Perspectives on Various Issues of Interest

The Effects of External Auditors and Certification Bodies on the Operational and Market-Oriented Outcomes of ISO 9001 Implementation

There are a number of practical implications drawn from the findings of our study. First, our study confirms once again that quality implementation is the key determinant of the operational outcomes of ISO 9001 adoption. At the same time, however, the findings also confirm the important role of external auditors in enhancing the effect of implementation on the operational outcome from ISO 9001 standard. This result is instructive in that it is the quality of auditors rather than the reputation of certification bodies that help firms in gaining the operational outcomes. For many firms, however, this finding could raise a practical problem: how to find good auditors? The answer to this question is not straightforward because, unlike certification bodies who have certain brand equity, auditors are employed by certification bodies and their quality is somewhat hidden from the customers and is only revealed after they are engaged after the ISO 9001 certification is over. Indeed, this problem is exacerbated by the fact that firms cannot simply resort to reputable certification bodies in order to find good auditors. The positive correlations between quality of auditors and reputable certification bodies only show a medium strength and, hence, this does not provide a strong assurance that reputable certification bodies will always send quality auditors. Therefore, while engaging reputable certification bodies is recommended, firms should request that they are served by experienced and quality external auditors whose characteristics are partly captured in this study. At the same time, however, the findings also infer that high quality auditors are not necessarily always employed by reputable certification bodies; they could also be part of less reputable certification bodies. In this regard, our findings also provide a ray of hope for firms who cannot afford to engage reputable certification bodies that normally charge higher costs than their counterparts. In particular, smaller firms with limited resources still have a chance to engage high quality auditors and to benefit from their services.

Our findings show that the reputation of certification bodies (rather than the quality of external auditors) helps firms improve their market-oriented outcome, including broadening their market scope and winning more customers. This finding suggests that customers still rely on “brand image” of reputable certification bodies. Customers perceive ISO 9001 certifications issued by reputable certification bodies to be of higher value than others. While this may be true to a certain extent, it is important to balance this notion with our finding, which shows that certification bodies do not have a direct positive effect on operational outcomes. Instead, firms ought to seek high quality ISO 9001 implementations that are then vetted by high quality auditors so as to obtain operational outcomes. The operational outcomes in turn exert a positive effect on market performance. This result therefore sends a strong message to firms that are trying to attain market-oriented outcomes solely from compliance to the standard’s requirements without internalizing the implementation process. More importantly, since it is operational outcomes that are mainly desired by customers (rather than the certification), simply signaling high quality ISO 9001 implementation by tapping into the reputation of certification bodies could be a misleading strategy to gain market-oriented outcome.

Withstanding the economic recession: Examining the efficacy of manufacturing strategy alignment and process integration

In this paper, we examine how manufacturing strategic alignment and process integration affect manufacturing plant performance under two distinct environmental contexts presented by long-term macroeconomic instability. A large-scale dataset was specifically assembled for the purpose of this research investigation by combining plant-level survey data on practices and performance with secondary macroeconomic data for 14 countries from multiple sources. The results from multi-level regression analyses indicate that while manufacturing strategy alignment and process integration are beneficial for plant performance, they have distinct effects when the contingency factor, macroeconomic instability, is taken in consideration. Notably, when plants face high macroeconomic instability, process integration has a stronger effect on performance whereas in low instability environment manufacturing strategy alignment provides higher performance benefits. 

The findings have implications for managers in pointing out ways in which firms can successfully compete during times of recession. In particular, the study found that overly emphasizing the internal manufacturing alignment during recession could lead to opposite result than expected. Although, it could be a common policy to strengthen the internal alignment during recession, too much internal focus could lead firms to go far away from the requirements of the market. The study also offers practical insight regarding the lack of cost implication of manufacturing alignment during recession. The study finds no costs, delivery and flexibility benefit of alignment but negative impact of the same on quality performance. Hence, it would be important for the managers to re-consider the justification of investigating in alignment, especially during recessions. Recessions do not have a set start and conclusion time; hence, decisions about any questionable investment during recession can be detrimental to the future survivability of the firms.

On the other hand, the findings validate the need for process integration during economic instability. Supply and operation managers might hesitate to support processes integration due to initial negative impact on costs and popular negative news such as the cost overruns at Boeing and Airbus due to poor suppliers’ integration. However, the findings of this study highlight that process integration exerts a positive effect on all dimensions of performance when there is no recession, and provides higher quality, delivery and flexibility performance in the presence of economic recession (although cost performance does suffer). Hence, during recession, process integration efforts by firms present a trade-off between costs and other three operational performance factors. Moving the focus from internal alignment to external integration through improving real time information sharing with suppliers and customers will help firms identify the problems quickly and respond accordingly, especially during recession. It is also suggested by several studies that during recession, firms’ sole focus on cost cutting could be detrimental for brand image, future recovery and overall performance. Nonetheless, considering the range of practices required for supplier integration, such as, product/process integration, supplier involvement with new product development, joint decision making, and information sharing, the focal firms need to identify the priority areas for integration rather than integrating all aspects between the parties. To summarize, managers should not expect universal impact of recession on the manufacturing performance but should carefully consider the wide-ranging impact of the recession on the firm’s performance. This is in line with other contingency theory studies that found that contingency factors could have varied influence on manufacturing performance.

Internationalization of manufacturing is a growing trend necessitating a joint examination of international business and operations management issues. Our study aimed at finding the role played by organization-level and supply chain-level factors that impact perfor- mance under different environmental conditions, particularly as pre- sented by the severity of the recent Great Recession. The conceptual framework and the results of this study allow us to integrate these issues and show that careful attention to these factors is needed for manufacturing competitiveness. The organizational and supply chain factors have distinct performance implications. 

The Impact of Chain Organization Size on Efficiency and Quality of Affiliated Dialysis Facilities

In a recently published article we find that the size of chain organizations has a nonlinear effect on performance of dialysis facilities. Medium-sized chain organizations have lower efficiency and higher quality than smaller and larger chain organizations. 

The results call attention to being cognizant of the advantages and disadvantages of their growing size. Our study indicates that as chain organizations grow from a small size to an intermediate size, their efficiency drops and quality improves. We find that the efficiency bottoms out when chain organizations grow to have about 882 dialysis facilities whereas quality reaches its peak when the number of dialysis facilities in a chain organization reaches to about 796. After reaching these inflection points associated with efficiency and quality, facilities within the chain organizations become more efficient, but their quality levels suffer. This presents implications for decision makers to carefully think about the underlying mechanisms. The initial drop in efficiency as chain organization size increases may reflect the investments facilities affiliated with medium-sized chain organizations make when adding dialysis stations and personnel to address the demand growth. We conjecture that facilities affiliated with medium-sized chain organizations do not fully utilize their stations, thereby bringing down the efficiency. Their quality however increases, since staff in these medium-sized chain organizations has more time to give to each patient.

As chain organizations grow in size, it is likely that they see an increase in demand due to cross referrals among facilities within the chain. This increase in demand eventually provides the needed efficiency gains through economies of scale, but the associated deterioration in the quality of care raises concerns. It is possible that the approaches large chain organizations take to increase staff capacity, which differ from those taken by medium-sized chain organizations, could contribute towards deterioration in quality. Larger chain organizations tend to employ fewer registered nurses and licensed practical nurses as a percentage of their staff than medium-sized organizations. To offset the cost associated with staffing, large chain affiliated facilities employ higher levels of patient care technicians as compared to medium-sized chain organizations, which can lower their quality levels. As chain organizations grow, decision makers should appropriately manage the staffing patterns so as to avoid erosion of quality with a corresponding increase in efficiency.

To address both efficiency and quality performance, chain organizations should be strategic and develop appropriate coordination capabilities so that affiliated facilities can improve their quality while retaining efficiency gains through economies of scale. Technological innovations may make it easier to spread tacit knowledge pertaining to quality-oriented best practices. Opportunities for enabling interactions among people involved with clinical care, as well as nonclinical support services, can enhance learning and improve the quality of care. To facilitate quality improvement efforts, chain organizations can oversee the establishment of cross-disciplinary teams comprised of members from the affiliated dialysis facilities as well as the area manager from the chain organization. Organization-wide policies and procedures, including standards for clinical processes and quality improvement activities, should be widely communicated with affiliated dialysis facilities. Performance goals and objectives for dialysis facilities should be established and appropriate reporting structure of quality improvement initiatives and performance should be put in place. Chain organizations should provide feedback to affiliated facilities and, when needed, offer training and cross learning opportunities to the affiliated dialysis facilities.

For facilities within the chain organization, the results present implications for awareness of the influence of the contextual environment that chain organizations create. An independent facility has a better understanding and awareness of its resources and practices than facilities within chain organizations. Our results show that as these independent facilities join others to form a small- to medium-sized chain organization, they are able to improve quality but their efficiency suffers. The efficiency suffers, as these facilities have to coordinate efforts toward pooling their resources. As the size of chain organizations crosses a certain threshold level, the affiliated facilities gain economies of scale and increased demand, such that their efficiencies improve. However, they also witness growing heterogeneity and have difficulty managing the associated ambiguities, which have detrimental effects on their quality performance. An awareness of the changes in the environmental context and adoption of proactive adaptation measures, such as information exchange site visits to other affiliated facilities and training of staff members, can help manage efficiency and quality. Our results may be useful in other service settings beyond healthcare that have multiunit organizational forms, in that becoming part of a network, such as joining a chain organization, can have a positive or negative effect on efficiency and quality, depending on the size of the network.

Source: Dreyfus, D., Nair, A. and Talluri, S., 2020. The Impact of Chain Organization Size on Efficiency and Quality of Affiliated Facilities—Implications for Multi‐Unit Organizational Forms. Production and Operations Management, 29(7), 1605-1623

 

Gavi to make Parsyl’s quality assurance platform available in Uganda and Senegal to address last mile distribution challenge

Vaccine supply chain in Uganda 🇺🇬 and Senegal 🇸🇳 to be boosted by a partnership between @gavi and @ParsylHQhttps://t.co/zpsJbargCH#GotLife pic.twitter.com/X8vPHoKyDg

— Gavi (@gavi) January 25, 2019

Differential Impact of Network Size on Cost Performance for High and Low Quality Hospitals

In a recently published study my co-authors and I consider the deductive configuration perspective and distinguish high and low quality hospitals by using clinical and experiential quality as two dimensions of quality capability. We examine the impact of healthcare network size on operating costs of hospitals. Additionally, we investigate the interaction effect of hospital demand and healthcare network size on operating costs.  The results of this study show that quality laggards experience lower costs per day through their affiliation with larger healthcare networks, but experiential quality focusers and clinical quality focusers experience higher costs. In contrast to our hypothesis, affiliation with a large healthcare network does not adversely affect the operating costs of holistic quality leaders. We show that clinical quality focusers and holistic quality leaders can complement the effect of network size and hospital demand to reduce their operating costs. However, quality laggards and experiential quality focusers do not observe a reduction in their costs due to the complementary effects of network size and hospital demand. 

Our results offer important theoretical and managerial implications that we discuss next. Healthcare networks are becoming ubiquitous. Even distinct health systems that can either take the form of a diversified single hospital system or multi-hospital system comprising of two or more hospitals owned, leased, sponsored, or contract managed by a central organization are entering into network arrangements. By being part of a network quality laggards may gain additional patients, which helps in increasing their resource utilization levels. In addition, the ability to learn best practices from other hospitals in the network further helps in reducing their operating costs. The marginal cost for these hospitals to be part of a network is low. However, experiential quality focusers and clinical quality focusers face the challenge of coordinating with other hospitals in the network while at the same time maintaining their quality levels. While health systems have a central governance structure, health networks do not have this ability to exert centralized control for efficiency. Hence, operations of healthcare networks require hospitals to complement their network-based benefits with their demand. Holistic quality leaders are especially well positioned to gain this complementary benefit. The clinical process of care and the practices that are aimed at enhancing patient experience are synergistic. These quality leaders attract larger numbers of patients by their intrinsic quality characteristics and network effects; however, they stand in good stead to achieve demand-based utilization levels and reduce the coordination burden of affiliation with large healthcare networks.

Growth in hospital networks, healthcare demand, and experiential learning calls attention to a better understanding of the relationship between a hospital’s holistic quality profile and its ability to gain benefits from healthcare network. This research sheds some important insights in this domain. There has been increasing evidence suggesting that hospitals must carefully manage both clinical and experiential quality. By focusing on both clinical and experiential quality, unlike experiential quality focusers and clinical quality focusers, holistic quality leaders are not adversely affected by the size of their network. Our results suggest that experiential quality focusers and clinical quality focusers should either embrace holistic quality management or restrict the size of their networks to maintain their quality level and to reduce coordination costs. 

Project Structure and Buyer-supplier Collaboration Quality in New Product Development: A US-China Comparative Study

In a study my co-author and I study how the national context (the social system) interacts with the project structure (the technical system) in influencing buyer-supplier collaboration quality, an indicator of project-level effectiveness of inter-firm interactions. We further examined how structural deviation, the difference between the actual and ideal project structure, differentially influence collaboration quality in China and U.S. We tested the hypotheses using survey responses from 214 U.S. based and 212 China based buying companies. Due to their distinctive national cultures and economic ideologies, the two countries differ in their ideal project structures, the ones that lead to the highest level of collaboration quality. Our research model is as follows:

 

Results suggest that a formal project structure is only effective in enhancing buyer-supplier collaboration quality in the U.S. and not in China. Centralization hurts collaboration quality only in U.S. based projects. These results highlight the important and differential role played by the administrative structure for motivating collaborative behaviors in different national contexts. The task structure, characterized as task interdependence, does not play such a differentiating role as the results show it to be equally effective in improving buyer-supplier collaboration quality in both U.S. and Chinese NPD projects. Supporting the STS view, we also show that the ideal project structure, a result of the interaction between the social and technical systems, varies between U.S. and China. Specifically, the ideal project structure in U.S. is more formal and less centralized as compared to that in China. We also found some support for our prediction that the negative effect of structural deviation on collaboration quality is dampened by China’s national context. Below we discuss theoretical and managerial implications of these findings.

This study presents key insights for project managers about the relative importance of different aspects of the project structure in influencing the quality of buyer-supplier interactions. Compared to the task structure, the administrative structure has a more nationally-contingent impact in shaping buyer-supplier project interactions. Specifically, a formal and decentralized structure, though usually advocated by the project management literature, does not always lead to more effective project-level interactions, especially in countries with similar cultural and economic contexts as China. The significant association between task structure and collaboration quality in both countries suggests the importance of assigning interdependent tasks to each group for encouraging collaborative behaviors. This finding questions the traditional wisdom about outsourcing modular, rather than integral, tasks to external suppliers with the purpose of reducing transaction cost. Specifically, we show that task modularity, though reducing short-term transaction costs, might hurts the quality of inter-firm interactions, which limiting the dyad’s value creation potential. Overall, our findings suggest that project managers could encourage effective project-level collaborations by creating mutually dependent tasks involving both buyer and supplier sub-groups.

Results from this study point to the importance of considering the national context when structuring an interorganizational team. Testing the conceptual model in two culturally distinct countries, China and the U.S., reveals varying effects of project structures on collaboration quality. The comparison between U.S. and China presents two culturally distinct nations who are playing important role in the emerging global product development initiatives. While U.S. has always been a leader in NPD, China is increasingly displaying its product development capabilities. The findings from this study have direct implications for project managers who are in charge of NPD teams in these two countries. Specifically, a formal and decentralized inter-group structure is found to be more effective in enhancing collaboration quality in the U.S. than in China, while task interdependence is equally effective in promoting inter-group collaboration in China and in the U.S. Thus, when initiating interorganizational product development efforts in the global context, project managers are advised to consider the impact of the national culture and economic ideology of different locations in order to cultivate a high-quality collaboration process. By revealing country-level contingency effects evidenced in Chinese and the U.S. based NPD projects, this study shows the inappropriateness of a “one-size-fits-all” approach when structuring NPD teams globally.

The stronger negative effect of structural deviation in the U.S., as compared to China, also has managerial implications. In low-context cultures, such as the U.S., project manages need to pay more attention to identify and stick to the ideal project structure because deviating from it adversely impacts collaboration quality. As shown in this study, the ideal project structure should be congruent with social values held by project members. Such structure-value congruence motivates collaborative behaviors among project members. In contrast, managerial efforts of ensuring maximum conformance to the ideal project structure are less rewarding in high-context cultures, such as China, where negative effect of divergence from the ideal-state is partly mitigated by cultural ethos that dominate public life beyond NPD projects. In such high-context cultures, rather than solely relying on the governance of the ideal project structure, project managers need to understand the implicit rules and unspoken protocols embedded within the cultural ethos in order to cultivate a high-quality collaboration process.

Source: Yan, T. and Nair, A. 2015. Project Structure and Buyer-supplier Collaboration Quality in New Product Development: A US-China Comparative Study. Unpublished manuscript.

Buyer-supplier network structure and product architecture

In a study my co-authors and I investigate the contingent role of product architecture on the relationship between buyer-supplier network structure and product quality. The hypotheses are tested on a combination of primary and secondary data from the North American automobile industry. The results suggest that correspondence between buyer-supplier networks and product architecture networks may not be conducive for product quality. While buyer network density (or tight coupling) is better suited for improving the product quality of modular systems, buyer network centrality (or loose coupling) is better suited for improving the product quality of integral systems. The implication is that greater information sharing between buyers and suppliers is more likely to improve product performance of modular products as compared to integral products.

To test our hypotheses, we assembled data using a combination of archival and primary sources. We focus on firm-system as the unit of analysis. This choice was guided by the observation that there is considerable variation in the composition of supplier networks for different systems of a given firm. We collected data on buyer-supplier links for twelve vehicle systems in 2010. The systems we examine are as follows: transmission, major engine system, engine cooling, suspension, drive systems, exhaust, electrical, power equipment, body hardware, braking system, climate system and fuel system. We focus on these 12 vehicle systems instead of more disaggregate subsystems or vehicle components to keep the functional interactions or dependencies tractable (Novak and Eppinger 2001, Gokpinar et al. 2010). Additionally, a practical consideration was that data on product quality are available at the vehicle system level but not at the subsystem level. We identify suppliers of thirteen automobile manufacturers with significant operations in North America (BMW, Chrysler, Ford, General Motors, Honda, Hyundai, Kia, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Subaru and Toyota). The thirteen auto manufacturers accounted for approximately 85 percent of vehicles sold in North America. The data collection efforts yielded a total of 964 unique suppliers for 13 automobile firms and 12,667 unique B-S relationships. The following figure presents an illustrative supply network for the electrical system network comprising of 3,656 ties between 507 entities (13 automakers and 494 suppliers).

 

The data on quality of auto manufacturer’s vehicle systems for 2011 was assembled from Consumer Reports. There are two important issues to be considered in matching B-S relationships with quality outcomes. First, data on B-S relationships was available at the ‘automaker-vehicle system’ level whereas data on product quality is at the ‘model-vehicle system’ level. For example, consider the case of Subaru of America, the automaker. While we constructed the supplier network for Subaru, the quality data is available at the model level (e.g., Outback, Legacy) of Subaru. We aggregated model-level quality by weighting on model sales to construct the automaker’s quality for a vehicle system. Second, we only included suppliers of models that were manufactured in North America. For example, Subaru of America manufactured three of its five models (i.e., Outback, Legacy and Tribeca) in its North American assembly plants. We identified suppliers of these three models of Subaru and excluded suppliers of two manufactured outside North America. Likewise, we aggregated product quality for Subaru by using sales weights for the three models manufactured in North America.

We relied on primary data sources to operationalize the Strength of Design Interface (SDI) variable. We conducted 31 in-depth interviews with product and design engineers in automobile and supplier firms to gauge the dependencies between various systems in a vehicle. The in-depth interviews lasted approximately 90 minutes in duration. The experts participating in the survey were employed at General Motors (USA and India), Ford, Chrysler, Honda, Toyota, BMW, Porsche, Hyundai (USA and South Korea), Aisin (USA), Bosch (USA and South Korea), Cummins, Denso, Mando, SAIC Motors, Maruti (India) and Ashok Leyland (India) and had, on average, approximately 13 years of experience in automotive design. To assess SDI, we asked product and design engineers to evaluate the degree of information, spatial, structural, material and energy dependencies between vehicle systems (see ‘Measures Section’ for details on the questionnaire items). We also asked these experts whether the level of dependency criticality and absolute criticality of systems vary across major automakers. All but one expert indicated that dependencies do not vary across automakers. In other words, the strength of the design interface is system-specific and is not contingent on the automobile manufacturer.

We also collected data on several supplier and buyer characteristics. Data on the size of the supplier’s plants (in square feet), distance in miles between the supplier and auto manufacturer, the union status of suppliers, and quality awards of supplier were obtained from ELM Analytics. We also collected data on buyer characteristics such as sales from the Ward’s Automotive Yearbook and R&D expenditures from COMPUSTAT and annual company reports.

A test of our hypotheses requires a close alignment between the theory, measures and the empirical model. We model the impact of buyer-supplier network characteristics in time period ‘t-1’ on product quality in time period ‘t’. The temporal separation facilitates a more confident interpretation of the quality consequences of B-S network structure. Our final dataset for empirical analyses is comprised of 156 firm-system observations (13 makes x 12 systems). The B-S network characteristics and control variables are for 2010 and product quality data is for 2011.

Our findings show that buyers in dense networks experience better product quality outcomes compared to buyers that are centrally located. We find that integral systems have higher quality compared to modular systems. More importantly, our results reveal that buyer network density enhances the quality of modular systems to a greater extent compared to integral systems. On the other hand, a central position for buyers is beneficial for improving product quality for integral systems than for modular systems. 

The findings of this study offer numerous valuable insights for managerial practice. In recent years, there has been increased emphasis on improving supply chain performance. The emphasis has been on using concepts such as modularization, flexible and lean manufacturing to boost performance. Despite such advances, the poor performance of supply chains, as evidenced in growing number of product recalls in the marketplace, continues to frustrate and disenchant managers. Our findings caution managers to refrain from viewing network density as beneficial and network centrality as detrimental to quality. Our findings, instead, point to the need to evaluate the normative B-S network structure in conjunction with the architecture of the product. We performed a univariate transfer function analysis to understand the economic value added by matching buyer-supplier network structure and product architecture. We computed the direct impact of changes in automakers’ network density and network centrality on product quality for high and low levels of SDI. The high and low levels for buyer network density, buyer network centrality and SDI are set at the 90th and 10th percentiles. To compute the dollar impact of change in product quality, we turn to previous research that has assessed the shareholder value impact of product quality. Tellis and Johnson (2007) note that increasing product quality from 10^th percentile to 90^th percentile value leads to a 9.35% increase in shareholder wealth. The average market capitalization of publicly traded automobile firms in our sample is $73.37 billion. In our sample, this translates to an increase of $6.86 billion. The difference in product quality between 90^th and 10^th percentile in our sample is 1.87 points. Thus, a one point increase in product quality corresponds to an increase in market capitalization of $3.67 billion.

Our post-hoc analyses reveal that if buyer network density is increased from the 10^th percentile to the 90^th percentile, there is significant increase in product quality for low SDI systems relative to high SDI systems (difference in quality = 0.11 points). That is, when buyer network density is increased, there is a greater increase in product quality for modular systems than for integral systems. The total economic value created when buyer network density is aligned with modular systems is $403.56 million. Although dense networks are costly to maintain because of intensive information sharing, our post-hoc analyses reveal that buyers could harness considerable economic value from dense ties by aligning it with the appropriate product architecture. Similarly, if buyer network centrality is increased from the 10^th percentile to the 90^th percentile, there is significantly greater increase in product quality for high SDI (system design interface) systems relative to low SDI systems (diff = 0.05 point change). Correspondingly, there is greater increase in shareholder wealth at high levels of SDI than at low levels of SDI. The total economic value created when buyer network centrality is aligned with integral systems is $183.43 million.

Source: Kalaignanam, K., Kushwaha, T. and Nair, A., 2015, January. Buyer-supplier network structure and product architecture. In Academy of Management Proceedings (Vol. 2015, No. 1, p. 13626). Academy of Management.

Six Sigma Quality Innovation & Organizational Theory Typology

Implementations of Six Sigma quality innovation (SSQI) have resulted in performance benefits for several leading firms. While SSQI has its roots in the foundations of Total Quality Management (TQM) and ISO 9000 certification, it presents a set of unique organizational practices and ideas that provide an opportunity for interesting and important investigations of relevance to operations and supply chain management. With a few notable exceptions, the academic literature in operations management has not given sufficient attention to various aspects of SSQI. In a paper, my co-author and I identify some potential areas for future research and develop research questions pertaining to these areas. We call for theory-driven investigations by presenting the organization theory typology as a framework for linking SSQI research issues with appropriate theoretical perspectives. Using the unit of analysis and the various perspectives for managerial action as a basis, the typology presents six categories of organization theories. The typology provides a convenient basis for categorizing the research issues in SSQI based on their underlying theoretical rationale. We use the linkages between the research issues in SSQI and the theoretical perspectives to develop research propositions that could potentially aid and instigate theory-driven research studies in quality innovation.

The following figure positions research issues pertaining to SSQI in the organization theory typology:

Source: Narasimhan, R., Nair, A. 2015. “Towards a Theory-Driven Research Agenda in Six Sigma Quality Innovation: Linking Research Opportunities with Organization Theory Typology,” International Journal of Quality Innovation, 1:5.

ISO 9000 practices and the Development of Intellectual Capital

In a recent paper my co-authors and I investigate the relationship between internalization of ISO 9000 practices and the development of intellectual capital within organizations. We posit that intellectual capital, which comprises of human capital, organizational capital, and social capital, leads to improved processes in an organization. Process improvement, in turn, results in superior operational performance.The research model is as follows:

Using a sample of 321 ISO 9001 certified organizations, the hypothesized relationships are tested by means of the structural equation modeling technique. The results of this study show that performance benefits from the internalization of ISO 9000 standards occurs mainly through the development of human and organizational capital, and the consequent improvement in business processes. 

The results of this study show that We show how continuous improvement initiatives in the ISO 9000 internalization process result in enhanced use of information to improve products and processes as well as in development of human capital. Internalization of ISO 9000 initiates training and development programs for the workforce, and documentation and storage requirements for the knowledge dissemination throughout the organization. As a result, the organization becomes a medium of proficient knowledge sharing and socialization of the competent employees. These factors enable the firm to move toward superior performance. This indicates that managers should focus on internalization of ISO standards instead of merely aiming for ISO 9000 certification. This helps in boosting confidence of employees and enhancing their effectiveness in performing tasks. It also results in more consistency in terms of the way various activities are performed within an organization.

Knowledge management practices resulting from internalization of ISO 9000 standards create norms and procedures as to how the knowledge is stored and disseminated in the organization. The employees refer to the codebooks, which are basically the stored knowledge, and rely on each other to achieve
process improvement. Effective development of organizational and human resource capabilities with the help of internalized ISO 9000 standards enable an organization to outcompete other firms. This study shows that the implementation of ISO 9000 is not simply about complying with the requirements and attaining the certification; rather, it is concerned with the intellectual structure of the firm.

Understanding this issue represents a real step forward in developing capabilities since the focus is now on the effectiveness of the quality system for the entire organization as against solely the “conformance” of processes to the prescriptions of ISO 9000 standards. A quality management system, such as ISO 9000 standards, must be focused on internalizing knowledge about processes and the steps needed for process improvement as against merely on compliance to set procedures. Therefore, while ISO 9000 certification does not provide competitive value on its own due to its imitability, the internalization process provides a good platform for intellectual capital building, if managed properly.

In conjunction with the aforementioned point, the findings of the study point to the need for balancing knowledge with competent workforce within the quality management system as both human resources and knowledge storage devices, routines and emergent network structures are potential assets for organizations. Given the differences in their nature, each of these types of assets will require unique kinds of investments. The findings of this study emphasize the importance of building
complementarities mainly between organizational capital and human capital, which will together produce more effective and unique capabilities for organizations.

Source: Ataseven, C., Prajogo, D., Nair, A. (2014). “ISO 9000 Internalization and Organizational Commitment - Implications for Process Improvement and Operational Performance.” IEEE Transactions on Engineering Management, 61(1), 5-17.

Quality and Flexibility in Cardiology Units

In a recently published article my co-authors and I examine the association of clinical quality and clinical flexibility capabilities on cardiology unit length of stay and cost performance. These relate to the operational performance of cardiology units and capture the timeliness and cost efficiency of cardiac care. We also investigate the complementary role played by the experiential quality in enhancing the impact of clinical quality and clinical flexibility on operational performance measure. Experiential quality relates to patient-centered delivery of care by a hospital. We collect and combine data for 876 U.S. hospitals from four distinct sources and undertake multi-level analyses that consider a hierarchical structure in which the hospital is nested within county and state. To disentangle the effects at the levels of states, counties, and hospitals, we use the mixed-effects modeling approach.The research model is as shown below:

The results obtained from econometric analyses indicate that clinical quality and clinical flexibility reduce cardiology unit average length of stay. Clinical flexibility also helps in reducing the average cost of cardiology units. Experiential quality moderates the impact of clinical quality on length of stay and plays a complementary role in the relationship between clinical flexibility and cost.

The findings of this study present implications for structuring processes and allocating resources in hospitals. It is important to ensure that hospitals supplement their clinical quality and flexibility capabilities with personalized attention to patient needs. Facets such as empathy and consideration for patients’ situation, and room environment play important role in providing patient-centered care. The results highlight the complementary role of these facets, referred to as experiential quality capability, in enhancing the impact of clinical quality and flexibility capabilities on cardiology unit operational performance. Hospitals are operating in a very different environment compared to the 1990s. During these earlier times a significant portion of hospital costs were fixed. There was sufficient capacity and the per-diem revenue earned by increasing patients’ length of stay was higher than the variable costs to provide healthcare. In today’s environment, many hospitals are facing capacity constraints since the decline in managed care utilization management and aging demographics have increased demand. Furthermore, the fixed per diem contracts are also much less prevalent in many markets. Our results show that a holistic management of clinical quality, clinical flexibility, and experiential quality capabilities can make cardiology units better equipped to cope with these changed circumstances by reducing length of stay and costs.

The results of our study present implications for setting up multidisciplinary clinical business units comprised of various services and different functional representatives such as the physician, the nurse, the pharmacist, the radiologist, and the manager. This enables gaining complementary benefits of clinical quality, clinical flexibility, and experiential quality capabilities. Multiple services within a clinical unit help in effectively managing co-morbidities, such that a patient can be moved to different sub-divisions within the clinical unit depending upon their prevailing conditions. Team members with varying perspectives on healthcare could jointly review clinical condition of patients, patient and staff satisfaction data, and operational performance measures within the unit. This team approach results in improved communication among various members, which in turn provides ongoing interdisciplinary education, better coordination of care for patients, and concurrent data feedback. The team-based efforts and open lines of communication with patients could also aid in incorporating evidence-based best practices, which enables audit with feedback such that a summary of the clinical performance of healthcare over a time interval is maintained and is then communicated back to practitioners.

Recognizing the importance of healthcare quality and to facilitate a broader understanding among healthcare providers, consumers and policy makers, the Institute of Medicine offered the following definition: “Quality of care is the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.” The definition proposed by the Institute of Medicine clarifies the meaning of healthcare quality, yet several of the aspects referred in the definition could vary considerably depending on whether one considers the point of view of the healthcare providers or that of the patients. For instance, “desired health outcomes” refers to the accuracy of diagnoses and the effectiveness of treatments in producing health, but providers and patients could have varying perspectives regarding this aspect of healthcare. While providers would consider the clinical aspect of healthcare quality (i.e., type of medical equipment used, the use of healthcare techniques, etc.), patients would form opinions based on overall perception of the healthcare experience. Similarly, the aspect of “current professional knowledge” could vary substantially since healthcare service providers differ in their level and type of training. This difference could intensify depending on the range of related services, type of medical equipment, and techniques that providers use for healthcare. The national debate about healthcare often emphasizes inefficient processes, rising costs, and variations in quality. The necessity of satisfying the needs of various stakeholders (healthcare providers and patients) makes it obligatory to look more carefully into the key factors that influence healthcare operational performance. A holistic consideration of quality and flexibility capabilities is important in order to deliver on the promise of improving healthcare. In this study we establish the distinct role played by cardiology unit clinical quality and clinical flexibility in improving adjusted average length of stay and adjusted average cost performance. The results of this study shed important light into distinguishing these capabilities and highlighting how these capabilities improve operational performance.

Disparities in cardiovascular health across geographic locations are well documented. These disparities manifest in the form of healthcare challenges and access barriers, and pose one of the most serious public health problems. Socio-economic factors, such as unemployment, poverty, low educational level, and income inequality, also vary across geographic locations and contribute towards cardiovascular health disparities. Although there have been remarkable declines in cardiovascular mortality observed nationally over the last three decades, the disparities across population subgroups and geography are widening. In fact, Healthy People 2020 national public health agenda8 includes the elimination of these disparities as one of its goals. Our multi-level investigation in which the effects of state and county manifest at different levels accounts for disparities associated with complex environmental conditions within which hospitals operate.

Source: Nair, A., Nicolae, M., Narasimhan, R. (2013). “Examining the impact of clinical quality and clinical flexibility on cardiology unit performance - Does experiential quality act as a specialized complementary asset?” Journal of Operations Management, 31(7-8), 505-522.