7th Global Conference on Business & EconomicsISBN : 978-0-9742114-9-7
Decision-Making or Something Else?
–Reflections of Organizational Innovation AdoptionProcess from Four Case Studies
Hannu Makkonen
TurkuSchool of Economics
Rehtorinpellonkatu 3
20500 Turku, Finland
p. +358 503724187
ABSTRACT
Traditionally organizational innovation adoption has been studied within diffusion research. In this contextit is understood as a choice type decision. This perspective has dominated the field as research has been typically carried out with a large sample of organizations and focusing on correlations between groups of factors and a specific outcome of the adoption process.Due to this focus on adoption as choice we are mostly unaware what happens within a firm during an adoption process and thus a need for a process perspective has been manifested by different authors.As a process the adoption has been conceptualized as decision-making in previous literature. The purpose of this study is to further understanding of the organizational adoption as a process and especially scrutinize the appropriateness of the decision-making conceptualization of the organizational innovation adoption. This is conductedby applying the decision-making approach to four case studies in which organizational innovation adoption process is in focus.
INTRODUCTION
Traditionally organizational innovation adoption has been studied within diffusion research. In this context it is understood as a choice type decision (for a hierarchical classification of decisions see Kunreuther & Bowman 1997). This perspective has dominated the field as research has been typically carried out with a large sample of organizations and focusing on correlations between groups of factors and a specific outcome of the adoption process. The research has yielded organizational, environmental and managerial factors that separate adopters from non-adopters or different variables such as sources of information used (see e.g. Rogers, 1983) or a role of a CEO (Meyer & Goes, 1988) as predictors of adoption. These studies are incapable to explain how these factors evolve and interact with other factors during the adoption process finally producing adoption or rejection (see Langley & Truax, 1994, 620). Damanpour and Schneider (2006, 215) present that even though the adoption would have been conceptualized as a multiphase process most large sample empirical studies of organizational innovation have operationalized adoption as a dichotomous decision of adoption or rejection (see also Frambach & Schillewaert, 2002, 164).
Due to this focus on adoption as choice we are mostly unaware what happens within a firm during an adoption process and thus the need for a process perspective has been manifested for example by Frambach and Schillewaert (2002, 172). As a process the adoption has been conceptualized as decision-making in previous literature. Traditionally this view to adoption derives from a consumer market context and therefore we are a bit doubtful about itsfitness to organizational innovation adoption.In general the stage models of decision-making have been criticized in an industrial context too as identified stages in different studies reflect rather few acts in a decision process or major behavioral events during it consisting of hundreds of behavioral acts (Lichtenthal 1988, 138).
The purpose of this study is to further understanding of the organizational adoption as a process and especially scrutinize the appropriateness of the decision-making conceptualization of the organizational innovation adoption. This is done by applying the decision-making approach to four case studies in which organizational innovation adoption process is in focus. We start our discussion from the theoretical part and then move on to present the methodology and cases and then discuss them with reference to the decision-making approach of organizational innovation adoption. Finally the work is put together in the findings and conclusions section and ideas for future research are fed.
ORGANIZATIONAL INNOVATION ADOPTION AS DECISION-MAKING
Organizational decision-making has been studied widely and within various disciplines over the years (see e.g.Ansoff 1971;Chandler 1962; Cyert & March 1963;Hannan & Freeman 1977; Lawrence & Lorcsch 1967;Mintzberg, Raisinghani and Théorét 1976; Nutt 1984 and Simon 1955). In this study a review of the field of general decision-making is however out of the scope. Rather we concentrate on the most used and cited decision-making conceptualization in this specific field of innovation adoption, namely the one provided by Rogers (1995).
Rogers (1995, 161–203) have depicted and conceptualized innovation adoption as a decision-making process consisting of five stages. In his model the adoption is a process that happens through the stages of knowledge, persuasion, decision (adoption / rejection), implementation and confirmation. This approach has been widely used to structure the adoption process in the previous literature. For example in the context of organizational innovation adoption Frambach and Schillewaert (2002) reviewed organizational innovation adoption literature and integrated the main findings within a framework in which a decision-making process (the stages are ideologically similar to Rogers’ classification but are named as awareness, consideration, intention, adoption and continued use) has been put at the heart of the model and different factors has been presented to affect on this process.
The idea of Rogers’ stage model is that in order to adopt an innovation a potential adopter must first became aware of an innovation. This knowledge may be a cause of a passive exposure to an innovation or a result of an active search for a solution to some specific need. After having knowledge of an innovation and an idea of how it works the adopter forms a favorable or unfavorable attitude towards the innovation. This attitude formation stage is called persuasion. Decision is an act that leads to a choice to adopt or reject the innovation. After deciding to adopt the innovation the activities performed to put the innovation in use form an implementation stage. Finally confirmation is a stage in which the adopter seeks reinforcement for a decision made or reverses this decision.
THE EMPIRICAL CASE STUDIES
The data presented here has been gathered as a part of a larger study and presented here from the point of and in the scope of this study at hand. In the original study we focused on buyer-supplier dyad in a context of some chosen technology adoption cases. The methodology used is thematic interviews with the participants of the adoption process at adopter companies and at supplier companies. All the studied four companies operate within a food processing sector in Europe. To respect a wish of anonymity of the companies we consider them anonymously in this paper.
Two of the companies are big concerns(called FoodConcern1 and FoodConcern2 in this paper), quite similar in size, one is a medium sized company (FoodMedium) and one is a family owned small business (FoodSmall). The total number of interviewswithin these cases is 26. In FoodConcern1 case there have been done 10 interviews, 8 inside the company and two at the supplier. In FoodConcern2 case we conducted totally three interviews that all were done at the company. For the FoodMedium case we had 9 interviews at the company and one at the supplier. Similarly for FoodSmall case we had one interview at the supplier and two at FoodSmall. The variance of the number of interviews is due to a variance of the number of persons involved in the studied projects.In FoodConcern2 case we did not reach the supplier for an interview. Next we briefly describe the conducted cases and then analyze them with reference to the decision-making approach.
FoodConcern1 and a NewQuality Assurance Method
The adoption process took place during 2002-2003 at one production plant of FoodConcern1. The adopted product was a microbiological quality assurance method to test microbiological safety and purity of the final products. The method consists of a testing machine and chemical reagents that are needed to perform tests by the machine.The project group (production manager, quality & development manager, and laboratory assistant) at the production plant formed a core for this project. As this project was initiated at the plant in order to meet a need to adapt to increasing production the project group was highly motivated to find a solution to avoid constructing a new storage and to gain the possible benefits of the fast analyzing methods. In practice the project group made calculations of the payback time and other paper work needed to assure the concern level management as well the laboratory assistant run the new method in parallel with the previous one for six months in order to do comparisons. In addition to the project group two microbiologists at the concern central laboratory were involved in the process. The microbiologists acquired and refined information facilitating the evaluation of the method and the adoption process. They brought in expertise needed to arrange the testing and implementation procedures to make sure that they qualify for the restrictions set up by the authorities and interpreted the test results. Their role was also crucial in the final examination by a supervisory board to give credence to the project.
FoodConcern2 and a Production Line Automation
In the mid 90’s the company planned and foresaw together with an expert organization the production process and the product flow for the future. Then created vision, a big picture of an ideal production process, in back of mind the company had made modifications and improvements to the production process until these days. From the nineties the technology has evolved and some ideas of expected future opportunities have now come true. In 2000 company reconstructed the section of the production (which was automated later) but the technology was still immature in terms of larger automation at that time. However the key persons had already that time a quite sharp idea of what kind of and what size of the machines will be and thus places and space were left to wait these machines. In 2006 company realized the investment and automated the production line replacing the former machines. First of all the automation was done in order to improve the cost effectiveness and it replaced tens of workers from that section.
FoodMedium and a New Packing Machine
FoodMedium had launched a new product to heavily competitive markets and started production of this product from a scratch what comes to machinery and technical circumstances. The company was forced to take this decision to start with a new product as a large share of the contract production was taken away by the principal. FoodMedium designed and constructed a simple production line in three months for the new product. Although FoodMedium hadpoor technical facilities in the beginning it had a great experience in this type of production due to contract manufacturing of similar product. After the market entry the company had in back of mind the obvious need for the line improvement but before big financial commitments it needed to be sure that the new product will survive and be accepted by consumers. After having occupied a 20 percent market share the company encouraged to start to improve the line and targeted first to the packing function that was carried out in very labor intensive fashion and thus was the most evident bottleneck at that moment. The solution was to invest in new automatic packing machine to replace six workers from the production line and improve cost effectiveness of the line.
FoodSmall and a New Aseptic Packing Machine
The studied adoption process, in which a small family owned company invested in a novel aseptic packing machine, took place in 2003. The investment decision was made in February 2003 and the machine was installed in November 2003. The studied adoption process deals with packing of a product of FoodSmall that was fairly new and differs from the other products of the company. The company itself has already a well established position and a fairly long history. Two packing machines were used before this adoption to pack the product. During the first two years after launching the product to markets the production was packed by one machine. After these two first years another machine was acquired. The third machine, scrutinized here, replaced the very first one and is now run in parallel with the second one that was also supplied by the same supplier as the most recent one.
THE STUDIED ADOPTIONS AS DECISION-MAKING
FoodConcern1
Knowledge
At the production plant they were aware of faster microbiological quality analyzing methods already since 2000 mainly because of active suppliers who had approached the plant. The both microbiologists had known the technology platform since late 1970’s. The central laboratory had tested another application of this technology already in the beginning of 1980’s for another purpose but results then were not satisfying.
Persuasion to Test
The production at this plant was known to rise due to a FoodConcern1 concern level decision to shut down the other one of FoodConcern1’s two special production plants and concentrate all this type of production to this examined site. The production plant needed to find a solution to adapt to the increasing production. The microbiological analytics of final products to assure their quality was especially a bottleneck in this new situation. The company had earlier rejected or postponed the adoption of the faster analyzing methods but after the known rise in production the option became more tempting.
Before this shut down decision these methods were not considered seriously even though it might have been a beneficial investment. Due to the known rise in production the factory was more sensitive to respond as the CEO of the supplier (called TestCo here) contacted the production manager who agreed to meet him at autumn 2001. The method felt promising from the very beginning and the benefits it could bring in sounded lucrative.
After some weeks of preliminary investigation a more serious testing that required a formal establishment of a project was started. The production manager made a project plan which specified him as project manager, the aims of the project, project personnel, the supervisory board and the schedule. The project outline derived partly from therequirements for an internal technology development process as which this project was specified according ISO 9001 quality system the firm has. The plan was proposed to FoodConcern1 central administration and then a license to start the project was given.
In the beginning the microbiologists were doubtful about this method. The other (he) said that in the beginning of the project he used to put this suspiciousness into a phrase that “Do we try again a long forthcoming, promising new method.” Before starting a testing period at the plant TestCo had to assure the microbiologists that it is worthwhile to engage into a deeper testing phase. For that purpose TestCo visited the central laboratory in September 2002 and performed a set of tests to demonstrate the method and got microbiologists’ blessing to continue.
Implementation
After the establishment of the project at FoodConcern1 in March 2002 TestCo performed a testing period in order to adapt and fine tune the method for the products to be tested at the production plant. During TestCo’s testing period FoodConcern1 sent them their products to be analyzed. In parallel with this testing at TestCo FoodConcern1 found out other possibilities and suppliers. In addition to TestCo another supplier whose product was based on a different technology platform was considered preliminary, but never tested due to a high price and lack of references. After TestCo’s method was adjusted for the FoodConcern1’s products the testing period started at the production plant in August 2002. The new method was run in parallel with the old one in order to do comparisons until January 2003. The number of tests being as high as 10 000 was sufficient for statistical analyzing.
In addition to a traditional role of seller,TestCo possessed also co-operative and expert roles. They brought in their contribution to validation and implementation in terms of expertise and experiences they have gained through earlier customer validation and implementation processes and also through their own use of the method as it had been used in TestCo’s own laboratory to produce commercial laboratory testing services. The CEO of the firm was the key person who possessed various roles in this case as TestCo is a quite small firm. In addition to him the laboratory staff at TestCo was involved on practical testing and user training. TestCo gave user training for the machine, installed it and supplied the needed chemicals.
Decision
After the testing period it seemed that the method is enough specific and sensitive for the purpose. The results were then presented to the supervisory board of the project that made sure that the project was done following the formal internal guidelines and the results are satisfying for that purpose. Supervisory board accepted the project and then the production plant was capable to do a proposal of investment to FoodConcern1 central administration. After the approval the machine that was leased until this far was bought and then started to be used in analyzing some product groups without the older method as backup since April 2003.