvey 2011, Edmondson, 1999), but also translates into improved organizational effectiveness (Carlisle, 2004, Ratcheva 2009) and innovation (Teigland and Wasco, 2003 Shin and Jalajas 2010). Boundary spanners serve as both filters and facilitators in information transmittal between internal units (Adams, 1980; Ancona and Caldwell, 1988), and therefore they play an important role in the transfer of ideas within organizations. Boundaries can be spanned effectively only when the agents learn about both sides of the boundary and search out and disseminate relevant information (Rangarajan et al. 2004).
The attempt of creating paths of process exploitation involves spanning boundaries between structures of relevance (Garud and Karnoe 2001). By spanning boundaries across business and technology, the CEO may better understand firm’s technological capabilities and incorporate that into her own knowledge of business. The CEO may then build new structures and capabilities for sensing business opportunities and managing process resources, while the CIO may learn about the firm’s strategy and operations, enabling him to build a process infrastructure that fits the changing needs of the organization needs. The concept of boundary
spanners-in-practice ( Levina and Vaast 2005) is adopted in the study to examine details of the knowledge combination and creation between business and technology boundaries. Boundary spanners-in-practice are agents who, with or without nomination, engage in spanning (navigating and negotiating) boundaries between different fields. The emergence of a boundary spanning competence in practice is associated with the
emergence of a new joint field which unites agents in their pursuit of a common organizational interests ( Levina and Vaast 2005). Adopted from Levina and Vaast (2005), Figure 1 demonstrates the emergence of a new joint field between Field A and B due to boundary spanning in practice.
Figure 1. Emergence of boundary spanners-in-practice (adopted from Levina and Vaast 2005).
The CEO, controlling resources and authorizing action, and the CIO with the knowledge and capability of process configuration are both legitimate agents capable of shaping the practice of boundary spanning.
3.1 Methodology
This research is an attempt to better understand how entrepreneurial alertness is built by the CEO and CIO to develop value from process capital. A case study of a global IC distribution company is presented and analyzed from the perspective of boundary spinning theory. The case study research design is considered appropriate when ‘how’or‘why’questions are being asked about a contemporary set of events, over which the investigator has little or no control (Yin, 1994). This approach allows the study to focus on the development of capabilities in a natural setting (Montealegre 2002). The aim of the in-depth case analysis was not to generalize from a sample to a population (Barki and Pinsonneault 2005) but rather to build and test logical support for understanding the value development of process capital. This can help us address the question as to how, under certain conditions, effective interaction between the CEO and CIO can be linked to entrepreneurial action.
3.1 Longitudinal case study
Ba B A A A A A B B B AB AB Field A Field B Ab New Joint Field
-
Letters A and B represent agents in fields A and B respectively-
Letters AB represent boundary spanners-in-practiceTo track and analyze the value development of process capital, this study presents a longitudinal study of process capital development at a global IC distributor. The case organization worked hard to nurture the value of its process capital under intense competitive pressure. In comparison with firms in the industry although all firms posses same stock of process capital with sufficient reach and richness in linking with internal and external stakeholders, the selected case demonstrated a higher level of entrepreneurial alertness by initiating more effective activities in developing process value. These initiatives include projects of process
improvement, process replication, process commercialization, building of supplier linkage, support of new products and new customer segments, and providing new services to customers.
3.2 Data collection and analysis
The case study was conducted between 2009 and 2013 (Table 1). Data were collected and analyzed over multiple time horizons helped reveal the evolution of capabilities at different times. Based on the concept of boundary spanning a semi-structured questionnaire was designed to explore 1) process value development, 2) CEO and CIO’s interactive activities, and 3) direct results of the interactions between CEO and CIO of each stage of process development. In addition to the semi-structured questions, open-ended questions were tailored according to interviewee’s roles and responsibility to seek elaboration on the building of the
entrepreneurial alertness and CEO and CIO activities. Secondary data were collected to complement unclear parts of the interviews. Archival data was reviewed to capture historical activities, whereas multiple interview data was applied to gauge attitudes and ongoing activities. All interviews were transcribed and compared with other interviews and documents.
Top managers, executives and business managers were interviewed at least twice in 2006 and regular visits were paid to same interviewees between 2009 and 2013 in order to track the long history of process capital development. During the last three months of the research, the operation manager and the CIO were interviewed twice a month to verify the path and evolution of process capital. An event listing (Miles and Huberman 1994) was created to examine “what led to what, and when” of the long life of process value development. Critical incidents that may lead to changes in the capability of entrepreneurial alertness were listed and examined. Each stage of process value development was deeply discussed and analyzed for its properties and impacts.
In the end, analyzed results and confirmed process capital development patterns were consolidated and verified to form the study’s findings. These findings give greater insight into the dynamic interactions between the technological and organizational elements of process capital.
Table 1. Data collection between 2007 and 2011
Interviewees Year 2009 Year 2010 Year 2011 Year 2012 Year 2013 CEO 2 hours 2 hours 1 hours 1 hour 3 hours
CIO 6 hours 4 hours 3 hours 2 hours 7 hours 4 Operation managers 14 hours 6 hours 5 hours 5 hours 18 hours
BPM manager 2 hours 2 hours 3hours 2 hours 4 hours
ICD Co. was established in 1980 and is headquartered in Taiwan. It has business interests across the Asia, including Hong Kong, China, Singapore, Malaysia, Thailand, the Philippines, Japan, and India. The ICD Co. distributes a range of IC components, such as semiconductors, connectors, passive and electromechanical components, and computer and peripheral products from manufacturers such as Intel, TI (Texas Instruments), Philips, Hynix, Infineon, ADI Vishay, and more than 60 other brands. Its major customers are ICT
manufacturers for global brands such as Dell, HP, Lenova, and ACER.
In order to increase responsiveness as well as enhance control of business risks, in 1999 ICD began investing in a series of process management projects. Two of its major projects are order fulfillment and procurement management, which are the key processes in IC distribution. Over the last ten years, ICD has experienced growing complexity in process management by first integrating internal orders and procurement, then linking these processes with functional processes, then integrating the processes globally and extending and replicating the processes in internal business units and newly acquired businesses, and finally, serving external customers. The process capital development stages are summarized in Figure 2.
Figure 2. The four stages of process capital development in the case study
The following sections describe the actions taken for boundary spanning between the CEO, Charles Lee, and the CIO, James Chang, during the design, implementation and value-development of process capital at ICD between 1999 and 2009.
4.1 Operation automation (2001– 2002)
To control the growing rate of accounts receivable and overstocked inventory ICD decided to integrate its order processing and procurement operations. Lotus Notes on a client server platform was selected to manage communications across departments. Since business users were under pressure to achieve other targets and considered this project a technology solution, the project was lead by the IT department, with no involvement from business users.
Redesigned processes supported by functionally- integrated system Functional integration 2003–2005 Global integrated processes with in-house developed system Global integration 2005–2009 Operation automation 2001– 2002 Process extension, replication and commercialization to serve external customers Business innovation 2009 - present Automated local operations
Several problems were encountered after the system was implemented. Users complained that the automated process was difficult to use and certain transactions took longer to process than the manual process. The process inefficiencies raised Charles’s attention and initiated special meetings to track the problems. James and his team summarized the problems in three areas: network, system integration and user acceptance. First, the expensive client-server environment (US$400 for 64K bandwidth) was relatively slow. It took longer for users to request goods than with manual processing. The infrastructural support issue was never addressed in the design phase. Second, there was no real-time data exchange between Lotus Notes and the ERP system. The disconnected data flow between the ERP and workflow systems reduced accuracy in the new process. However, the data integration issue was raised neither by users nor by the IT implementer during the design phase. Furthermore, most users, who had little experience in using computers, were uneasy about the electronic process and preferred the old way. These users were not only unaware of the objectives of the automation project but also lacked the skills to use the system.
“It was not easy to admit the mistakes we made in the past and criticize what has been done wrong by myself, but it helped us to dig into the system implementation process and evaluate the business environment,” James
said.
The IT department spent much time fixing problems in the network, user interface and connections between the ERP and Lotus Notes systems. Although most of the problems were solved in three months, Charles requested a broad examination of the capability of the Lotus Notes.
“I want to know whether or not we can live with Lotus in the next few years.” the CEO said.
4.2 Internal functional integration (2003– 2005)
After evaluating the capability of the Lotus Notes, James proposed purchasing a new workflow system. Several vendors were invited and Charles attended a few product demonstration sessions to deliver key business requirements including system performance, core functions, and compatibility with other in-house systems. The IT team was both motivated by the involvement of the top manager and under pressure to carefully evaluate the software. A Microsoft compatible workflow system, ACTIF, was chosen to replace Lotus Notes. ACTIF provided a process 30 seconds faster than the previous system. The ICD integration team worked closely with the ACTIF vendor to test system performance and linking with the EPR system.
Moreover, by sharing cases with top managers of the industry, Charles reconfirmed that some errors that had occurred were not the result of the system but of the design of the business processes. He then requested that the project team involve business users in the design of the new processes in the ACTIF flow and delivered clearly his expectations for the participation of business. The integration between front-end ordering and purchasing processes and back office supporting functions were streamlined, with excessive
documentation removed and layers of accounting processes simplified. Several accounting functions were redesigned so that user tasks became more analytical. Charles rewarded the participating users for project success in project review meetings. Because they were learning more about the systems and increasing their ownership of the processes business participants voluntarily set aside time to promote the benefits of the new system to users and co-owned the educational programs with the IT department. At this stage, ICD established functional process integration with a centralized database of customer and supplier information. Monthly meetings continued between Charles and James to discuss improvements in the process.
In the mid of 2004, as ICD sensed the importance of technology impacts on process effectiveness, CIO James was included in the executive board after a structural reorganization. Each monthly board meeting, James reported on technology trends and system running status.
“This has changed my view about information technology in the firm. I felt like a teacher, or even a
salesperson, to preach the benefits of technology. But sometimes, I realized how naïve a technology person can be by forcing users to adapt to meaningless changes.” James said.
By the end of 2004 ICD’s revenue had doubled. ICD was beginning to feel that the ACTIF webflow could no longer support the expanding business. There was an emerging concern that the ACTIF webflow could not handle frequent but simple changes. For example, control steps could not be combined if different roles were being filled by the same person. This resulted in one person approving a single request numerous times because they handled several roles, such as being both the direct supervisor and the head of the cost centre. It took the ACTIF vendor months to modify the software for this, but the new version only added problems. With a clearer understanding of the business strategic intent both from the executive meetings and informal conversation, Charles and James began planning for a digitized process infrastructure for growing business needs, including increased responsiveness and forthcoming mergers and acquisitions with firms in Asia and the Americas. Meanwhile, the system implementers were encouraged to learn the characteristics of an integrated system, including interfacing with other applications, possible options for decision processes and architecture of workflow management functions for the complicated processes of multiple business units across different nations.
4.3 Global process integration (2005–2009)
In the mid of 2005 an in-house designed workflow system was proposed by James to replace the old system and integrate processes of global regions. By that time most industry firms purchased packaged software instead of spending effort designing the application. James saw the opportunity in global processes and brought the board members consider the trade-offs between making and buying software. The project was decided by Charles, sponsored by the vice president of operations and executed by James.
“We’ve come a long way to know our situation. Although it is more expensive to make our own software, I
trust that James and the team can make us a software that fits our special needs,” said Charles.
After accumulating experience with the workflow systems and learning from software vendors, the IT department development team was comfortable with building the software. They were also familiar with the process of implementing new systems involving employees from all regions and experts in different functions. A procedure of process evaluation and improvement was formally included in the system design process and users were required to propose changes in their processes. As a result, job responsibilities were adjusted and controls assessed to ensure the proper control of credits and inventory. In eight months the global integration process, developed in-house, was in use supporting internal and external functions and decision-making. Knowledge of global customers and suppliers began accumulating.
During this phase the project team learned that organization integration is much more complicated than technology integration. In addition to behavioral adjustment, conflicts of political powers and global resources needed to be reconciled. The company spent much in learning about and experimenting with the balance between control and autonomy. Requested by James and appointed by Charles, a team of global sales and procurement agents began meeting regularly to clarify business objectives with top managers, resolve cross-regional problems, analyze customer demand, extend supplier links, and plan enhancements to business processes.
4.4 Business innovation by process extension, replication & commercialization (2009–present)
Motivated by the effective interaction between global sales and procurement agents, and sensing the need for continuous realignment between business and technology, Charles established a permanent function called the business process management (BPM) team to handle the continuing needs of business process maintenance and to fulfill the goal of building industry integration with high adaptability to customers and suppliers. The team consisted of six senior business users who had worked in key processes for more than ten years. The team deals with and reports directly to the Charles. The team’s goal is to review the efficiency, effectiveness, and control of business processes and organize tasks to improve them. By closely working with the James the BPM team developed a process-tracking system to verify each approval and analyze its impact. Levels of authorization were reviewed for their appropriateness to different regions and products. While the related workload, responsibilities and resources were reallocated, measurements and reward systems were redesigned to make the changes proceed more smoothly.
In this time ICD has acquired more than seven firms of various sizes and management styles in China, Singapore, India, and Mexico. The BPM team, together with James’ team, implemented the major processes in these firms in less than three months by modifying related operations and adjusting structures.
One of the major tasks assigned by the Charles to the BPM team was to seek opportunities to enhance customer services.
“This is the R&D of our firm!” told by Charles in the company annual meeting.
Team members are encouraged to seek opportunities in all market areas. Since the inventory and logistics processes of six warehouses in Asia were solidly built one of the customers invited the James to consider providing the processes to serve customers. A vendor managed inventory (VMI) service was proposed to shorten the supply chain process for customers. Various spanning agents such as customer representatives, operations managers, a financial support team, and a service delivery team, were nominated to participate. Five months after the proposal the service business was up and running at the end of 2005. This new service has increased revenue 15% and attracted more customers. In addition to new business, the business impact of adapting the RosettaNet standard on managing relationships with various levels of suppliers was studied, and a selective integration policy was designed to handle different levels of control and communication.
Between year 2008 and 2009 the global IC market experienced a sharp downturn, and revenue dropped 30%. Process development, however, did not stop. The BPM and IT teams planned a new version of the process platform, using objective-oriented concepts while the same group of IT teams designed a more
flexible global platform providing on-demand services to serve customer requests across many different firms and countries. Entering 2010 business started to pick up, and the platform enabled ICD to acquire two more enterprises in the United States and replace their systems in less than four months. More services were provided to customers with specific needs including made-to-order services of certain product lines, and providing specific terms for customers of Japan and Korea. While further process improvement is in progress, the function of the BPM team has expanded from process control and monitoring into technology scanning and initiating advanced use of current processes. Meanwhile, Charles has decreased his involvement in daily process improvement and increased his interest in process innovations by interacting with James in areas such as Web 2.0 for linking with customer R&D, tailored product assembling, and green computing services. .
5. Case analysis and discussion
Table 2 presents an analytical overview of how the CEO and CIO of the ICD case form boundary spanning in practice for building entrepreneurial alertness during the process-capital development life. By tracking the boundary-spanning process, several observations on the building of entrepreneurial alertness with process capital are discussed in the following section.
Table 2. Analytical overview of boundary spanning in ICD
Process development
Boundary
spanner-in-practice by the CEO
New joint field emerged Boundary spanner-in-practice by the CIO Entrepreneurial alertness built Operation automation Triggered by system problems the CEO
The problematic
Provided detailed analysis with supporting information
Insights about software functions, implementations
initiated project reviews and meetings with CIO. Decided on replacing problematic software.
processes as to know why and how the problem happened and the resolutions
of software, operation environment and business operations. Proposed new software.
and business operations Foresights about operational improvement
Functional Integration
Provided list of concerns to software vendors and IT engineers, communicated with software vendors and learned industry
experience.
Decided on new software.
New software selection
Provided information about software analysis, industry scan, and project plans. Decided on new software.
Insights about business requirements and software Foresights about technology options
Nominated business users to participate in the project.
Awarded user participation.
Involved in project review.
Software implementation
Interacted with business users.
Learned business operations. Incorporated business users as system promoters.
Insights about business operations, system implementation
Foresights about process efficiency improvements
Regular meetings on process improvement Nominated CIO on board in acknowledging technology impact on business value
Process improvement
Further interaction with business operations and customer operations Absorbed business strategic intent and movement. Provided technological scan and analysis to the board. Accumulated knowledge about software
development. Sensed problems in the software functions Proposed a new software developed in-house
Insights about business strategic intents, increased competence in software development
Foresights about technology options
Global integration
Provided business expectations and list of concerns about the system developed in-house. Nominated project sponsors and business participants.
The new in-house developed systems
Interact with global users, software support and global customers and suppliers
Insights about IT competence, business strategy, process operation and complementary resources
Foresights about technology options process
improvement opportunities Provided business
directions Nominated process improvement team with designated process improvement goals Global process improvement on clarifying business objectives and cross-regional issues.
Proposed extended use of the processes
Interacted with international users and customers and suppliers. Learned more about operations of different needs. Grew knowledge on customers and suppliers,
Insights about process operations, business changing needs,
organizational resources, user behavior
Foresights about technology strength and limitations, global process opportunities Business
innovation
Established a permanent function of BPM team Shared experiences ad expectations of the team Delivered goal of process innovation New services (supporting new product lines, new services)
Worked with BPM team, multiple users and parties including vendors, competitors, global technology suppliers
Insights about inter-organizational operations, global resources and system capabilities Foresights about technology options, process linkage with customers and suppliers and customer service improvement Assigned business
sponsors in the team and provide business directions for serving major customers
Vendor inventory management process
Propose new vendor inventory management (VMI) and worked with BPM in organizing the new services
Insights about process capabilities, global resource management
Foresights about technology options and opportunities in customer services Decreased involvement in Process Provide technology scan, Insights about process
process improvement, increased interests in process innovations Interacted with CIO in making new use of new technologies
innovation innovative uses of
technology and operational concerns.
Evaluate newly-merged systems
capabilities, customer and suppliers’ processes and resources support
Foresights about technology options and business opportunities in customer service and process improvement
5.1 Emergence of joint fields of boundary spanning for building entrepreneurial alertness
The analytical overview of the ICD case shows that the level of entrepreneurial alertness escalated with multiple emergences of joint fields of boundary spinning between CEO and CIO along the maturity path of process capital. Through reciprocal cycles of establishing new joint fields between the two powerful
representatives of the business and technological arenas, the CEO and the CIO gained deeper understanding of each side, enabling foresight about process opportunity and insight into process resources. The
entrepreneurial alertness increased over time as the established organizational process matured and as new paths were created.
A joint field makes the dialogues between CEO and CIO meaningful and activities practical. As depicted in Fig. 3, the cycle of joint fields of boundary spanning repeatedly embraced critical issues of process capital development: selecting, designing, implementing, improving, and then leveraging process systems. For each cycle of boundary spanning, different opportunities such as process improvement, technology options, running the system flexibly, serving customers differently, and creating value-added services, are assessed, with the involvement of different agents. Through each joint field of boundary spanning, the productive alliance between the CEO and the CIO in identifying and configuring processes for feasible opportunities was practiced and enhanced.
This study does not intend to generalize the observed path of a single case experience to all cases. However, the findings of this case analysis suggest that the growth of entrepreneurial alertness capability is related to combined knowledge accumulated through a series of process-topic-focused boundary-spanning activities between the representative agents of both strategy and technology.
Figure 3. Process capital development cycle in ICD.
In the ICD case, the CEO, with control over resources, power of nomination, and responsibility for organizational performance, is the legitimate igniter of the cycle of boundary spanning. As the CEO invests resources in spanning boundaries among these fields, they foster the emergence of a new boundary between agents who are engaged in the new joint field. The challenges are to keep the spanning process effective by providing business objectives, nominating appropriate agents, designating resources, offering project
governance, and encouraging boundary spanning among agents. For the virtuous circle to continue, the CEO progressively creates new joint fields across boundaries and ensures that the agents translate tacit knowledge into practical knowledge.
Several projects at ICD show the role of the CEO in driving and defining the process. For example, when selecting new software to replace Lotus Notes, the CEO delivered the key requirements, joined the team that evaluated the functionality of potential software, and nominated business participants to the project. Similarly, when ICD developed the capability to provide vendor warehousing services to customers, Charles became involved in negotiating service content, packaging service delivery, evaluating business cases, and monitoring service quality. As the ICD case shows, sometimes a joint field is created for a short period time to carry out a specific task, while other joint fields continue indefinitely, perhaps becoming permanent business units. A CEO manages the portfolio of emergent joint fields of the firm and assures the appropriateness of the nominated agents practicing boundary spanning.
5.3 The CIO as boundary spanner- in- practice
The CIO of a firm is the authorized and legitimate representative of its technological resources. In addition to maintaining IT competence in designing and maintaining the process systems, the role of the CIO in ICD evolved and contributed to the building of entrepreneurial alertness by interacting with the CEO and executives, providing technology options, proposing joint fields of practice and, in most cases, sharing the responsibility of managing, recreating, and expanding joint fields of boundary spanning in practice. In the ICD case, after a change of mindset from technology-oriented to business-profit-oriented, the CIO became involved in educating the CEO and process owners about the critical factors of technology success and failure and co-initiated new joint fields in practice, such as the in-house software project with agents from both the business and technology sides, and new services to global customers with the BPM team and customers’ CIOs. Managing and creating new joint fields is dependent on the CIO’s efforts in assuring the alignment of the business objectives with the boundary-spanning activities.
5.4 Forward and backward entrepreneurial alertness with process capital
As depicted in Fig. 3, when the reach and richness of the process is relatively low, the boundary spanners-in-practice tend to focus more on the existing processes and on finding solutions through internal process improvement. After the global integrated process network was established, the boundary
spanners-in-practice moved the organizational boundary out, extending it to include customers and suppliers. More innovative exploitation of the process capital then evolved. This suggests that a potential learning path for entrepreneurial alertness moves from the internal to the external in discovering feasible opportunities in the environment. James, the CIO, would not have been able to propose the in-house development of software
if he and the CEO had not (1) experienced software problems that heightened their understanding of the limitations of their technology and business operations, (2) explored and implemented new software to build insights about software design and business operation, and (3) had a blueprint in mind about business strategic intent. Similarly, the new VMI services would not have been proposed and implemented if the CIO had not known customer operations well and the CEO had not had the confidence to commercialize the digitized operation.
5.5 Maintaining a virtuous circle of boundary-spanning for entrepreneurial alertness
As observed in the ICD case process, capital development is an evolving process with different challenges and opportunities for the processes to be designed, implemented, refined, and exploited. The capability of entrepreneurial alertness toward the changing processes is, therefore, dynamic and situated. However, the case herein suggests that the building of entrepreneurial alertness is by no means spontaneous or intuitive. It is based on concrete, detailed, and combined knowledge of the business and its technological capabilities obtained through progressive learning of the firm’s technology options and business operations. This requires the continual evolution of boundary spanning with new joint fields.
By consolidating both the literature and empirical data, this study identified situations calling for representative individuals to initiate new joint fields for practice, conditions that enable representative individuals to engage in the practice, and tendency of path creation and the approach for the organization to sustain boundary spanning.
Situations for initiating new joint fields of practice are mostly related to process performance. In ICD,
when processes were running smoothly, the CEO did not spend time with the CIO on process matters. The CEO became involved only when there were business issues in the process. Boundary spanners were assigned to fix problems as they arose. At ICD, a significant increase in process value also drew the CEO’s attention to the need for greater investment in process exploration. This is reflected in the project of process extension to customers and suppliers after the global integrated process was successfully replicated in a few acquired firms. To build entrepreneurial alertness, stakeholders need to leverage the results of process evaluation and brave the risks of initiating a new joint field in practice.
Self-efficacy and symbolic recognition are conditions that affect the motivation of individuals acting as
boundary spanners in practice. As the literature suggests (Bandura 1977, Tang 2008), this study found that the level of entrepreneurial alertness increased when the entrepreneurs had high levels of self-efficacy in
performing the roles and tasks of new-venture creation. The case data showed that enhanced literacy makes agents more inclined to practice boundary spanning. This is observed in the CEO’s attitude toward process integration software. When Charles learned more about the critical factors for system implementation from the previous joint field project, he acted decisively to initiate a joint field of streamlining processes between technology support groups and process owners. The pattern was also seen among the business users who participated in introducing the new system to other users when they had learned more about the software process. After observing this behavioral pattern, James invested considerable time in communicating with key business partners to increase their technological literacy.
On the other hand, symbolic recognition can create another condition for agents to contribute to entrepreneurial alertness building. After James was included in the board, he was more inclined to share technology insights and become more involved in spanning boundaries between market operations and
business units. The institutionalization of the BPM team is another form of symbolic recognition for their high-ranking positions and accumulated knowledge of business practices. The result of recognition is that nominated agents continue to strive to span boundaries for business opportunities. Both in Levina and Vaast (2005) and in the current case, the CEO used his symbolic capital as a boundary-spanning tool to encourage the production of a new joint fields by giving symbolic recognition to those agents who contributed to building the practice.
5.6 From reactive to proactive path creation in the process value development life cycle
In the life of process value development in ICD, there seems to be a tendency of path creation (Boland, R.J. and et al. 2007,Garud and Karnoe 2001) with each cycle of joint fields for boundary spanning. In the global software development case, the CEO deviated from the conventional way of buying the packaged software and took the CIO’s advice in investing in the self-developed software. This is a challenge in the firm, but it also created opportunities for the team to build deeper knowledge about system architecture and
business operations. With the VMI case, it brought a new wave of boundary spanning, which has created a new business model that not only commercialized ICD’s warehouse management process but also provided enormous value to the customer. Through this joint field in practice, ICD built further insights about customer operations and gained confidence in value-added services. The establishment of the BPM is another
ground-breaking initiative of expanding and sustaining the boundary-spanning practice. It did not follow the repeating pattern of nominating a task force for boundary spanning but instead took the approach of locking agents into permanent boundary-spanning loops. This has stabilized the accumulation of knowledge for business insights and foresights. Throughout the life of the process-value development, capability of entrepreneurial alertness was progressively modified as new paths of process development emerged.
The establishment of the BPM team in ICD is an approach for the firm to transform the development of
entrepreneurial alertness from a reactive to a proactive orientation. This establishment of the BPM team in
ICD is a sustained mechanism that takes on the role of initiating new joint fields of boundary spanning, nominating boundary spanners-in-practice, and executing boundary spanning with multiple agents. The
institutionalization of the boundary-spanning function concretely demonstrates the importance of continuity in boundary spanning in a firm to develop value from capital. It built an explicit institutional framework for translating the informal and tacit knowledge into boundary-spanning units. However, it is also due to the high praise given by the CEO (who possessed his symbolic capital) that helped the team build high spirits for discovering new opportunities. One may ask whether it would be feasible for a CEO to give the responsibility for boundary spanning in process exploration and exploitation to a newly formed team. Based on the ICD case, the preconditions should be process maturity, agents’ experience in boundary spanning between business and technology, and the CEO and CIO’s commitment to leading the boundary-spanning efforts.
6. Conclusion and implication
This study examines the roles of the CEO and CIO in fostering entrepreneurial alertness for developing value out of process capital through a longitudinal case study of a leading international IC distribution company. Based on the case study, this study formulated insights into entrepreneurial alertness building as both knowledge-based and project-oriented. Underlying this view is the assumption that acquiring,
emergence of strategic foresight and systematic insight into the firm’s stock of process capital. The case findings highlight the importance of the emergence of joint fields for boundary spanning between CEO and CIO for building the specific organizational capabilities. It is essential to point out that entrepreneurial alertness toward process capital opportunities comes neither from the CEO’s intuition nor from free talks between the CIO and business representatives. Instead, it appears to follow a pattern of systemic accumulation of operational experience and synergy building between business and technology. This does not imply that the CEO and CIO are systematically and rationally searching their environment for competitive imperfections. Rather, this study argues that these individuals become aware of such competitive imperfections through their day-to-day activities (Krzner 1989), and that day-to-day activities are in turn shaped by boundary-spanning actions taken by both the CEO and CIO.
The studied case illuminates how boundary spanning can be driven and leveraged by the CEO and CIO for process value development and used to support knowledge management across boundaries by focusing on fostering the emergence of new joint fields. Boundary-spanning theory allows us to view diverse aspects of entrepreneurial alertness through a single theoretical lens and focus on the path of knowledge accumulation of the enterprise. Findings about the emergence of boundary-spanning activities, agents, and organizational units provide an enhanced explanation of the importance of communication between the CEO and CIO in
developing value from the resources of the firm. The experience of ICD suggests that the knowledge
interaction between the CEO and CIO must be topic-focused, shaped by both parties, and joined by multiple agents across related boundaries.
The paper also reinforces current practitioner thinking (Sauer and Willcocks, 2002), which suggests that one of the most compelling emerging organizational roles of IS is that of increasing alertness for process flexibility and business innovation. This finding provides a backdrop against which practitioners can evaluate their entrepreneurial alertness management scheme to (1) enhance the quality of communication between business and technology, and (2) identify joint fields in practice and nominate agents to participate.
Finally, the nature of the link between entrepreneurial alertness and process capital is context-specific and is hence likely to play out differently in different organizations and industries. For instance, as the
processes in a firm and industry become more heavily networked, process boundaries expand across the firm’s formal external boundaries. However, such expansions would appear to be mediated by the knowledge base and technological capabilities of the partner firms. Hence, it would be useful to explore how the CEO and CIO reach across firm and unit boundaries to the CEOs and CIOs in such networks and build entrepreneurial alertness for leveraging the processes they choose to connect. Extensions of the analysis described here to other contexts may provide further support for, and greater understanding of, the development of value out of process capital in today’s networked economic relationships.
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