The Performance Impact of Business Process Standardization
The Performance Impact of Business Process Standardization
www.emeraldinsight.com/1463-7154.htm
                                                                                                                          Performance
  The performance impact of                                                                                             impact of BPS
business process standardization
                      An empirical evaluation of
                       the recruitment process                                                                                                 29
                                   Björn Münstermann
  Department of Information Systems and Services, University of Bamberg,
                           Bamberg, Germany
                                     Andreas Eckhardt
Institute of Information Systems, University of Frankfurt, Frankfurt am Main,
                                Germany, and
                                          Tim Weitzel
  Department of Information Systems and Services, University of Bamberg,
                           Bamberg, Germany
Abstract
Purpose – The purpose of this paper is to show if business process standardization (BPS) has an
impact on business process performance and should be considered as both a valid business process
management (BPM) measure and a regular driver of process success.
Design/methodology/approach – An empirical analysis based on data from 156 firms is used to
evaluate the hypothesis that process standardization positively impacts business process time, cost,
and quality.
Findings – First, the paper proposes a model and empirical operationalization to analyze the impact
of process standardization on process performance. Second, empirical analysis shows that BPS has
a decisive impact on process performance (R 2 ¼ 61.9 percent). Precisely, there is a significant impact
on process time, cost, and most notably on quality. The results indicate that the impact is strongest in
services firms and varies subject to a firm’s strategy type.
Practical implications – The results suggest that BPS should regularly be considered a prime
action item and major tool in a firm’s BPM toolbox.
Originality/value – The paper is among the first to empirically show the vital impact of process
standardization on performance. For academics and practitioners interested in BPM and the value
impact of processes, the results suggest adding process standardization as a regular argument into
research on and management of business processes.
Keywords Business process re-engineering, Standardization, Process management, Recruitment
Paper type Research paper
1. Introduction
An important management question is how to enhance the performance of a company’s
business processes. Over the past few decades, firms have increasingly structured their                                Business Process Management
activities along end-to-end business processes and the “process-centric” perspective of                                                        Journal
                                                                                                                                   Vol. 16 No. 1, 2010
a company’s activities became prevalent (Tallon et al., 2000; Barua et al., 1995;                                                            pp. 29-56
Kettinger et al., 1997; Skrinjar et al., 2008; Goldkuhl and Lind, 2008). One possible level                        q Emerald Group Publishing Limited
                                                                                                                                            1463-7154
to increase the performance of a given business process is “process standardization.”                                 DOI 10.1108/14637151011017930
BPMJ   Accordingly, process standardization is receiving increased academic and practitioner
16,1   attention. Venkatesh (2006), for example, identifies “process standardization” as one
       of three “broad future research directions.” An impressive number of recently
       published papers on process standardization shows the associated relevance
       (Sánchez-Rodrı́guez et al., 2006; Bala and Venkatesh, 2007; Wuellenweber and
       Weitzel, 2007; von Stetten et al., 2008; Muenstermann and Weitzel, 2008).
30         From a practitioner perspective, attention is largely aimed at huge cost-saving
       opportunities through process standardization – as a recent Computer Weekly headline
       (Hadfield, 2007) impressively illustrates:
          BP Retail expects to save up to £600 m over the next few years by standardizing business
          processes and IT systems at all of its petrol stations around the world.
       But besides cost savings, process standardization as a tool of business process
       management (BPM) can offer further value. Swaminathan (2001) demonstrates “better
       operative process performance through business process standardization” and argues
       further that “process standardization provides immense benefits.” Ramakumar and
       Cooper (2004) declare that “process standardization proves profitable” while
       Wuellenweber et al. (2008) suggest that process standardization also increases
       transparency and controllability.
          Unfortunately to date and to our best knowledge, no stringent empirical exploration
       of the impact of process standardization on process performance exists. Therefore, in
       this paper, we aim at answering the research question:
          RQ. What is the impact of process standardization on process performance?
       We suggest that a better understanding of the impact of process standardization
       on process performance might benefit business process research, standardization
       research, and BPM practice alike by providing a new perspective on how and why
       particular process standards are developed and used (de Vries, 1999) with the eventual
       goal to theoretically link research on business process optimization to business value
       research (Melville et al., 2004; Balasubramanian and Gupta, 2005).
          To explore the relationship between process standardization and process
       performance and to evaluate if this research area warrants more extensive research,
       we develop (Section 2) and empirically evaluate (Section 3) a model of the impact of
       process standardization on process performance using data from 156 firms. The paper
       closes with a discussion of the results, potential limitations and possible areas of further
       research (Section 4).
       2. Research model
       2.1 Process standardization
       Starting with a definition of “business process” as the object to be standardized, we
       follow one of the most common definitions given by Davenport and Short (1990). They
       define “business process” as a “set of logically related tasks performed to achieve a
       defined business outcome.”
           It is, to a considerable degree, more difficult to approach “standard,”, respectively,
       “standardization.” The probably most common definition has been given by ISO
       (1996):
   Standards are documents, established by consensus and approved by a recognized body that              Performance
   provides, for common and repeated use, rules, guidelines or characteristics for activities or
   their results, aimed at the achievement of the optimum degree of order in a given context.          impact of BPS
Other authors like de Vries (2006) go in even more detail when defining “standard”
and “standardization.” Lyytinen and King (2006) highlight the importance of
standardization but complain about an alarming lack of research on it:
                                                                                                                 31
   Despite the importance of standardization, the IS field has not pursued research on it
   vigorously. Scholarly discussions are rare, and strong contributions are lacking. [. . .] Notably
   absent are studies of standardization concepts, processes, the impact of ICT standards on
   industrial coordination and strategy, or the economics of ICT standards.
Combining the definitions of “business process” and “standard” and trying to approach
“process standardization” now – again as before – several authors diagnose a lack of
fitting literature: von Stetten et al. (2008) point out, that:
   [. . .] there is not much relevant literature to be found. Although some ideas can be borrowed
   from the rich business process improvement literature from the nineties, only a very limited
   number of papers exist treating “business process standardization” solely.
Ungan (2006) points out that “despite its great attractiveness, academics’ and
practitioners’ work on process standardization is conspicuously absent.”
   The work of Muenstermann and Weitzel (2008) in contrast provides a first
proposal of how to define a measurement construct for “process standardization.”
Wuellenweber et al. (2008) define “the objective of [process] standardization” as “to make
process activities transparent and achieve uniformity of process activities across the
value chain and across firm boundaries.” Shaw et al. (2007) further define “process
standardization as a means to change business processes from where they are to a
standard business process” and “focus on a meta process: the process of changing a
process.”
   For this paper, we restrict our research to a purely inner-organizational
understanding of process standardization and aim at investigating the effect of
inner-organizational process standardization on process performance. For this purpose,
we define “process standardization” as the unification of variants of a given business
process by aligning the variants against an archetype process. The archetype process
against which the process variants are aligned can either be created or selected within
the focal firm or be based on/adopted from an existing external reference/best in class
process[1].
Benefit Description
2.3 Extended model: impact of process standardization on process time, cost, and quality
To refine the consideration of the impact of process standardization on process
performance, we expand the dependent variable process performance along the more
detailed process performance success dimensions process time, cost, and quality
following authors like Wagner (2006) or Mooney et al. (1996)[2]. This perspective leads
us to three hypotheses (H1-H3) in Table II.
    Figure 2 shows the research model resulting corresponding to H1-H3 which are
elaborated in the following.
    2.3.1 Positive effect of process standardization on business process time. We expect a
positive effect of process standardization on business process time where business
process time indicates the total time elapsed to produce a product or to deliver a
service, respectively, along the process (sub)-activities from the beginning to the end
of the process.
    The first argument to theoretically derive the positive effect of process
standardization on business process time is that a standardized business process is
simpler to perform or operate than a non-standardized business process and
consequently can be operated with less cycle time. In a first step process,
standardization makes it simpler to perform a given business process by reducing the
overall process diversity/variance (Hesser et al., 2006; Lillrank and Liukko, 2004)
Hypothesis Section
34
                                                        Process       H2 (+)
                                                                                    Process cost
                                                    standardization
Figure 2.
Extended research model                                               H3 (+)
for the impact of process
                                                                                   Process quality
standardization on process
time, cost, and quality
Jayaram and Vickery (1998)   “Clearly, standardization simplifies, thus engendering cycle time
                             reduction”
                             “Standardization can also create focused expertise with materials and
                             processes to a point where it is much easier to identify sources of delay,
                             unnecessary steps and opportunities for parallelism”
Ungan (2006) and Siha and    Process documentation is an essential part of process standardization
Saad (2008)                  since “process documents must be created to standardize a process”
                             and therefore are “important tools to standardize a process”
                             Providing six case studies Siha and Saad deduce significant process
                             cycle time reductions from extensive process documentation
                             Consequently, process standardization via its part process
                             documentation leads to significant cycle time reductions
Jayaram et al. (2000)        “Process improvement also directly influenced supply-chain time
                             performance”
                             “Each of the three process improvement variables also influenced
                             some aspect of supply-chain time-based performance. Standardization
                             being the most influential enabler affecting delivery speed and
                             responsiveness to customer’s performance”
                             “Specifically, the IT factor along with process improvement variables
                             (standardization and concurrent engineering) had a complementary
                             and significant positive influence on time-based performance”
Manrodt and Vitasek (2004)   “Employees consistently echoed the belief that the business had
                             created a common methodology that fosters an environment for
                             collaboration and process standardization. Results of this effort were
                             identified in several areas. [. . .]                                                   Table III.
                             For instance [. . .]                                                         Overview of literature
                                61% reduction in order turnaround time”                                          supporting H1
BPMJ   to operational efficiency or improved operational performance, which then leads to
16,1   reduced process cost.
           Beimborn et al. (2009) summarize the underlying reasons saying that “process
       standardization within a firm can improve operational performance and reduce
       processing costs by eliminating errors, by achieving economies of scale, and by
       facilitating communication.”
36         Looking into the drivers that lead to reduce business process cost when performing
       process standardization in more detail, Wuellenweber et al. (2008) add “decreasing
       process errors, facilitating communication, or just profiting from expert knowledge” as
       contributing drivers.
           With regard to a company’s procurement process as Sánchez-Rodrı́guez et al. (2006)
       cite Bennett (1982), it was clear already that “standardization of purchasing procedures
       could also be a potential point of cost savings for companies.” Sánchez-Rodrı́guez et al.
       empirically substantiate Bennett’s supposition and find a positive effect of
       standardization in purchasing over purchasing performance on production cost.
           Process standardization facilitates communication about how the business as a whole
       and subdivided into its business processes operates (Davenport, 2005; Ramakumar and
       Cooper, 2004). The easier, it is to communicate about the ways in which a business as a
       whole and subdivided into its processes works, the easier it is for the working employees
       to acquire a profound understanding of the business process at hand. Following the
       argumentation of Manrodt and Vitasek (2004), “a greater understanding of how benefits
       were delivered to the customer” leads “to overall corporate savings by reducing waste
       and redundancy”. We thus expect process standardization to reduce business process
       cost due to the fact that it first leads to a profound understanding of the business process,
       which then implies cost reductions.
           Another argument that contributes to H1 is that process standardization can enable
       headcount reductions. For example, van Wessel et al. (2006) investigate the “effects of
       IS standardization on business process performance” using a human resource (HR)
       information systems (IS) case study in which HR processes are standardized. They find
       significantly reduced process cost due to the possibility to decrease the number of
       employees after having standardized the HR process.
           Similarly but focusing on cost-reduction potential on the information technology
       (IT) side of business processes, van Wessel et al. (2006) reason that process
       standardization gives rise to the “decommissioning of legacy HR systems” which in
       most cases goes along with significant cost reductions.
           Within the same in-depth case study as cited in the previous section (Section 2.3.1)
       Manrodt and Vitasek (2004) provide evidence for significant business process cost
       reductions caused by a 64 percent reduction in working capital and 35 percent
       reduction in inventory cost.
           Considering the three previous arguments in unison, we hypothesize that process
       standardization leads to reduced business process cost by the possibility to reduce the
       number of employees necessary to operate the standardized process, by the possibility
       to decommission legacy IT systems that the standardized process does not require
       anymore as well as by reducing working capital and inventory cost made possible by
       having standardized the business process.
           Drawing on the statistical theory of variation (STV) developed by Shewhart (1931)
       and expanded by Deming (1986), one finds another argument contributory
to the generation of this section’s hypothesis. Following the STV, each business                           Performance
process exhibits variation, which leads to deviation from targets and thereby can be                     impact of BPS
associated with a loss function, which quantifies the costs necessary to reduce the
variation. The more intensive the variation observed the higher the costs to reduce it.
In this regard, understanding process standardization as a means to reduce variation
or to at least reduce the degree of variation emerging, we hypothesize that process
standardization has a positive effect on business process cost.                                                           37
   Summing up all the preceding arguments, we hypothesize H2 (as summarized in
Table IV):
   H2. Process standardization is positively associated with business process cost,
       i.e. reduces process cost.
2.3.3 Positive effect of process standardization on business process quality. We propose
a positive effect of process standardization on business process quality, where
business process quality indicates the quality of the products (in manufacturing
Beimborn et al. (2009)     “Process standardization within a firm can improve operational
                           performance and reduce processing costs by eliminating errors, by
                           achieving economies of scale, and by facilitating communication”
Wuellenweber et al. (2008) “Standardization of business processes aims at improving operational
                           performance and reducing costs by decreasing process errors, facilitating
                           communication, or just profiting from expert knowledge”
Sánchez-Rodrı́guez et al. Empirical substantiation of the positive effect of standardization in
(2006)                     purchasing over purchasing performance on production cost
Manrodt and Vitasek        “First, a greater understanding of how benefits were delivered to the
(2004)                     customer was identified. This led to overall corporate savings by reducing
                           waste and redundancy”
                           “For instance [. . .]
                              64% reduction in working capital
                              35% reduction in inventory costs”
van Wessel et al. (2006)   Investigating the “effects of IS standardization on business process
                           performance” using a HR IS case study in which HR processes are
                           standardized van Wessel et al. find “reduced costs” because of a “reduction
                           in HR staff” and “decommissioning of legacy HR systems”
Davenport et al. (2004)    In the IT-driven process standardization situation where indeed the initial
                           implementation of a new enterprise system requires a significant
                           investment, the mid- to long-term business case still promises to be
                           positive due to continuously refined, optimized and standardized
                           processes (enabled by the enterprise systems implementation)
Lillrank and Liukko        “The statistical theory of variation, developed by Shewhart [(Shewhart,
(2004)                     1931)] and expanded and popularized by Deming [(Deming, 1986)], is
                           based on the insights that all processes exhibit variation, variation leads
                           to deviation from targets and is the primary cause of poor quality,
                           variation is associated with a loss function: when an actual manufacturing
                           step produces a value that deviates from the target, costs in terms of
                           rejection or trouble later in the process are incurred.”                                Table IV.
                           Consequently, standardization seen as reducing variation reduces process      Overview of literature
                           cost                                                                                 supporting H2
BPMJ   industries), respectively, the quality of services (in service delivering industries) that
16,1   are produced by the business process at hand. Business process quality can, for example,
       be measured as the value of percentage defective or of defects per 100 products,
       respectively, services produced by the business process at hand.
          Similar to the first argument in the previous section (Section 2.3.2), the first and
       probably most generic argument to derive the positive effect of process standardization
38     on business process quality is that process standardization leads to operational
       excellence or improved operational performance, which then directly leads to higher
       business process quality.
          Ramakumar and Cooper (2004) investigate how to ensure “near defect-free
       products” and high-overall process quality in times of globalization and increasingly
       complex value chains, where companies “may have more than 100 operating plants
       and design locations.” They recommend the implementation of a centralized quality
       management, which according to their findings can be established by:
          .
             standardizing the respective processes; and
          .
             implementing consistent corporate-wide visible key quality metrics.
       In their eyes, “to achieve operational excellence [. . .] in a global value chain process
       standardization is critical.” Hence, process standardization is an essential measure to
       enhance both process and product quality.
          Looking into the drivers that lead to higher business process quality when
       performing process standardization in more detail, van Wessel et al. (2006) in the same
       HR IS case study, again list “consistent and timely management reporting” and
       “improved HR data” as contributing drivers. According to them, the better the
       management of an organization is informed about a business process using improved
       data about the business process’ characteristics, the more it is able to take the right
       actions at the right time and thereby improving business process quality. Therefore, we
       hypothesize that process standardization leads to higher business process quality.
          Further, Kondo (2000) emphasizes:
          [. . .] the necessity and importance of standardization [. . .] of work itself [. . .] in order to ensure
          the product and service quality by documenting the work flow, issuing the work standards as
          to the means and methods and working in accordance with the standards,
       and thereby supports the reasonableness of our hypothesis.
          Finally, referring to the theory of statistical variation again (Section 2.3.2), Lillrank
       and Liukko (2004) formulate that “variation leads to deviation from targets and is
       the primary cause of poor quality.” Hence, understanding process standardization
       as in the previous section as a means to reduce process variation, we expect process
       standardization to positively affect business process quality.
          Synthesizing the preceding arguments, we hypothesize H3 (as summarized in
       Table V):
          H3. Process standardization is positively associated with business process
              quality, i.e. increases process quality.
       The following section introduces the particular process observed and outlines its
       adequacy to analyze the impact of business process standardization (BPS) on process
       performance determinants.
                                                                                                             Performance
References                 Key finding
                                                                                                           impact of BPS
Ramakumar and Cooper       Implementation of centralized quality management of which process
(2004)                     standardization is one out of two key ingredients to enhance process and
                           product quality
                              “To achieve operational excellence [. . .] in a global value chain process
                              standardization is critical”                                                                  39
                              “enforce process standardization with the ultimate goal of producing
                              near defect-free products”
van Wessel et al. (2006)   Investigating the “effects of IS standardization on business process
                           performance” using a HR IS case study in which HR processes are
                           standardized van Wessel et al. find “improved quality” because of
                           “consistent and timely management reporting” and “improved HR data”
Kondo (2000)               “The coming twenty-first century is foreseen as the century of quality”
                           “The necessity and importance of standardization [. . .] of work itself have
                           been emphasized in order to ensure the product and service quality by
                           documenting the work flow, issuing the work standards as to the means
                           and methods and working in accordance with the standards”
Lillrank and Liukko        “The statistical theory of variation, developed by Shewhart [(Shewhart,
(2004)                     1931)] and expanded and popularized by Deming [(Deming, 1986)], is
                           based on the insights that all processes exhibit variation, variation leads
                           to deviation from targets and is the primary cause of poor quality,
                           variation is associated with a loss function: when an actual manufacturing
                           step produces a value that deviates from the target, costs in terms of
                           rejection or trouble later in the process are incurred”                                    Table V.
                           Consequently, standardization seen as reducing variation increases              Overview of literature
                           process quality                                                                        supporting H3
                                                               Sales
                                                                                                                             41
                   Procurement         Operations                                     Logistics   Service
                                                              marketing
IT
Administration
                                                      Finance
                                                                                                                        Figure 3.
                                                                                                            The recruiting process
   Source: We adopted Porter's (1985) value chain model for our design
       incoming applications. The use of integrated IS for staff recruitment changes the
       regular communication with applicants and offers a potential for cost reduction.
   .
       Recruiting process quality. So far, there is no definite measure for process quality
       in staff recruitment. Therefore, current approaches on recruiting process
       performance (von Stetten et al., 2008; Laumer et al., 2008; Eckhardt et al., 2009b)
       integrate measures as applicants’ quality or the quality of applicants’ data in
       their evaluations. Relational quality measures like the degree of information for
       the operating departments and candidates’ satisfaction with the provided
       information are also included within the evaluation of recruiting process quality.
3. Methodology
3.1 Constructs and data
The theoretical framework (Figure 1 for the basic research model and Figure 2 for
the extended research model) has been operationalized and transferred into structural
equation models. In the following, the measurement and structural models are
evaluated. The Appendix offers additional detailed data.
   3.1.1 Construct operationalization. All latent variables in our research models are
represented by a set of at least four reflective indicators. We measured all constructs on
a seven-point Likert scale using scales from “strongly agree” to “strongly disagree.” All
but one constructs are modelled as first order constructs – only the process
performance construct in the basic research model has been modelled as a second order
construct. The operationalization of our constructs is presented in Table AVI in the
Appendix.
   Content validity refers to the extent to which measures reflect the intended
meaning of a construct (Zhu and Kraemer, 2002). A researcher needs to corroborate
that the results measured represent the content of the related construct and not an
unreasonable view (Vinzi et al., 2003; Nunnally and Bernstein, 1994; Cronbach, 1971). A
major requirement to ensure content validity is a very precise definition of the content
represented by the constructs.
BPMJ      We ensured content validity by deriving the indicators used from existing
16,1   constructs where possible and discussing them in detail with several experts in the HR
       departments of German companies (Churchill, 1979). Furthermore, we evaluated the
       content of the constructs used with senior executives and consultants of one of the
       world’s largest job board.
          The original constructs in our survey were questioned in German, so we
42     operationalized our constructs in this version using the back-translation method
       (Brislin, 1970).
          3.1.2 Data collection procedure. In January 2006, we sent out our questionnaire
       to executives responsible for the recruiting process in Germany’s Fortune
       1000 companies that all had individually been contacted by phone before. We chose
       the beginning of a year for our data collection to ensure an equal context and measurable
       relation for the respondents regarding the current state of process standardization
       and process performance within their corporation. Overall, 156 usable questionnaires
       were returned (response rate 15.6 percent). None of the data sets had more than
       50 percent of missing values for the analyses in this section, so all 156 data sets could
       be used for model validation.
       3.2 Analyses
       Based on the standard procedure of Chin (1998, 2000), Bagozzi and Yi (1988) and
       Gefen et al. (2000) to measure a structural equation model, we first perform a partial
       least squares (PLS) analysis and then a t-test for significance of the path coefficients.
          We have used SmartPLS (Ringle et al., 2005) in the version SmartPLS 2.0 M3 for
       analysis.
          3.2.1 Measurement model (of the extended research model)[3]. According to Hulland
       (1999), the adequacy of a measurement model can be assessed by looking at:
          .
              individual indicator reliabilities;
          .
              the convergent validity; and
          .
              discriminant validity.
       Individual indicator reliabilities deal with the statistical fit between an indicator and its
       corresponding latent variable. All indicator loadings are significant at the 0.001 level
       and above the recommended 0.7 parameter value (Carmines and Zeller, 1979; Fornell
       and Larcker, 1981). All indicator loadings under 0.5 parameter value were excluded
       beforehand (Hulland, 1999) and as cross-loadings in Table AV (in the Appendix) show
       all indicators have the highest correlation with their respective construct. Significance
       tests were conducted using the bootstrap routine with 200 samples (Chin, 2000).
           Convergent validity refers to the internal consistency of a set of indicators and is
       analyzed by calculating the average variance extracted (AVE) and the composite
       reliability (CR). In our case, all AVEs are over the recommended threshold of 0.5 and all
       CRs are above the recommended threshold of 0.6 (Bagozzi and Yi, 1988). Another
       test-option that most notably has formerly been used is Cronbach’s alpha (CA). Values
       close to 1.0 indicate great reliability (Gefen et al., 2000) and all our values fulfill this
       criterion.
           Discriminant validity is concerned with whether a construct shares more variance
       with its indicators than it shares with other constructs in a model (Hulland, 1999). To
       test discriminant validity, Fornell and Larcker (1981) demand that the AVE should be
greater than the variance shared between the construct and other constructs in the                          Performance
model. According to Hulland (1999):                                                                       impact of BPS
   [. . .] this can be demonstrated in a correlation matrix which includes the correlations between
   different constructs in the lower left off-diagonal [. . .] and the square roots of the [AVEs]
   along the diagonal. For adequate discriminant validity, the diagonal elements should be
   significantly greater than the off-diagonal elements in the corresponding rows and columns.
                                                                                                                            43
In our case, this criterion holds as shown in Table AIV in the Appendix. In addition,
the loadings of the reflective indicators in our research model are higher for the
corresponding constructs than for any other, so discriminant validity is high.
   Table VI provides an overview of the statistics of CA, AVE, and CR for the extended
measurement model. Overall, all values are over the recommended thresholds.
   3.2.2 Structural model. We first evaluate the basic model of Figure 1. The quality
of the structural model is determined by the two values R 2 and the related
path coefficients. The squared multiple correlations (R 2) express the proportion of
the variance of the endogenous variable process performance that is explained by the
exogenous variable process standardization. The results indicate that 61.9 percent
(R 2 ¼ 0.619) of the overall variance for process performance could be explained by
process standardization. The path coefficient for the impact of process standardization
on process performance amounts to 0.787 (compare Figure 4). The t-test for significance
of the path coefficient by conducting the bootstrapping routine with 200 samples
(Chin, 2000) yields a highly significant result.
   The evaluation of the structural model shows a significant impact of process
standardization on process performance. Hence, H1 0 is supported and encourages
to look at the positive effect of process standardization on process performance in
more detail.
   Looking at the extended model of Figure 2, the squared multiple correlations (R 2)
show that 38.9 percent (R 2 ¼ 0.389) of the proportional variance for business process
time, 30.5 percent (R 2 ¼ 0.305) of the proportional variance for business process cost
and almost two-thirds (R 2 ¼ 0.626) of the proportional variance for business process
                                                                                                                     Table VI.
                                                CA                     AVE                   CR              Quality criteria for
                                                                                                          the extended research
Process   time                                0.975400                0.890907            0.979986      model for the impact of
Process   cost                                0.948332                0.765775            0.957872      process standardization
Process   quality                             0.925235                0.692387            0.940058    on process time, cost, and
Process   standardization                     0.951224                0.879277            0.966459                       quality
                                                                                                                      Figure 4.
                                                     0.787        Process                                 Evalution of the basic
                                Process
                                                                performance                               research model for the
                            standardization      t = 4.643***      2
                                                                 R =0.619                                      impact of process
                                                                                                      standardization on process
                                                                                                                    performance
                       Notes: *p < 0.010; **p < 0.005; ***p < 0.001
BPMJ                         quality are represented by the antecedent process standardization (compare Figure 5).
16,1                         In order to analyze the significance of path coefficients in our research model, we
                             evaluated the t-values. Significance tests were conducted using the bootstrap routine
                             with 200 samples (Chin, 2000). The following figure now shows the evaluation of our
                             structural model including the significance level of the path coefficients.
                                As the empirical analysis shows (Figure 5), all H1-H3 are supported.
44
                             4. Conclusions
                             4.1 Key findings and contribution
                             First, this paper proposes a theoretical research model and empirical operationalization
                             to analyze the impact of process standardization on process performance – illustrated
                             using the corporate staff recruiting process. Second, the results are among the first
                             to systematically and empirically show that there is a significant positive impact of
                             process standardization on process performance.
                                What are the managerial implications? An important finding is the empirical
                             confirmation of the positive effect of standardization on process performance and
                             thereby its potential as part of a BPM approach that strives for continuous improvement.
                             The possible impacts of process standardization make it a relevant measure for business
                             process reengineering and controlling. Managers can also use the results as supporting
                             rationale demonstrating the standardization impact expected before deciding to undergo
                             a standardization project. Following the line of reasoning of Sánchez-Rodrı́guez et al.
                             (2006), we can say that:
                                [. . .] in an economic environment where businesses are constantly attempting to identify
                                means to obtain incremental improvements and enhance the company’s bottom line,
                                managers can use this study as evidence that standardization of, [processes has a positive
                                effect on process performance] and, thereby, justify its implementation.
                             Also, and in line with most management and IS research, a first glimpse of the role of
                             strategy type and industry sector show (Section 4.2) that standardization is no silver
                                                                                          Process time
                                                                 0.623                     R2 = 0.389
                                                                 t = 3.897***
                                                                      0.791
Figure 5.
                                                                      t = 5.211***
Evaluation of the extended                                                              Process quality
research model for the                                                                    R2 = 0.626
impact of process
standardization on process
time, cost, and quality
                                                Notes: *p < 0.010; **p < 0.005; ***p < 0.001
bullet for process improvements but that, as so often, it depends on factors including            Performance
firm strategy and industry.                                                                     impact of BPS
4.2 A first glimpse of the role of strategy type and industry sector
As a main contribution of this paper, it could be shown that there is a significant
impact of process standardization on process performance in general and on process
time, cost, and quality in particular. In this context, one might look at differences in the                45
value compositions amongst the three performance dimensions time, cost, and quality
subject to firm strategy, industry sectors, or firm size (large-scale versus small and
medium enterprises).
   To do a first step in this direction, we divide our overall data sample and evaluate it
for companies of a specific strategy type (prospector versus analyzer versus defender)
and also industrial vs services firms[4].
   We created two sub-samples based on the demographic data the firms provided
within the survey. Unlike the overall sample, these contained a number of data sets
with missing values so these data sets are excluded from the respective sample as seen
in Table VII.
   4.2.1 The role of strategy type. Miles and Snow (1978) showed the profound impact
of business strategy for firm performance, other authors stress that different types of
business strategy are associated with different kinds of IS (Sabherwal and Chan, 2001)
and explain differences in information management sophistication (Gupta et al., 1997).
We draw on Miles and Snow (1978) and use three types of business strategy:
prospector, analyzer, and defender. Prospectors follow a first-mover strategy,
analyzers are fast followers that tend to prefer a “second-but-better” strategy while
defenders are conservative late followers (DeSarbo et al., 2005).
   The strategy type of a corporation seems to influence the overall impact of process
standardization. We examined this by looking at companies’ behaviors to introduce
and implement a new technology. Therefore, we clustered our sample in three different
groups. The largest group (n ¼ 75) contains the enterprises, who regard themselves to
be always among the first to implement new technologies, products, and processes
(prospectors). The second group (n ¼ 45) represents the analyzers who track the
behavior of competitors first and follow them rapidly if deemed advantageous. Third,
the defenders are the smallest group with just 23 answers. This group only implements
new technologies, products, and processes, if they have shown a permanent added
value at their competitors.
   Data analysis reveals substantial differences among the three groups. For
prospectors, only the impact of process standardization on business process quality is
Strategy                            Prospector                                      75
                                    Analyzer                                        45
                                    Defender                                        23
Industry                            Industrial sector                               59                Table VII.
                                    Services sector                                 94               Sub-samples
BPMJ                  significant. For analyzers, all three paths are significant, in contrast to no significant
16,1                  relations among laggards, which is likely due to the small sample size (Figure 6).
                         4.2.2 The role of industry sector. As researchers increasingly emphasize the role of
                      industry (Chiasson and Davidson, 2005), our second sub-sample extracted from the
                      overall data sample compares two different industry sectors; industrial corporations
                      and corporations of the service industry. Altogether, 59 industrial corporations and
46                    94 corporations of the service industry could be observed. The results reveal a
                      major difference between the two groups. While the relationship between
                      process standardization and the performance determinants is weak or nonexistent for
                      industry corporations, it is highly significant for all three dimensions in services
                      industry firms while both samples are large enough for meaningful calculation
                      (Chin, 2000). The path coefficients and the R 2-values for both groups are shown
                      in Figure 7.
                      4.3 Limitations
                      As with any work in a new field of research, relevant literature to build on is scarce.
                      Following Wuellenweber et al. (2008), we accentuate that “in standardization research
                      [. . .] determining the value of a standard has remained an open issue for decades.
                      Looking at process standards, things seem to be even worse.” Unfortunately, the
                      operationalization of “business process standard” used in this paper could
                      consequently not build on earlier work too much. While this paper could draw on
                      an earlier process standardization construct (Muenstermann and Weitzel, 2008), future
                      research should improve the operationalization.
                           It is important to note that we have only discussed one process to examine the
                      influence of process standardization. As this study provides support for a significant
                      influence of process standardization on process performance, it might represent a single
                      example for staff recruitment. Although the process observed has carefully been chosen
                                                                 (1) 0.810**
                                                                 (2) 0.975***        Process quality
                                                                 (3) –0.454          (1) R2 = 0.656
                                                                                     (2) R2 = 0.469
Figure 6.                                                                            (3) R2 = 0.206
Structural models –
strategy type
                                      Notes: *p < 0.010; **p < 0.005; ***p < 0.001
                 (1) Industrial (n = 59)                                                       Performance
                 (2) Services (n = 94)                          Process time                 impact of BPS
                                                               (1) R2 = 0.008
                                           (1) 0.088           (2) R2 = 0.579
                                           (2) 0.762***
                                                (1) 0.198
                                                                                                             47
                                                (2) 0.608***    Process cost
                         Process
                                                               (1) R2 = 0.039
                     standardization
                                                               (2) R2 = 0.369
                                           (1) 0.300
                                           (2) 0.897***
                                                               Process quality
                                                               (1) R2 = 0.090
                                                               (2) R2 = 0.804                           Figure 7.
                                                                                              Structural models –
                                                                                                   industry sector
               Notes: *p < 0.010; **p < 0.005; ***p < 0.001
(Section 2.4) there might be differences for other processes (other secondary/support
processes or primary processes) with different settings. Future research should discuss
this issue in more detail.
   There is an opinion that process standardization prevents the display of creative
and innovative activities and that process standardization and innovation/creativity
are mutually exclusive. As a consequence, this paper’s findings might potentially not
be transferable to processes requiring a lot of creative and innovative ideas of the
employees performing them. Kondo (2000) elaborates on this aspect and finds that
“innovation and work standardization are [. . .] not mutually exclusive but mutually
complementary.” Lampel and Mintzberg (1996) investigate a continuum of strategies
from “pure standardization” to “pure customization” and find that “one secret of
successful management today” is “to customize standard concepts to fit specific
applications.” Future research, therefore, should also focus on processes requiring
plenty of creative and innovative ideas of the employees performing them and compare
the results with this paper’s findings[5].
   Our questionnaire was just answered by large-scale corporations in Germany.
So, our results might not be directly transferrable to any other country or firm size.
Our results may also be affected by common method variance because we collected
the data from participants at the same time using the same survey (Podsakoff
et al., 2003).
   Compared to covariance-based approaches, the PLS approach does not allow to
test for potential correlations between constructs – in our context to test if and to what
extent the process performance success dimensions time, cost, and quality might
be interrelated (e.g. loops and time-dependencies). Since the goal of this paper was
to quantitatively disclose that and to what extent BPS influences the three of the
dimensions, this does not compromise our findings.
BPMJ   4.4 Future research
16,1   As for this paper, we have chosen the recruiting process as research object (Section 2.4),
       future research should do both investigate other secondary processes and select
       appropriate primary processes for examination. In addition, an already planned
       quantitative survey will explicitly control for the impact of industry type and firm size.
       Together, these measures will allow for broader generalizability.
48         As in many other quantitative research approaches, an additional longitudinal
       perspective could offer exciting results about size and duration of process
       standardization’s impact on process time, cost, and quality. Especially, the use of
       latent curve modeling might offer some help to future research approaches.
           Future research should examine antecedents and drivers of process standardization
       in more detail and different scenarios to deepen the present understanding of the
       process standardization construct. First, findings of qualitative research approaches
       emphasize the importance of continuous top management support, the involvement of
       all departments affected as well as the particular role of organizational topology
       (Muenstermann and Eckhardt, 2009).
           A complementary step might be the consolidation of process and data level
       arguments (Muenstermann et al., 2009), in order to elucidate the interplay of data
       (e.g. electronic data interchange and Extensible Markup Language) and process
       standards and to examine if there is a combined effect of process standards and data
       standards on process performance.
           Besides, business process performance future research might also take into account
       further benefit dimensions of process standardization (as shown in Table I).
       Notes
        1. Examples of reference processes are, e.g. the MIT process handbook or industry-specific
           reference standards such as, e.g. the “Supply chain operation reference-model (SCOR),” the
           “enhanced Telecom Operations Map (eTOM),” or “IT Infrastructure Library (ITIL)” for
           software-development processes. See, Kindler and Nuettgens (2005) for an overview of
           reference processes or Malone et al. (1999) for how to design reference processes.
        2. The process performance success dimensions time, cost, and quality are probably
           interrelated. For example, an improvement in quality can both increase cost (e.g. because of
           additional quality controls) or decrease cost (e.g. because of rendered unnecessary error
           treatments). This paper does not aim at explaining and measuring the interplay and
           interdependencies between the process performance dimensions time, cost, and quality.
           Rather, it focuses on quantitatively disclosing that and to what extent business process
           standardization influences the three of the dimensions. For a discussion of the dimensions’
           interplay compare, for example, Beimborn et al. (2009). We thank one of the anonymous
           reviewers for this comment.
        3. The measurement model of the basic research model for the impact of process
           standardization on process performance (including quality criteria, latent variable
           correlations and cross-loadings) is presented in Tables AI-AIII in the Appendix.
        4. Since we are convinced that analyzing such sub-samples can provide significant insights but
           cannot yet provide the complete theory explaining our initial findings, we place these
           analyses as starting point for future research within this section.
        5. We thank one of the anonymous reviewers for this comment.
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Appendix
Tables for basic model
                                                                                                                   Table AI.
                                          CA                     AVE                         CR        Quality criteria for the
                                                                                                           impact of process
Process performance                     0.9558                   0.5477                     0.9599        standardization on
Process standardization                 0.9512                   0.8793                     0.9665      process performance
Overview of indicators
Indicator Description
Process-time (1)     We have reduced the time between the identification of a vacancy and the
                     posting of the job ad
Process-time (2)     We have reduced the time between the posting of the job ad and the first
                     incoming applications
Process-time (3)     We have reduced the time between the incoming applications and the
                     transmitted notice of arrival for the respective applicant
Process-time (4)     We have reduced the time between the incoming applications and the final
                     hiring decision
Process-time (5)     We have reduced the time between the identification of a vacancy and its fill
Process-time (6)     We have reduced the time between the posting of the job ad and the final hiring
                     decision
Process-cost (1)     We were able to reduce the costs for candidate attraction
Process-cost (2)     We were able to reduce the average costs per each posted job ad
Process-cost (3)     We were able to reduce the costs for the response management with the
                     recruiting process
Process-cost (4)     We were able to reduce the costs for the internal applicant tracking
Process-cost (5)     We were able to reduce the costs per tracked application
Process-cost (6)     We were able to keep the internal set budgets for staff recruitment                        Table AVI.
                                                                                         (continued)     Construct indicators
BPMJ         Indicator             Description
16,1
             Process-cost (7)      We were able to reduce the average costs per each hire
             Process-quality (1)   We were able to enhance the overall applicant quality
             Process-quality (2)   We were able to sustain the overall applicant quality
             Process-quality (3)   We were able to enhance the quality of applicants’ data
56           Process-quality (4)   We are satisfied with the matching between the hired candidates and the open
                                   vacancy
             Process-quality (5)   We were able to enhance the proportion of top candidates
             Process-quality (6)   We were able to enhance the degree of information for our operating
                                   departments
             Process-quality (7)   Our applicants are very satisfied with our offer of information
             Process-              We have a well-regulated process cycle for applicant tracking in our staff
             standardization (1)   recruitment
             Process-              We have established an efficient organized process in our staff recruitment
             standardization (2)
             Process-              We have established highly standardized procedures in our staff recruitment
             standardization (3)
             Process-              We have documented our actions to a great extent
Table AVI.   standardization (4)