THE SUPPLY CHAIN MANAGEMENT ORGANIZATION WITHIN THE GLOBAL FIRM: A STRUCTURAL CHANGE PERSPECTIVE By Joseph A. Roh A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Logistics 2011 ABSTRACT THE SUPPLY CHAIN MANAGEMENT ORGANIZATION WITHIN THE GLOBAL FIRM: A STRUCTURAL CHANGE PERSPECTIVE By Joseph A. Roh This dissertation examines how firms change their supply chain management organization structure to address challenges associated with pursuing global strategies. We perform a qualitative study to develop a structural change process that examines the change progression from external environmental pressures to structural design implementation. Our sample consisted of 22 leading global firms and included interviews with 46 senior supply chain leaders from corporate, SBU, and functional supply chain related organizations. In addition, we identify similarities and differences of the emerged structural change process to existing organizational structural change theories. The proposed supply chain management organizational change process most closely follows strategic choice and genealogical theories. Further, we identify specific areas where existing organizational change theories can be extended, as well as which theories best explain specific types of supply chain structural change phenomena. Contributions to theory and practice are presented as well as suggestions for future research. ACKNOWLEDGEMENTS Having completed my studies at Michigan State University, I would like to express my appreciation to those who supported me during my doctoral studies. First, I would like to acknowledge my dissertation committee: Dr. Morgan Swink, my committee co-chair, for agreeing to supervise my independent study which was the basis for this dissertation. I sincerely appreciate his leadership throughout the dissertation process and providing me with many professional opportunities. I extend my heart-felt gratitude to my academic advisor and committee co-chair, Dr. Judy Whipple, for her constant support and encouragement. She challenged me to pursue better ideas and better writing from the very beginning. She never hesitated to provide me with guidance regarding how to navigate the many hazards involved in a doctoral program. I would also like to deeply thank Dr. David Closs for his support through my doctoral program and his helpful suggestions to this dissertation. I am also very grateful to Dr. Virpi Turkulainen, Helsinki University of Technology, Finland, for her many contributions to this work and her insights in the areas of integration and organizational design. I am indebted to several other people who encouraged me to enter a doctoral program. To my dear friend Dr. Wesley Randall, Auburn University, who has always personally challenged me to try new things and never tolerated inconsistency among who I am, my goals, and my actions. To Dr. Joe Michels, who provided me with an external source of accountability. His constant status checks encouraged me to stay on track and finish the program. To my industry colleague, Cliff Spier, who challenged me to dream and pursue a career that I wanted versus what I was doing…for that I am constantly grateful. iii I have been extremely blessed with an amazing family who continuously provides me with unconditional love and always expresses their pride in whatever I choose to do. I love you more than anything in my life. To Diane, my wife, I am very grateful for your unwavering confidence and all the sacrifices that you have made. You have been my chief supporter from the very beginning of this journey, even though it meant delaying many of your hopes and dreams. I look forward to the next chapter in our lives together. To my precious children, Hannah and Andrew, who were always so accepting when I was unavailable to play - knowing that in the long run, it was better to have dad studying. I am also extremely thankful for my mother, Mary Roh, and my mother-in-law, Karen Atencio-Henderson for their love, encouragement, and support over the years. This research project has been financially sponsored by the Council of Supply Chain Management Professionals (CSCMP) and Michigan State University’s Center for International Business Education and Research (MSU-CIBER). I appreciate the opportunity to partner with CSCMP, the CSCMP Research Strategies Committee and MSU-CIBER on this research endeavor. Additionally, I appreciate the support of A.T. Kearney for hosting a focus group forum as part of this research effort and assisting in identifying participants of the study. iv TABLE OF CONTENTS LIST OF TABLES………………………………………………………………………………………………………. vii LIST OF FIGURES………………………………………………………………………………………………....... viii CHAPTER 1 INTRODUCTION…………………………………………………………………………………… 1 CHAPTER 2 LITERATURE REVIEW…………………………………………………………………………… 6 2.1 Organizational Structure…………………………………………………………………………………. 7 2.2 Organizational Structure Change…………………………………………………………………….. 10 2.3 Research Gaps…………………………………………………………………………………………………. 17 CHAPTER 3 STRUCTURAL CHANGE IN GLOBAL SCMOs………………………………………….. 21 3.1 METHODOLOGY………………………………………………………………………………………………. 21 3.1.1 Grounded Theory Process…………………………………………………………………. 23 3.1.2 Elaboration of the Grounded Theory Process: Research Sample and Steps……………………………………………………………………………………………… 24 3.1.3 Grounded Theory Evaluation Criteria………………………………………………. 30 3.2 RESULTS…………………………………………………………………………………………………………. 32 3.2.1 Sense Environmental Change Drivers………………………………………………. 33 3.2.2 Assess SCMO Needs and Structural Design……………………………………… 41 3.2.3 Modify SCMO Structure………………………………………………………………….. 45 3.2.4 SCMO Structural Change Process……………………………………………………. 48 3.2.5 Conclusions and Future Research……………………………………………………. 50 CHAPTER 4 AN ORGANIZATIONAL CHANGE THEORY ASSESSMENT………………………. 62 4.1 METHODOLOGY……………………………………………………………………………………………… 62 4.2 RESULTS…………………………………………………………………………………………………………. 65 4.2.1 Contingency Theory…………………………………………………………………………. 66 4.2.2 Resource Dependence Theory…………………………………………………………. 70 4.2.3 Strategic Choice Theory…………………………………………………………………… 77 4.2.4 Configurational Approach……………………………………………………………….. 84 4.2.5 Genealogical Theory………………………………………………………………………… 94 4.2.6 Complex Adaptive Systems……………………………………………………………… 99 4.2.7 Conclusions……………………………………………………………………………………… 104 CHAPTER 5 FUTURE RESEARCH……………………………………………………………………………… 113 5.1 Supply Chain Management Organization Structural Change Flexibility……………. 113 5.2 SCMO Strategic Integration Within the Global Firm………………………………………… 118 5.2.1 Strategic-Operational Centralization Hybrid Structure……………………… 122 v 5.2.2 Internal Supply Chain Governance Intensity……………………………………... 126 APPENDIX 1: Qualitative Codes………………………………………………………………………………. 134 APPENDIX 2: Environmental Sectors………………………………………………………………………. 137 BIBLIOGRAPHY……………………………………………………………………………………………………….. 139 vi LIST OF TABLES Table 1-1: Intended Contributions…………………………………………………………………………. 5 Table 2-1: Supply Chain Related Organizational Change Literature………………………… 14 Table 3-1: Grounded Theory Process…………………………………………………………………….. 24 Table 3-2: Sample Characteristics………………………………………………………………………….. 27 Table 3-3: Criteria for Evaluating Grounded Theory Studies…………………………………… 30 Table 3-4: Major SCMO Structure Environmental Change Drivers…………………………. 34 Table 3-5: Types of SCMO Capabilities Needed to Meet the Firm’s Changing Needs………………………………………………………………………………………………………… 44 Table 3-6: SCMO Structural Change Process Description……………………………………….. 49 Table 3-7: Supply Chain Related Organizational Change Literature……………………….. 56 Table 4-1: Candidate Theory Positioning in Organizational Literature…………………… 65 Table 4-2: Comparison of SCMO Structural Change Process to Six Organizational Change Theories………………………………………………………………………………………… 107 Table 4-3: Theories which Significantly Inform SCMO Structural Change Process Steps…………………………………………………………………………………………….. 112 Table A-1: Qualitative Codes………………………………………………………………………………….. 134 vii LIST OF FIGURES Figure 3-1: SCMO Structural Change Process…………………………………………………………. 49 Figure 4-1: Organizational Power Support Pattern…………………………………………………. 89 Figure 4-2: Organizational Member Commitment Pattern……………………………………… 92 Figure 4-3: Activities in the Knowledge Evolution Cycle………………………………………….. 97 Figure 5-1: SCMO Structural Change Flexibility………………………………………………………. 117 Figure 5-2: SCMO Design Implications of Potential Corporate-SBU Strategic Conflicts……………………………………………………………………………………………………… 121 Figure 5-3: SCMO Strategic Integration Mechanisms……………………………………………… 130 viii CHAPTER 1 INTRODUCTION Over the past few decades, firms have rapidly expanded across international borders as domestic markets have become saturated and mature. Expanding outside their home countries, global firms draw on many of the strengths that created domestic success. Some examples include competitive brands, marketing expertise, product and process innovation, and supply chain management capabilities. This shift in the business environment has caused firms to recognize the potential for supply chain management to contribute to the firm’s strategic vision, as well as its overall competitive advantage. Supply chain management organizations (SCMOs) have evolved their capabilities over the past few decades in response to global expansion, as well as to deregulation and changing geopolitical events (e.g., the formation of the European Union, the North America Free Trade Agreement, and increased access to markets in China,