Developing measures to assess the extent of sustainable competitive advantage provided by business process reengineering

Journal of the Academy of Business and Economics, April, 2003 by R. Srinivasan

ABSTRACT

The study proposes a set of measures that assess the extent of competitive advantage provided by BPR. Naturally measures have to be both reliable (must not vary unreasonably because of irrelevant factors) and valid (should measure what they are intended to measure). The development of measures that have been tested for reliability and validity is a critical requirement for the advancement of knowledge in management disciplines.

This study is a planned methodological research program based on (Churchill's 1979) guidelines for developing measures that have the desirable reliability & validity properties. The eight-step process recommended by Churchill is adopted in this research. In the main study primary data was collected using structured questionnaire by eliciting response from 181 respondents. The construct was checked for measurement properties through statistical analysis.

1. INTRODUCTION

Research in Business Processing Reengineering (BPR) is at critical crossroads today, with increased emphasis on developing theoretical concepts and testing empirical relationships rooted in such concepts. Such a transformation critically depends on conceptualizing, measuring & analyzing the role of BPR and its derivative constructs in a business enterprise. This is motivated by the management's desire to gain competitive advantage through process innovation techniques. It is well recognized that improvement in competitiveness means improvement in both efficiency & effectiveness of business operations. This paper is based on a research study, which aims to contribute to the measurement stream of BPR research with an explicit recognition that measure development cannot be divorced from broader theoretical network. The specific aim is to develop and validate a set of operational measures for a particular conceptualization of BPR. The expectation is to provide an initial set of operational measures with strong support in terms of their measurement properties that can be utilized by other researchers for theory-testing as well as further extensions/refinements.

This paper is divided into four sections. The first section provides background for this research through a brief historical trace of various approaches to measurement of management constructs. The second section provides a theoretical circumscription of the proposed BPR construct. The research method including data analytical approach and results are presented in the third section. The fourth section discusses the implications of the results.

2. BACKGROUND

2.1 Alternative approaches for developing constructs in Management

Narrative Approach: This reflects the case-based tradition of business policy predicted on a view that the complex characterization of competitive advantage should only be described in its holistic and contextual form. Since the distinctiveness lies in its uniqueness to a particular setting, the implication is that competitiveness can (and should) be best described verbally, and any attempt to develop a measurement system will be incomplete. While such an approach has its role for conceptual developments, it has limited use for testing theories pertaining to the effectiveness of situations under differing environmental, organizational and temporal conditions.

Classificatory Approach: The first movement away from narrative descriptions of competitiveness is reflected in the development of strategy classifications--either conceptual or empirical. The conceptual classifications are term as 'typologies'. The distinguishing feature is that such typologies are rooted in a set of parsimonious classificatory variables or conceptual criteria. While topologists are best know for their conceptual elegance, they do suffer from an inherent weakness in that it is fairly easy to find a single variable on which a typology can be used.

The empirical classifications are termed as 'Taxonomies". These reflect empirical existence of internally consistent configurations, but it is important to recognize that their development is sensitive to the choice of underlying variables as well as the analytical method used to extract the taxonomies. Thus, while it serves to capture the comprehensiveness and integrative nature of competitive advantage, it does not reflect the 'within-group' differences along the underlying variables.

Comparative Approach: The aim of the third approach is to identify and measure the key traits (also termed as variables) of the competitive advantage construct. Consequently, the focus is less on categorization and more on measuring the differences along a set of characteristics that collectively describe the construct in question. The attractiveness of this approach lies in its ability to decompose the variation that is seen across different BPR factors. This requires that the traits have specific theoretical content as well as adequate operational measures.

However, the present extent of research in construct measurement in BPR is grossly inadequate. Researchers continue to propose and employ measures without corresponding tests for reliability, convergent, discriminant and predictive validity. In the absence of a systematic basis to evaluate the adequacy of measurements, confidence in research results is considerably eroded, which implies that the managerial implications derived from such results may be questionable.