generative mechanisms of the adoption of logistics innovation: the case of on-site shops in...

Forthcoming in Journal of Business Logistics

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Generative mechanisms of the adoption of logistics innovation: the case of

On-site Shops in construction supply chains

Kari Tanskanen*, Jan Holmström**, Mikael Öhman***

Aalto University School of Science

Department of Industrial Engineering and Management

PB 15500

00076 Aalto

Espoo, Finland

*) corresponding author, tel. +358505508008, email [email protected]

**) tel. +358503675973, email [email protected]

***) tel. +358503009620, email [email protected]

Abstract

Empirical studies of logistics innovations have focused on the innovation process, bypassing much

the innovative artifact or solution design itself. Focusing on the artifact and solution design in a case

study, we contribute to the emerging theory of logistics innovations through articulating the

generative mechanisms of the adoption of logistics innovation, i.e., the mechanisms through which

the design of the solution enables its’ adoption. We study On-site Shop, a rare example from the

construction industry of a logistics innovation that has successfully migrated from a limited number

of pilots to common practice.

The case-study is based on insights from participation in the design of the solution, and on 55

interviews conducted in a relationship triad consisting of three groups: (1) construction site users,

(2) the solution designers, and (3) the suppliers. We propose that standard and efficient solution set-

up is the key enabler of logistics innovation’s adoption at temporary construction sites.

Communication and operating rules facilitates adoption in the triad, whereas internal and external

integration further advances adoption by creating links between the innovative logistics solution and

other activities. Finally, trilateral collaboration and congruent technological frames in the

relationship triad sustain adoption over time.

Key words: Construction supply chains, logistics innovation, adoption, case study, design theory


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INTRODUCTION

In this article, we investigate the generative mechanisms for the adoption of On-site Shop, a

logistics innovation developed and adopted by Skanska Oy as a part of its lean construction and

logistics development program. The purpose of this investigation is to complement the emerging

theory of logistics innovations by providing insights and developing propositions about how design

affects the adoption and evolution of an innovative logistics solution. We study the adoption of

logistics innovation in the construction industry context because it is a setting where innovative

operations management solutions have been particularly challenging to introduce (Dubois and

Gadde 2002; Hayes et al. 2005). The On-site Shop had been implemented at approximately 200

construction sites in Finland, Sweden, and Norway by the end of 2013 and is thus a rare example

from the construction industry of a logistics innovation that has successfully migrated from a

limited number of pilots to common practice. The salience of the adoption and long-term viability

of the innovation is that it effectively supports both process and project management. The On-site

Shop streamlines the processes for procuring goods according to demand at a construction site and

replenishing the site by the supplier, taking into account various aspects of project management in

terms of coordinating ramp-up and ramp-down for each construction site.

While recent studies (e.g., Chapman et al. 2003; Bello et al. 2004; Panayides and So 2005; Flint et

al. 2008; Wagner 2008; Su et al. 2008; Wallenburg 2009; Grawe 2009; Su et al. 2011; Lee et al.

2011; Mota Pedrosa 2012; Wagner and Sutter 2012; Wagner 2013) tell us much of the early phases

of logistics innovations, we do not yet understand what drives the adoption and sustains the

viability of logistics innovations. Expanding the understanding of the adoption of logistics

innovation is important, as an innovation differs from an invention in that it provides economic

value and is diffused to other parties beyond the discoverers (Garcia and Calantone 2002; Rogers

2010).

Grawe (2009) synthesized the results of logistics innovation studies in a systematic review and

proposed future research examining the adoption and evolution of novel logistics services and

processes. Mirroring the situation in management information systems research in the early 2000s

(Orlikowski and Lacono 2001), the design of innovative logistics solutions has not been studied, as

researchers have instead focused on the innovation process. This finding indicates an opportunity

for complementary research through investigating the artifact, or solution design itself (Gregor and

Jones 2007) for a better understanding of how design characteristics affects the adoption and

evolution of an innovative solution. Through the study of both successful and unsuccessful solution

designs, the academic field will be able to gain a step-by-step understanding of how logistics

innovations can be designed for adoption in specific problem contexts. This study begins to fill this

gap by studying in detail a successful logistics innovation in the construction industry.

We address, on the basis of 55 interviews and direct observations among three actor groups – users,

solution designers and suppliers – the following research question: What generative mechanisms

enable the successful, widespread adoption of a logistics innovation in the construction industry?

Taking a design perspective (Aken 2004; Holmström et al. 2009) of logistics innovation, we


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develop a design theory of On-site Shops. Design theory describes a design such as a small item-

logistics solution and explains how and why the design works in a particular problem context

(Holmstöm et al. 2014). Design theory emphasizes the identification of generative mechanisms to

explain how the design of a logistics innovation affects its adoption and sustained use. We were

involved from the beginning of the innovation process in developing the solution design of On-site

Shop and later in investigating the mechanisms, explaining how and why the logistics innovation

produces the observed outcomes. The research into developing the solution design has been

previously reported in (Tanskanen et al. 2009), describing the problem in context and the design of

the logistics innovation. In this paper, we report observations on the outcomes of the innovation for

the different types of actors involved and investigate the generative mechanisms of the solution

design that affect the outcomes of its adoption.

The paper is structured as follows. The next section is a critical review of prior research related to

logistics innovation, articulating the need for a perspective of design for understanding the adoption

of innovative logistics solutions in different problem settings. In section 3, we present the research

design and methodology used in this study. In the case study, we examine the problem and scope of

On-site Shop and describe the form and function of the solution design. The empirical investigation

of outcomes constitutes the core of the paper and details the different outcomes of adopting On-site

Shop and the implications of these outcomes for each of the actor groups involved. The theoretical

analysis uses generative mechanisms to explain adoption and develops testable propositions for

these explanations.

LITERATURE REVIEW

Logistics innovation has been defined as any logistics related service that is regarded as new and

helpful to a particular focal audience (Flint et al. 2005). For the purposes of this paper, the focus is

on innovations that change how logistics activities are carried out. This type of logistics innovation

changes operational processes and how logistical work is performed (Pisano 1996; Hammer 2004).

An operational innovation may evolve into service innovation when the process change is perceived

as helpful across organizational boundaries (Gallouj and Weinstein 1997) and sometimes even into

business model and management innovations, profoundly changing the organizations involved

(Birkinshaw et al. 2008).

In the literature review that follows, we show how the current literature on logistics innovation

focuses on the process of innovation and the conditions for innovation. However, to understand the

adoption of logistics innovations, the innovation itself is also important. The study of logistics

innovation adoption requires a complementary perspective of design that focuses on the solution

and how it is used in sufficient detail to explain its success or failure in different contexts.

An emerging theory of logistics innovations

Logistics innovations have gained increasing attention among researchers over the last decade,

which has substantially increased our understanding of the antecedents and process of logistics

innovation, especially in logistics service provider (LSP) firms. Chapman et al. (2003) found that

knowledge, technology, and relationship networks are the antecedents of innovation in logistics

services. Flint et al. (2005) further explained the process of being innovative, identifying several


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phases: 1) Setting the stage activities, involving creating an environment conductive to being an

innovative organization and the acquisition of resources, 2) Customer glue gathering activities,

developing close relationships with customers and searching for opportunities for logistics

innovations, 3) Negotiating, clarifying, and reflecting activities concerns internal and external

dissemination in the form of communicating with and interpreting the needs of the customer, and 4)

Inter-organizational learning refers to the new insights and understandings that emerge from the

joint innovation process.

Flint et al.’s (2005) logistics innovation process has been refined and tested in subsequent studies

(Flint et al. 2008; Su et al. 2011), from which a theory of logistics innovation has begun to emerge.

In addition, several studies have focused more explicitly on innovation in LSP firms. Panayides and

So (2005) identified a positive relationship between logistics innovation and the logistics service

provider’s effectiveness. Wagner (2008) studied innovation in the German transportation industry

and found that internal and external search and development, investments in infrastructure and

capital goods, and the acquisition of knowledge, training, and education are connected to logistics

innovations.

Wallenburg (2009) revealed that proactive improvement by LSPs is positively related to customer

loyalty. Further, Mota Pedrosa (2012) showed that reactive and proactive customer integration are

critical for LSPs to be able to successfully anticipate customers' expressed and latent needs during

the innovation development process. Wagner and Sutter (2012), in turn, identified several

contingent factors that influence provider-customer innovation in third-party-logistics (TPL)

projects: a high level of integration with customers; establishing links to customers insisting on new

services; complementary relationship-specific investments; and agreements on benefit sharing.

Grawe (2009) synthesized the results of logistics innovation studies into a set of testable

propositions concerning organizational and environmental factors that affect logistics innovation;

the impact of logistics innovation on a firm’s competitive advantage; and finally the relationship

between a firm’s competitive advantage and the diffusion of logistics innovation. He also concluded

that while the antecedents and outcomes of logistics innovation have been identified in leading

logistics journals, very little is known about the adoption and evolution of logistics services and

processes over time (Grawe 2009).

The role of design and context in the adoption of logistics innovations

The emerging theory of logistics innovation does not study the innovation itself but rather treats the

design of a logistics innovation in abstract terms. In the case study of Su et al. (2011) on logistics

innovation in the setting of a large hospital, as well as in the multiple case studies of Mota Pedrosa

(2012) and Wagner and Sutter (2012) investigating the role of customers, logistics innovation is

operationalized as a process (Flint et al. 2008). Innovative solutions are introduced in abstract

terms, but the way they are adopted is not described in detail, limiting our understanding of how the

design of the innovation itself might affect its adoption in different problem contexts.

The current logistics innovations literature has not yet addressed how context affects the adoption of

logistics innovations. Nevertheless, literature shows that many logistics innovations are widely

adopted in one setting but do not proceed beyond piloting in other settings. Differences in the


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adoption of specific logistics innovations in different settings are likely contingent on the design

itself. Over the last few decades, the manufacturing and retail industries have been transformed by

innovative ways to carry out logistics activities, while the construction industry has been largely

bypassed. JIT, modularization, and mass customization are examples of operational innovations

(Pisano 1996; Birkinshaw et al. 2008; Hammer 2004) that have transformed the productivity of

industries such as automobiles (Holweg 2007) and electronics (Sturgeon 2002) beyond recognition.

Over the same period in retail supply chains, automated store ordering, Vendor Managed Inventory

(VMI), and cross docking have made retail supply chains significantly more responsive and

efficient (Holweg et al. 2005). In construction, on the other hand, significant efforts spent on

introducing innovative logistics approaches, such as lean construction and supply chain

management, have not led to widespread adoption or yielded the expected improvements (Egan

2002; Briscoe et al. 2004; Bankvall et al. 2010).

A design theory perspective on logistics innovation

Design theory describes a design such as small item-logistics solution and explains how and why

the design functions in a particular problem context (Holmstöm et al. 2014). The formulation of

design theory entails the identification of a set of design constructs that are key to the construction

of the design and to how the design works in its problem context. The main elements describing

design theory in more detail are purpose and scope, form and function, the principles of

implementation of the designed artifact, key constructs, mutability, and testable propositions

(Gregor and Jones 2007).

Thus, taking a design theory perspective (Gregor and Jones 2007) allows us to study how the design

of the logistics innovation affects its adoption in different contexts. From this perspective we define

logistics innovations as novel interventions designed to achieve specific ends (Simon 1996;

Holmström et al. 2009) and explain the mechanisms (Denyer et al. 2008) through which the

innovation has been successfully introduced and adopted in practice (Aken 2004), providing

economic value and diffusing to other parties beyond the originators (Garcia and Calantone 2002).

The organization of actors and the process are considered elements of design from a design theory

perspective (Romme 2003).

From a design theory perspective, research on a specific logistics innovation is mature when the

mechanisms for how the design of the innovation produces the observed outcomes can be explained

theoretically (Holmström et al. 2009). Outcomes can be related to performance, i.e., the efficiency

of production or product quality. Furthermore, for an innovative solution, the outcome in terms of

adoption is also very relevant. In explaining the outcomes of logistics innovations in manufacturing

supply chains, reuse and repeatability have been proposed as generative mechanisms leading to

observable and continuously improving efficiency (Wilson 1998). Specifically for innovative

replenishment solutions, fast and fluent flow (Schmenner and Swink 1998) and organizational

learning (Nonaka 1995) have been suggested as generative mechanisms for the observed efficiency

of the solution designs. In information systems literature, the suggested generative mechanisms of

adoption are perceived benefits and ease of use (Davis 1989).

However, generative mechanisms that make a solution design successful and enable an outcome in

one context may not be relevant or easily used in another. In contexts that involve a high degree of


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adjustment and changing requirements among actors, the procedures and practices for supplying the

information needed to produce a service becomes critical (Sampson and Froehle 2006). In situations

in which adoption depends on information inputs by different and changing parties (Callon et al.

2002), solution designs that ensure information quality and counter erosion over time (Oliva and

Sterman 2001) activate powerful generative mechanisms that enable adoption. In stable, mass-

production environments in which output is clearly defined by inputs, it is easier to detect

variability, which in turn enables the improvement of solution designs over time while achieving

simultaneous cost reductions and quality improvements. In information-intensive contexts,

however, additional mechanisms need to be employed to counter quality erosion from undetected

corner-cutting (Vrijhoef and Koskela 2000).

Recognizing the artifact and solution design as relevant to the outcome of adoption, we conclude

the literature review by identifying the need for logistics innovation research that articulates the

generative mechanisms of innovation designs.

RESEARCH APPROACH AND METHODOLOGY

The literature review revealed that the emerging theory of logistics innovation lacks explanations of

innovation adoption. We adopt a critical realism perspective and aim to understand the generative

mechanism of how the design of a logistics innovation explains the adoption of the innovation.

Towards this end, we conduct a case study, which according to Aastrup and Halldorsson (2008)

enables us to reach a causal depth required by the critical realist approach. Following Miles and

Huberman (1994), Eisenhardt (1989), Handfield and Melnyk (1998), McCutcheon and Meredith

(1993), Stuart et al. (2002), and Yin (2009) on theory building based on case studies, we note that

the study described in this paper is in the mapping and relationship-building stage. The identification

and description of design constructs in design theory enable us to determine their causalities as well

as the key variables, themes, patterns, and categories that are in play (McCutcheon and Meredith

1993). A case study is an empirical mode of inquiry that “investigates a contemporary phenomenon

within a real life context when boundaries between phenomenon and context are not clearly evident

and in which multiple sources of evidence are used” (Yin 2009, p. 23). According to Miles and

Huberman (1994), case studies include such advantages as flexibility, richness, holism, causality

assessment, and the possibility of finding meaning in natural settings. In light of these qualities and

characteristics, the case-study method is well suited to investigating the generative mechanisms of

the adoption of logistics innovation.

A successful replenishment solution in construction constitutes an interesting case example, as

replenishment has been successfully used in many settings but has faced difficulties in construction.

Such an example opens the possibility of contributing to the emerging theory of logistics innovation

by identifying novel design constructs and mechanisms that enable the adoption of an innovation.

On-site Shop as a process innovation in the construction industry offers such a case for study.

Because project sites in the construction industry are highly independent and temporary, it is

exceptional for a logistics solution to be adopted in a consistent way across project sites, even

within a single construction firm. Thus, On-site Shop provides a rare opportunity from the


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construction industry to study the generative mechanisms for a transition from successful pilot to

widely adopted logistics innovation across multiple project sites, company purchasing

organizations, and suppliers.

The present study employs an embedded single-case study design (Yin, 2009) that, according to

Siggelkow (2007), can be very powerful when the studied phenomenon is unique. Flyvbjerg (2006)

argues that it is a common misunderstanding that one cannot generalize based on a single case, and

“the force of example” is underestimated. However, as Eisenhardt and Graebner (2007, p. 27) note:

“single-case research typically exploits opportunities to explore a significant phenomenon under rare

or extreme circumstances.” Based on these authors’ perspectives, we argue that through studying the

On-site Shop, which represents a rare example from the construction industry of a logistics

innovation that has successfully migrated from a limited number of pilots to common practice, we

are able to provide theoretically valuable insights to the logistics innovation literature. Because an

On-site Shop has, to the best knowledge of the authors, thus far only been used in one company, the

case in this study represents the entire population.

Developing a design theory

Our research on the development and wide-scale adoption of the On-site Shop innovation aims at

achieving a contribution to the emerging theory of logistics innovations by providing explanations

of innovation adoption. This we achieve through developing a design theory (Aken 2004; Gregor

and Jones 2007) following the design science approach outlined in Holmström et al. (2009). The

design science approach links discovery and problem solving, and gradually proceeds towards

creating and accumulating theoretical knowledge. In this study, researchers were involved from the

first stage of idea and solution generation, and the involvement encompassed the evaluation of

outcomes and theoretical analysis. In design science, a novel solution is gradually refined and

tested. Theory of the middle range (Merton 1996) can be generated when a solution design is in use

and outcomes can be observed and analyzed. Thus, design theory building in this paper focuses on

the design of the innovation in explaining the outcomes of adoption.

The development of the design theory involves multiple studies conducted over a long period of

time (Holmström et al. 2009). Research on On-site Shop commenced in 2006. The first pilots

became operational in 2007. Wide-scale adoption followed in 2008, with On-site Shop gradually

becoming a widely adopted practice at the case company’s project sites. By 2013, several hundred

construction sites of Skanska in three Scandinavian countries had implemented and used On-site

Shop.

The study having commenced with the initiation of the project provides a longitudinal perspective.

The results of the design exploration phase are reported in (Tanskanen et al. 2009), who describe

the problem in context and the design of the innovation. In this paper, we report outcomes of the

innovation for the different types of actors involved and build theory on the mechanisms that

generate the observed adoption outcomes. We synthesize the results as a design theory (Gregor and

Jones 2007) for the adoption of logistics innovations in the construction industry. The description of

the case and its design is combined with empirical observations of outcomes and theoretical

explanations of the generative mechanisms of the adoption of the logistics innovation.


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Technological frames in the adoption of innovation

Our empirical observation of On-site Shop outcomes is structured using the technological frames of

the different actors (Orlikowski and Gash 1994). Technological frames are representations of how

individuals understand, implement and use a management intervention that is governed by their

cognitive frameworks, or mental models (Gioia 1986). The same innovation has multiple frames

depending on the actor involved, and the alignment of or incongruence between these frames

informs theory on how On-site Shop generates outcomes. This emerging theoretical understanding

is, in turn, a basis for defining the constructs of interest and proposing testable propositions for the

further development of design theory.

We apply the theoretical concept of technological frames because we are interested in the adoption

and sustained viability of logistics innovation. The technological frame concept has proven

effective in studies of information systems adoption and their evolution in use, but to the author’s

knowledge, has previously only been used in one single logistics study (Mirzabeiki et al. 2012). In a

particular organizational setting, the notion of cognitive structures can be extended to collectives,

such as groups and firms (Davidson 2006). Frames make it possible to describe and compare

outcomes from the various actors’ perspectives within a centralized SCM organization, construction

site, and supplier. The cognitive structures provided by solution designers and modified by users

stimulate and influence related organizational action (Chattopadhyay et al. 2001; Elsbach et al.

2005). Technological frames refer to a particular type of cognitive structure that actors use to

understand technology-based interventions in organizations (Orlikowski and Gash 1994).

Technological frame is similar to several other constructs that have widely been discussed in the

fields of innovation and strategy research, for example sense-making (Weick 1995; Möller 2010)

and cognitive maps (Eden 1992).

Research method

We use a qualitative approach to the collection and analysis of data (Eisenhardt 1989; Miles and

Huberman 1994; Yin 2009), primarily thematic interviews and field observations. Below, we

describe our unit of analysis, the case company, the selection of interviewees by sampling, and

procedures for data collection and analysis.

The unit of analysis is the triad of the solution designers who developed On-site Shop and provided

the technology for it, construction site users, and the suppliers responsible for the availability of the

items at On-site Shop construction sites. The empirical analysis is based on 55 interviews

supplemented with quantitative data regarding the use of the On-site Shop. Before addressing the

research question regarding the generative mechanisms responsible for the observed outcomes, we

first analyze the data with the aim of identifying the outcomes of On-site Shop adoption from the

perspectives of solution designers, users, and suppliers.

The case company, Skanska Oy, is the Finnish subsidiary of Skanska, one of the world’s largest

construction and project development companies with more than 60,000 employees and operations

in Europe, the United States, and Latin America. The case study focuses on the logistics

organization responsible for developing and introducing lean logistics and SCM in Skanska Oy’s

residential construction.


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Sampling and data collection

At the time of the study, On-site Shop was deployed at 26 ongoing construction projects divided

among four geographical areas. The sample was created on the basis of theoretical sampling and the

principle of saturation (Eisenhardt 1989). The case company’s logistics organization identified

ongoing projects using On-site Shop information systems and provided contact information for the

sites, suppliers, and solution designers. In all groups, new interviewees were added until the point of

saturation was exceeded and new information became scarce.

The eight sites ultimately selected represented roughly one third of the total population. Because

Skanska Oy is organized regionally (south, north, east, and west regions), sites were selected to be

representative of all regions. There being two types of implementation (container and office

cabinet), instances of both were included in the sample. Twenty-nine interviewees, selected from

the eight sites using the On-site Shop information system’s user register, constituted the “users”

group in the analysis of the user-supplier-solution designer triad. Our unit of analysis being this

triad, not the construction site, we effectively analyze only a single case.

Four suppliers, representing all three product categories included in the On-site Shop (protective

equipment, fasteners, and tools), were selected on the basis of having an active relationship with at

least one of the eight sites. The “suppliers” group in the analysis consisted of seventeen

interviewees, representing different geographic areas, selected from the four suppliers.

Five individuals in the centralized logistics and procurement organizations who were involved in

the operation (ranging from design and implementation to support) of On-site Shop, together with

two representatives from the IT-system supplier and two individuals from the supplier of the

container, were interviewed. These nine interviewees constituted the “solution designers” group in

our analysis.

All but one of 55 interviews conducted according to the sampling procedure described above were

recorded. The duration of the interviews ranged from 15 minutes to one hour. Appendix I presents

the interview calendar and appendix II the semi-structured guide used for the interviews. Interview

questions were intentionally general to enable interviewees to relate their own understandings of the

innovation and its purpose and benefits.

The interviews were supplemented with direct observations regarding the adoption of On-site Shop

by requesting access to the local implementation of the solution from construction site

representatives. Quantitative data on each site’s purchases were available via the supporting

software for On-site Shop.

Data analysis

Interview transcripts, categorized according to whether respondents represented users, solution

designers, or suppliers, were coded and categorized following Miles and Huberman (1994). All

responses were examined to identify statements that reflected assumptions about, or knowledge,

expectations, or views of, On-site Shop and its implications for site operations and the firm and the

respondent’s own work. An illustrative code was assigned to each new item identified in an

interview transcript, and a new code was added if no respondent had previously presented the same

description or view. Similar descriptions and views were grouped as a single item. New items and


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similar items that increased the weight of previous items were added, and traceability to the

respondent was preserved. This analysis and grouping employed a large Excel spread sheet with

respondents’ descriptions and views of On-site Shop categorized as follows: labeling of solution (23

items); description of function (10 items); advantages (137 items); disadvantages (91 items); first

contact (12 items); good functionalities (17 items); bad functionalities (26 items); reason for

respondent adoption (8 items); reason for increasing adoption (13 items); suggested improvements

(60 items); requirements for solution to work (9 items); other possibly relevant views (33 items).

As three of the emergent categories (advantages, disadvantages, and suggested improvements) were

considered essential to obtaining an overall picture of the responses, two researchers collaboratively

grouped the codes in a meaningful way within the categories. Each identified low-level code was

printed on a slip of paper, and these were arranged into groups in an iterative manner. Each code

was linked to the phrase from the interview transcript from which it derived, and each transcript

was further linked to the interview recording, enabling complete traceability from an individual

code to the original source. This traceability was employed when grouping of codes to clarify the

true meaning of each. In this process, advantages (137 items) and disadvantages (91 items) were

grouped into the 18 and 14, respectively, first order categories presented in appendix III.

Data analysis for each group (users, solution designers, and suppliers) was followed by cross-group

analysis to identify elements that were congruent and incongruent between the groups. These

differences in the technological frame elements are discussed after the description of On-site Shop.

DESCRIPTION OF ON-SITE SHOP

Next, we describe the purpose and scope, principles of form and function, and principles of

implementation of the On-site Shop. These descriptive design theory elements (Gregor and Jones

2007) are presented in Table 1. The remaining design theory elements are outlined in the results

section based on our analysis of the case.

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Insert Table 1 Approximately Here

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The intended purpose of On-site Shop from the perspective of the project site is to ensure material

availability at construction sites to reduce production disruptions and visits by site personnel to

hardware stores. From the perspective of the company purchasing organization, the design intention

of the On-site Shop was to introduce a pre-defined logistics solution that could be commonly

applied across numerous project sites and repeatedly by site organizations over time. The

centralized purchasing organization expected that establishing such a practice would bring

improved efficiency and control in individual projects, and by enabling learning would also provide

incremental improvements at the company level over time.

On-site Shop consists of a physical small-item store, a vendor managed inventory (VMI)

replenishment system, and procedures for joint construction company-supplier planning of the store

assortment, day-to-day operations of the supplier, and scaling up the use of the innovation to the


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corporate level. A construction site and one or more suppliers agree on small items to be stored in a

specially designed store on the construction site premises. The store is the property of the

construction company; suppliers own and are responsible for the availability of in-store items. The

construction project purchases needed items from the store. Purchases involve construction site

personnel recording the items removed from the store. The supplier invoices the construction

project and replenishes the store as necessary to maintain availability, based on these purchase

events.

The physical small-item store mimics a retail shop, being an enclosed, controlled access area (a

container or office cabinet) with shelves and a checkout facility. Unlike a retail shop, checkout is

self-service. Shelves are designed to accommodate small items used in construction projects, with

the locations of all items clearly marked with stickers that specify the item and display its barcode.

The store is furnished centrally by the construction company and delivered to a site when a project

begins. Upon the completion of a project, a store can be returned to a furnishing depot before being

deployed to the next project site. The requisite IT systems and connections are installed on site.

Stocking of items on the shelves at the start, and unstocking of items at the end, of a project is also

done on site. Store shelves can be rearranged and relabeled when new items are introduced during a

construction project.

A small software development company developed On-site Shop’s replenishment information

system to the construction company’s specifications. Ease of use for both construction site and

supplier was the guiding principle. A bar code scanner records purchases. Inventory control features

are simple, consisting of the inventory level and reorder point. The replenishment system notifies a

designated person in the supplier organization via e-mail of the need to replenish. Unused items

returned to their shelves are not registered in the replenishment system, but are rather marked, using

brightly colored stickers, as the property of the construction company. On-site Shop, although it

superficially resembles them, fundamentally differs from other solutions to the need for on-site

supply of small items. Small-item shops developed by some suppliers (e.g., Wurth) that operate

according to a VMI principle, although widely used in manufacturing plants, have failed to make

inroads in the construction industry. Small-item containers developed by individual construction

sites in the case company have also not proved to be effective, sustained solutions.

Table 2 compares On-site Shop to previously introduced solutions. Advantages of On-site Shop

include conserving staff time, who need not leave the site to procure small items, enabling suppliers

of small items to monitor and respond to demand at construction sites and affording a solution that

can be efficiently and effectively implemented at each new construction project.

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TECHNOLOGICAL FRAMES OF ON-SITE SHOP: PERSPECTIVES OF

SOLUTION DESIGNERS, USERS AND SUPPLIERS

Before elaborating the mechanisms that explain the adoption of On-site Shop, we describe

innovation outcomes from the perspectives of the three involved actor groups with reference to the

technological frames of those actors. Tables 3 through 6 describe and compare these actors’

technological frames with respect to their perceptions of the innovation, effects of its use, and how

it works. In tables 4 through 6, actors’ perceptions are organized according to the percentage of an

actor group that raised an issue during the interviews. As the number of interviewees in the solution

designer and supplier groups is small, the percentages should be treated carefully. All issues are

based on the coding and categorization of responses to the open questions presented in appendix II.

Image and role

We first asked the interviewees to freely describe the innovation, including what name(s) they most

commonly applied to it. That 23 different names were mentioned suggests that, there being no

established terminology for the innovation, it represents something new to the interviewees. “On-

site-Shop” or synonyms thereof were most commonly used by construction site personnel. “Small-

item stock,” the original name given to the innovation and used in the documents describing it, was

more commonly used by solution designers and suppliers. Other names used by solution designers

included “container” and “hardware store.” With one exception, supplier interviewees never used a

term such as “shop,” instead consistently selecting “stock,” “container,” or the like.

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This variety of labels is suggestive of the three types of actors’ differing attitudes towards On-site

Shop. Construction site users’ preference for “shop” emphasizes the supplier’s ownership of the

stocked items. Users also commonly believed items in the On-site Shop to be more expensive than

similar items purchased from a hardware store; hence, many considered the On-site Shop an

“emergency stock” or “buffer” rather than the main source of small items. Developers and suppliers

more commonly regarded On-site Shop as comparable to the raw material stock of a manufacturing

plant operated according to a VMI principle. Thus, On-site Shop was intended to serve as the main

source of small items and thereby reduce both shortages and administrative costs at construction

sites. Reducing the prices of small items, which constitute only a minor share of total costs, was not

a high priority in the development of the innovation.

An analysis of purchasing history data indicates that the perceived role of the innovation relates to

its use. At sites at which On-site Shop was considered an “emergency stock,” purchases were

infrequent. The label, role, and frequency of use did not, however, substantially affect the perceived

advantages and disadvantages of On-site Shop.

Many of the individuals interviewed at the construction sites compared On-site Shop to similar

solutions they had implemented on their own sites, as well as solutions offered as a service by some

suppliers. These individuals unanimously considered On-site Shop to be superior to similar


13

solutions to which they had been exposed; the support of solution designers during adoption and use

was particularly appreciated.

Advantageous effects of use

Although most of the identified advantageous effects of On-site Shop use are manifested at the

construction site, some corporate level and interface effects were identified. Table 4 presents the

frames on advantageous effects. At the firm level, On-site Shop was seen to improve the

effectiveness of procurement and harmonize practices across construction sites. Primarily solution

designers, but also some users and suppliers, mentioned such firm-level effects. All three actor

groups perceived similar advantages of On-site Shop: reduced workload for construction site

supervisors; increased effectiveness of site operations; and an overall reduction in logistics costs.

Most of the interviewed users and solution designers, and many of those associated with suppliers,

cited fewer visits to hardware stores by site personnel and fewer interruptions of their work.

------------------------------------------


-------------------------------------------

As they are among the most important goals of the solution design, these are clearly intended

outcomes. There was some incongruence among actors regarding the improved availability of small

items. Only a minority of users interviewed, compared to most of the solution designers and

suppliers, mentioned improved availability as an advantage of On-site Shop. Because most of the

former cited fewer visits to hardware stores and interruptions of their work, we can conclude that

the incongruence is not significant. Supplier interviewees commonly reported that On-site Shop

facilitated their work and supported their business objectives. However, they also emphasized that

realizing these advantages was contingent on the agreed-upon rules of use for the On-site Shop

being followed at construction sites. All actor groups believed that On-site Shop reduced logistical

and other operational costs. Resource requirements, in terms of facilities and work, were not

perceived as having been improved relative to former solutions for small-item procurement.

Disadvantageous effects of use

Table 5 presents the frames on the disadvantageous effects of On-site Shop use. Although most

interviewees across all actor groups were satisfied with the system outcomes, and the solution

designers’ post-pilot business case analysis suggested that adoption should pay off for the sites,

concerns persisted among solution designers and suppliers regarding the overall profitability of On-

site Shop. These concerns reflected the fact that costs are more visible and easier to calculate than

benefits. Some of the solution designers who mentioned this concern did not view it as a

disadvantage, but merely wished to acknowledge their awareness that some users did. Some

interviewees from all actor groups perceived the increased reliance on information and

communication technology as constituting some sort of risk, and some users cited decreased site

independence in procurement as a disadvantage. ------------------------------------------ Insert Table 5 Approximately Here ------------------------------------------


14

The greatest incongruence in the disadvantageous effects concerned negative effects on suppliers.

Interviewees from suppliers commonly observed that On-site Shop, as it differed from standard

practices, incurred some additional effort, as did site personnel not following agreed-upon rules.

Half of the supplier interviewees regarded the latter as a problem, but only a minority of solution

designers and no users did. This incongruence is alarming and may lead to major problems in the

future. All actors nevertheless regarded following agreed-upon rules as an important prerequisite to

the effective use of On-site Shop.

The adoption of On-site Shop alters interactions among the three actor groups. Every fifth

respondent across all actor groups perceived On-site Shop as complicating the procurement process

for small items and leading to communication problems. The communication challenge was also

raised indirectly in several interviews. Positive effects related to interaction and communication

were also cited—On-site Shop was considered to tighten collaboration among construction sites,

suppliers, and central offices, reflecting a degree of incongruence.

Functionality

Analyzing interviewees’ experiences with On-site Shop’s functionality helps to define outcomes in

terms of the innovation’s adoption (Table 6). These experiences with the innovation were classified

as positive or negative. The simplicity of the innovation was the most commonly cited positive

aspect, especially by solution designers, who perceived it as having been key to its widespread and

successful adoption. Construction sites had largely balked at attempts to introduce other, more

advanced logistics solutions, as such as planning and agreeing to more accurate time windows for

supplier delivery to sites.

-------------------------------------------


-------------------------------------------

Such advanced solutions were commonly piloted, sometimes successfully, but were not

subsequently widely adopted. Purchases among users and suppliers who perceived simplicity as a

positive element of On-site Shop were greater than among users who did not. A number of users

observed that their initial resistance to the adoption of On-site Shop was overcome, and their

attitude towards the innovation became positive, when they discovered how easy it was to learn and

how well it worked. Many users emphasized the importance of being able to influence the

assortment of items available in the On-site Shop, and solution designers seemed to be aware that

users appreciated this feature.

Across all actors, there were few negative observations concerning the functionality of On-site

Shop. Suppliers had more concerns than other actors, but did not consider them serious. Suppliers’

concerns may, however, become serious if they go unaddressed by users.

Negative observations regarding the functionality of On-site Shop stemmed not from the solution

design but rather from malfunctioning technology and rule breaking. Unreliable network

connections and problems with IT systems were cited by interviewees in all actor groups. Rule

breaking, including by interviewees who considered it a problem, was associated with “other”


15

actors. Many interviewees from suppliers observed that users often did not record purchases

immediately and did not make purchases in agreed-upon sales lots. Many users observed that

suppliers’ delivery times were often excessive and items often not properly shelved. Whereas

suppliers seemed aware of site users’ dissatisfaction with lead times, no users mentioned their own

behavior as potentially being responsible for problems in the operation of the innovation.

Summary of outcomes from different actor perspectives

Although the observed effects of On-site Shop on the interactions among actors were few in number

(two advantageous and four disadvantageous), analyzing these effects in detail yields some

interesting observations. Problems in interfaces stem from structural change: with the adoption of

On-site Shop, the formerly dyadic relationship between construction site and supplier became a

triadic relationship involving the site, supplier, and central office. The latter contracts with suppliers

and provides construction sites with On-site Shop, but all interaction is between construction site

and supplier. Communication must therefore be effective in all three interfaces: central office and

site; site and supplier; and supplier and central office.

Another major interface-related change was in the relationship between construction site and

supplier, from highly unilateral to (ideally) bilateral. Formerly, the supplier’s task was to fulfill

requirements established by site personnel as rapidly as possible. With On-site Shop, suppliers

could also establish requirements for construction sites. Establishing this bilateral and more equal

relationship between construction site and supplier appeared to be a challenge at most of the sites at

which we conducted interviews.

GENERATIVE MECHANISMS OF OBSERVED OUTCOMES

The research question we posited at the outset is to identify the generative mechanisms that explain

the adoption of On-site Shop in the case company. The observed outcomes as represented by the

technological frames of the three actor groups shows how actors experience different outcomes of

adopting On-site Shop, some intended, others unintended, and still others surprising. In this section

we begin to theoretically examine the case example with the objective of identifying possible

generative mechanisms for intended beneficial, as well as unintended, and possibly problematic,

outcomes.

Intended outcomes: Generative mechanisms that explain repeated and wide adoption

The most important intended outcome of On-site Shop is the elimination of stock-outs of small

items that necessitate visits to hardware stores by site personnel. Such visits disrupt site work and

account for a major share of the total cost of small items. Eliminating these disruptions was an

elementary aspect of lean construction development at Skanska. In this respect, the outcome was as

intended; all actor groups agreed that visits to hardware stores decreased dramatically at sites at

which On-site Shop was deployed. On-site Shop was also found to reduce the workload of site

supervisors, another objective of the solution design.

The generative mechanisms driving adoption can now be approached in terms of solution design

(Tanskanen et al. 2009) and logistics innovation process (Flint et al. 2005) overcoming the

challenges for the adoption of logistics innovations in construction: the temporary nature of


16

construction projects; variability in management, human resources and knowledge; and diversity of

technological elements and considerations (Akintoye et al. 2000; Dainty et al. 2001; Saad et al.

2002; Briscoe et al. 2004; Briscoe and Dainty 2005; Aloini et al. 2012).

The information-intensity of adopting On-site Shop due to the uniqueness and temporariness of

construction projects was reduced by including ramp-up and ramp-down in the solution design. The

shop’s physical presence at the project site takes the form of furnished office containers, and

responsibility for the sourcing of service providers and development of information systems resides

with a centralized purchasing organization. These provisions are key enablers of rapid ramp-up and

ramp-down at construction sites. The innovation introduces standard processes for ramp-up and

ramp-down and combines project and process management in a manner that facilitates adaptation to

the particular needs of a site.

The variability of management, human resources, and knowledge across construction sites and

suppliers was addressed by introducing a centralized logistics and development organization

responsible for mobilizing both internal and external resources in the On-site Shop solution design.

This solution provides management resources for conducting “setting the stage activities” proposed

in the logistics innovation process model of Flint et al. (2005). Moreover, the centralized

organization played a central role for “inter-organizational learning” (Manuj et al. 2014) from the

beginning of the innovation process.

A vice president responsible for supply chain management appointed in 2006 launched an

ambitious lean construction and logistics development program, of which On-site Shop was a part.

Fresh ideas were gleaned from outside the industry, which has been shown to be an effective way to

improve innovativeness (Bellingkrodt & Wallenburg 2013). This was done, for example, involving

university researchers and experts from other industries during the analysis phase, visiting a major

logistics services company, and inviting the vice president of a retail chain to describe its logistics

system as part of a workshop. The theoretical knowledge and experience of researchers from a

variety of industries informed iterative early drafts of the innovation. The researchers visited several

construction sites together with the vice president (SCM) of Skanska to obtain a deeper

understanding of the problem. Additionally, the different solutions that were currently used at

different construction sites for managing small item logistics were mapped and analyzed. As

construction sites are the customers of the logistics innovation, these activities were part of the

“customer glue gathering” phase of the Flint et al. (2005) logistics innovation process model.

When a draft of the detailed design of the concept was in hand, a second key person, a logistics

development manager experienced in the introduction of novel logistics solutions at large

construction sites, was brought on board and dedicated to the project. This manager drew on a

network of technology providers, users, and researchers for the design and piloting of On-site Shop,

which continued the set of “setting the stage activities” begun earlier and involved substantial

“inter-organizational learning” (Flint et al. 2005), as several organizations were involved, each

having its own specific expertise that contributed to the joint effort. Moreover the “customer glue

gathering” activities continued in a profound way. Selected site managers were closely involved in

the development of the innovation. The pilots were carefully monitored, for example a web-camera

was installed in some pilot installations to analyze how the solution was used in detail. Costs and


17

benefits of the pilots were also analyzed, and a business case developed based on the results. A

research paper ( Tanskanen et al. 2009) was published based on the results of the piloting phase.

For the transition from successful pilot to widespread, sustained use, which has had a history of

failure in the construction industry, an active expansion phase was included in the solution design.

In the expansion phase the centralized organization actively marketed On-site Shop to sites, and

provided support to sites throughout adoption. The solution designers developed a video and a set

of written materials to support new sites adopting the On-site Shop. The design can be seen as

formalizing the “negotiating, clarifying, and reflecting activities” phase in the Flint et al. (2005)

logistics innovation process model. Site personnel were involved in assortment planning and, within

limits, store layout. With increasing adoption the centralized responsibilities of the solution design

was gradually shifted from a development organization to a centralized purchasing organization.

Technological diversity and complexity were overcome through two main mechanisms of the

solution design. One, system design was made as simple as possible from the users’ perspective

through integration with both Skanska’s and suppliers’ related IT systems. Suppliers observe

inventory levels in real time and replenish them according to the VMI principle. Two, the IT

solution was owned by Skanska but developed and maintained by a service company. Ownership of

the IT solution was a key enabler of integration. On-site Shop could be automatically linked to

Skanska’s enterprise management systems and an interface designed to enable real-time

information exchange with, and flexible changing of, suppliers.

Unintended, and possibly problematic outcomes: Generative mechanisms undermining

future adoption

The major unintended outcome was the incongruent views of the role of On-site Shop. The actors

holding divergent views of On-site Shop—as the primary channel through which small items is

acquired on site, and as an emergency stock and buffer—is problematic because it may undermine

adoption in future projects. Suppliers cannot be expected to continue to provide emergency stocks

without compensation, and the logistics organization cannot justify further investments if On-site

Shop is not used to reduce overhead costs on site.

The mechanism driving this outcome may be identified as the project site focusing on direct costs,

as indirect costs are not captured. The full cost of items purchased off site that are available in the

On-site Shop is not visible; only the possibly reduced purchase price is accounted for. This finding

is consistent with studies of construction operations that have shown the tendency of construction

sites to focus on reducing direct purchasing costs (Dubois and Gadde 2002; Briscoe and Dainty

2005).

Another unintended outcome observed was that concern regarding adherence to the rules of the

solution design seemed to be exclusive to suppliers. The problem is that the attractiveness of the

concept declines for suppliers, as the responsibility and effort required to maintain the operations of

the On-site Shop increases. The user and solution designer remain unaffected until the supplier is

not willing to participate in further projects.

This undermining of further adoption can be seen as a result of the cutting of corners and quality

erosion on the part of users (Oliva and Sterman 2001). As users are simultaneously co-producers


18

and customers (Sampson and Froehle 2006), there is a temptation for suppliers to over service and

perform tasks that should be performed by users. The shift of responsibility (e.g., for performing

manual inventory counts) drives up costs for the supplier and reduces the reliability of the

information system, thereby increasing the risk of stock-outs.

Summary of generative mechanisms

Achieving the intended adoption outcomes of On-site Shop can be explained by how the solution

set-up is designed to overcome the temporary nature and variability of construction projects, and

how the tree actor groups have organized to share responsibilities, increase integration with other

activities, and facilitate learning. Incongruent views of the role of On-site Shop is a potential

generative mechanism that is undermining the adoption in future projects, as the attractiveness of

the solution will erode for the supplier if more construction sites use the On-site Shop as emergency

stock.

RESULTS: OUTLINE OF A DESIGN THEORY FOR ADOPTION OF

LOGISTICS INNOVATION

We can now proceed to elaborate and add missing elements of design theory to outline how this

particular logistics innovation was adopted in a construction industry context involving many sites

over a long period of time. According to Gregor and Jones (2007), the main elements of a design

theory are purpose and scope, form and function, principles of implementation of the designed

artifact, key constructs, mutability, and testable propositions. We next extend the description in

Table 1 and present the additional design theory elements for the adoption of On-site Shop: the key

constructs of the solution design and the generative mechanism that lead to the desired outcome.

These elements are further formulated into a set of testable propositions for explaining the adoption

of logistics innovation in the construction industry. We also briefly discuss the mutability of the

On-site Shop logistics innovation based on our observations.

The analysis of the generative mechanism of the adoption of On-site Shop showed that a

standardized, systematic procedure for project ramp-up and ramp-down is the key enabler of its’

repeated adoption at temporary construction sites. This procedure represents the design construct of

“solution set-up”, which is crucial for explaining the flexible transfer of the innovation between the

end of a project at one construction site to beginning operations at a new site. Solution set-up is

comparable to machine set-up, which is a key construct in just-in-time (JIT) manufacturing.

According to the JIT literature, standard and efficient machine set-up enables reduced production

lot sizes, which in turn is the generative mechanism for performance outcomes in terms of improved

flexibility, quality, delivery and cost (Ohno 1988; Schonberger 2008). Similarly, standard and

efficient logistics solution set-up enables fast and cost efficient adoption of the innovation at

temporary construction sites. Since this design construct of the On-site shop is observed to enable

its adoption, our first proposition stands: Standard and efficient solution set-up enables the adoption

of logistics innovations at temporary construction sites. (Proposition 1)

A further design construct that emerges in the analysis of On-site Shop’s adoption is the triadic

relationship among sites, suppliers, and a centralized logistics function that supplants the former

dyadic relationship between project sites and suppliers. The analysis of the technological frames of


19

disadvantageous effects of use (Table 5) revealed that communication and operating rules in the

triadic relationship are main concerns in all actor groups, and need to be addressed for this logistics

innovation to be adopted. The SCM literature refers to triadic relationships as typically among three

firms, buyer-supplier-supplier (Wu and Choi 2005; Wu et al. 2010) or buyer-supplier-carrier

(Gentry 1996; Rodrigues et al. 2008). The triadic relationship between solution designer, user and

supplier that we propose as a design construct may be relevant also more widely in supply chain

solutions for construction. In the analyzed triadic relationship, effective communication proves

particularly critical, as issues agreed between two parties need to be communicated to the third

party. Communication has earlier been demonstrated to be a focal determinant of the dyadic buyer-

supplier relationship (Chen et al. 2004; Paulraj et al. 2008). From these observations we derive our

next proposition on generative mechanism for adoption: Communication and operating rules in the

relationship triad of site users, solution designers, and suppliers facilitate the adoption of logistics

innovations in the construction industry. (Proposition 2)

Our analysis also reveals how both external and internal (functional) integration in the relationship

triad are important to adoption and sustained use of the logistics innovation in the studied case.

Automatic replenishment that is related to external integration was brought up among all actor

groups as a positive experience (Table 6). The fact that adoption of On-site Shop decreases site

independence and brings logistics management and development more to firm level was also

recognized at all actor groups (Table 5). Instead of all sites developing and maintaining their own

solutions, centralized organization develops the logistics solution for all sites collaboratively with

the sites. Management of logistics in the new situation calls for more internal integration between

centralized organization and sites. These findings imply the following proposition: Internal and

external integration in the relationship triad of site users, solution designers, and suppliers advance

the adoption of logistics innovations in the construction industry. (Proposition 3)

Many interviewees brought up a major change of the relationships governance. Formerly, the

supplier’s task was to fulfill requirements established by site personnel as rapidly as possible. With

On-site Shop, suppliers could also establish requirements for construction sites. Establishing this

bilateral and more equal relationship between construction site and supplier appeared to be a

challenge. In addition, adoption of the On-site Shop called for change in the relationship between

construction sites and the centralized purchasing and logistics organization. On-site Shop requires

that the previously unilateral relationship between construction site and supplier changes into a

trilateral, collaborative relationship in which each actor has requirements on the others in pursuit

of a common goal. In the transaction cost economics framework unilateral governance means that

an organization pushes another party in a desired direction; and multilateral hybrid governance form

means several parties enjoying close ties and working towards joint development (Williamson

1985; Heide 1994). The change from unilateral to multilateral governance is challenging in the

construction industry, in which relationships are traditionally adversarial and mistrust between

participants is common (Aloini et al. 2012). Our analysis corroborated this in the case of On-site

Shop, leading us to the next proposition: Trilateral collaboration between centralized organization,

site organization, and suppliers sustain adoption of logistics innovation in the construction

industry. (Proposition 4)


20

Understanding cognitive frames is important in the construction industry due to the high degree of

autonomy that site organizations enjoy with respect to logistics solution decisions. Technological

frame is the third design construct of the proposed design theory on the generative mechanisms of

adoption. Technological frames that depict the technology-related assumptions, expectations, and

knowledge collectively held by a group of actors (Orlikowski and Gash 1994) are a powerful tool to

facilitate adoption by observing the intended and unintended outcomes of a logistics innovation.

Social cognitive research has elucidated the role of mental models during processes of

organizational change: Several studies of information systems implementations have demonstrated

that the way in which organization members make sense of technology is critical to influencing

their actions and achieving planned outcomes (Orlikowski and Gash 1994; Shaw et al. 1997; Lin

and Silva 2005; Davidson 2006; Mishra and Agarwal 2010).

Our analysis shows that all three actor groups had quite congruent technological frames in all

studied dimensions except the role and the negative experiences of functionality. Overall, the

congruent views of the advantageous effects likely sustain the adoption of the On-site shop. The

users and suppliers adopted the solution, because they shared developers’ view of the advantages.

However, the decision to use the On-site Shop was made again every time when a new construction

project started. In this respect, construction industry differs fundamentally from non-project based

industries, where an innovation once adopted will be used until a decision to terminate its’ use is

made. The incongruencies of disadvantageous effects and functionality seemed to threaten the

decision to adopt the On-site Shop on sites in the future. Congruent views of the disadvantageous

effects, and what is positive and negative in the functionality, in turn, facilitated corrective actions

that support adoption in future projects. Based on this analysis we formulate our last proposition:

Congruent technological frames of users, suppliers, and solution designers for innovative supply

chain solutions sustain adoption of logistics innovation in the construction industry. (Proposition 5)

Even successful adoption and use can be undermined by divergent understandings of an

innovation’s purpose and what is required of the different actors. In the case study, innovation’s use

at many construction sites as an emergency stock denoted artifact mutability. The centralized

organization can discourage this kind of unintended uses by influencing user behavior to be

consistent with the intended use or, alternatively, revising the solution design to incorporate the

unintended use. If the users perceive the On-site Shop as an emergency stock, and not as the

primary source for small items as originally intended, how can the solution design be revised to

better serve as an emergency stock? Unless such unintended uses of the solution design are

addressed, the widespread adoption observed in the case setting may be undermined.

It should be noted that adoption of a logistics innovation in the construction industry is a repetitive

process that must be advanced and sustained. Enabling and facilitating its adoption as a one-time

event (Davis 1989) is only a necessary, but insufficient, first step. The decision whether or not to

use a logistics innovation is made repeatedly every time a new construction project starts. This is in

contrast to many other contexts in which a logistics innovation, once adopted, remains in use until

explicitly abandoned (see e.g., Holweg et al 2005). Therefore, the risk of low adoption increases if

the design is not invoking all the available generative mechanisms, and fails to evolve to

accommodate or prevent unintended uses.


21

Table 7 summarizes the five testable propositions for the design constructs and generative

mechanism. Figure 1 summarizes how the three design constructs and the five generative

mechanisms, contribute to enabling, facilitating, and advancing the adoption and to sustaining the

long-term viability of the studied logistics innovation in the construction industry. The solution set-

up is the key enabler of the adoption of logistics innovation at temporary construction sites.

Communication and operating rules facilitate its adoption, whereas internal and external integration

further advances its adoption by creating links between the innovative logistics solution and other

activities. Finally, trilateral collaboration and congruent technological frames in the relationship

triad sustain the adoption of a logistics innovation in the long run.

-------------------------------------------

Insert Figure 1 Approximately Here

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--------------------------------------------


--------------------------------------------

CONCLUSIONS

The findings of this study contribute to the emerging theory of logistics innovation, innovative

logistics practice, and research methodology for the study of logistics innovation. First, we

identified specific constructs of solution design that invoke generative mechanisms affecting the

adoption of a logistics innovation in the construction industry context. These constructs and how

they explain the adoption of logistics innovations is our contribution to theory. Second, our

contribution to practice is the formulation of design theory to support actors that want to replicate

the On-site Shop as well as actors that may consider a transfer of the findings to a different problem

context. Finally, we contribute to the research methodology to study logistics innovation by

demonstrating how a design science approach provides logistics researchers a novel perspective on

the innovation process. By combining design exploration and the evaluation of adoption, logistics

researchers can gain deep and longitudinal insights that are useful for theory building and

supporting logistics practice.

Implications for theory

The current literature on logistics innovation focuses on the process of innovation and the

conditions for innovation (Chapman et al. 2003; Roy et al. 2004; Panayides and So 2005; Flint et al.

2008; Su et al. 2008; Wagner 2008). Our contribution adds the perspective of design by focusing on

the solution and how it is used. We identify the theoretical design constructs and generative

mechanisms that explain the adoption of a logistics innovation in the construction industry. These

design constructs and generative mechanism are the key elements of design theory (Gregor and

Jones 2007), which are outlined in the form of five testable propositions.


22

When taken together, the five propositions explain the generative mechanisms of the adoption of a

logistics innovation in the construction industry, with outcomes that enable, facilitate, advance, and

sustain the innovation. The adoption of the logistics innovation in the setting of the construction

industry requires that users repeat the adoption in new projects, bringing to the fore the issue of

advancing and sustaining this adoption. From a theoretical perspective of management innovation

(Birkinshaw et al. 2008), this result is an example of how an operational innovation by a group of

solution designers over time may evolve into a business model innovation involving a triad of

construction site users, solution designers and materials suppliers. Hammer (2004) describes the

phenomenon of “deep change” caused by an operational innovation. Changing the way work is

performed has effects that ripple out to change the business logic and organization of the involved

parties.

Each of the five propositions can be related to the literature. The first proposition dealing with the

solution set-up is related to the discussion of the role of machine set-up in the JIT manufacturing

literature (Ohno 1988; Schonberger 2008). In the same way that a fast and efficient machine set-up

enables JIT manufacturing for improved performance, a fast and efficient solution set-up enables

the adoption of logistics innovation for improved performance in construction. The triadic

relationships we found in our study seem to be close to the relationship triads that have gained

increased attention in the SCM literature (Wu and Choi 2005; Wu et al. 2010), but with the

additional observation that the triadic relationship may involve both intra- and inter-organizational

parties, which calls for simultaneous internal and external integration. Technological frames, in

turn, have previously been shown to explain the adoption of information systems (Orlikowski and

Gash 1994), and this study proposes that technological frames similarly explain the adoption of

logistics innovations in the construction industry context. Other similar constructs that have been

widely discussed in the fields of innovation and strategy research include sense-making (Weick

1995; Möller 2010) and cognitive maps (Eden 1992).

In addition to advancing the main contribution of outlining a design theory explaining the adoption

of a logistics innovation, we also contribute to the research on logistics innovation process by

providing a confirmation of findings from previous studies. The logistics innovation process

proposed by Flint et al. (2005) is clearly evident in the design and adoption of On-Site Shop.

“Setting the stage activities” and “customer glue gathering activities” were first conducted when the

innovation was drafted. These activities were then repeated when the innovation was designed in

detail. We also observed “inter-organizational learning” taking place throughout the innovation

process. This observation is in line with the finding of Manuj et al. (2014), Su et al. (2011) and Lee

et al. (2011) on the need to include not only customers but also other stakeholders such as suppliers

in the logistics innovation process. The antecedents of logistics innovation identified by Grawe

(2009) in a systematic review of logistics journals were also found in the case of On-Site Shop.

Knowledge, technology, relationship network, financial, and managerial resources were mobilized

through a design based on standardized solution set-up and relationship triad.

Implications for practice

The implication for practice is clear for actors that want to replicate the On-site Shop in the context

of construction. In applying the design theory practitioners need to pay careful attention to ensure


23

that their solution designs include the design constructs specified in the design theory in such a way

that the generative mechanisms for adoption are invoked.

Furthermore, the design theory explaining why On-site Shops were widely adopted provides

insights that can be used to evaluate other design solutions. The design theory sheds light on why

other designs (Table 2) that address the same problem context have not been widely adopted. The

lack of the adoption of site-owned, small-item containers stems from the fact that the solution

design does not include the necessary managerial and technological resources to transfer the

logistics solution from project to project. The design constructs of solution set-up and relationship

triad are both missing, meaning that the corresponding generative mechanisms for the adoption

specified by the design theory are also missing. Supplier-owned replenishment solutions account for

the solution set-up in their design, and suppliers providing such shops have systematic procedures

for ramping-up and ramping-down the solution. As a result, supplier-owned solutions are easier to

adopt in a new project than the site-owned, small-item containers. However, because the solution

design is based on a dyadic relationship, the supplier-owned shops are not integrated into the

construction firm’s information systems, which reduce the benefits of the solution for the sites. The

site will also be locked into one supplier, which makes the solution less attractive for sites than On-

site Shops.

The design theory can also be applied in different, but similar problem contexts of temporary

service delivery, such as for maintenance in the field and equipment installation. However, for

practitioners aiming for transferring the novel and innovative solution design of On-site Shop to a

different problem context the implications of the design theory is only indicative. The design theory

constructs and invoked generative mechanism are useful for reflections by practitioners on how

design alternatives facilitate adoption of the designs. To apply the findings, a solution designer must

carefully evaluate how the transfer of the design constructs to a different problem context would

activate the mechanisms generating desirable outcomes. For example, in temporary service sites for

the installation of major equipment and maintenance shut-downs of manufacturing lines, the On-site

Shop and the key design constructs would likely function in a similar way as in the construction

industry. On the other hand, for other temporary service sites, our findings would likely not be

applicable. In corrective maintenance and small repairs, it is difficult to see the benefits of

introducing a solution like On-site Shops due to its very short duration and the limited scale of work

on the sites.

Implications for research methodology

As a methodological contribution, the study demonstrates how a design science approach provides

logistics researchers with direct access to the innovation process (Sein et al. 2011). Our study of

designs and outcomes yielded insights on the design constructs and mechanisms that facilitated,

advanced, and sustained the adoption of a logistics innovation. The participation in design gave

researchers access to study the purpose and scope of the solution, the evolution of the solution in

response to problems, and the understanding of the solution in different actor groups. The potential

benefit for research on logistics innovation is a more in-depth understanding of specific innovations,

which is a stepping-stone to a systematic view of generative mechanisms and accumulating

evidence of outcomes for different types of innovations and problem contexts (Holmström et al.

2014). This view opens the door for using theories such as sense-making and technological frames


24

which is a largely unexplored route for logistics and supply chain management research

(Gammelgaard and Flint 2012).

In this way, the design science approach and design theory can be seen as research methods for

evidence-based logistics management and practically useful theory. As a framework to integrate

and evaluate evidence from different studies and sources, design theory could be used in a similar

manner as design logics are already used in evidence-based management research (Denyer et al.

2008; van Burg and Romme 2014). A knowledge framework for the systematic review and

combination of evidence from different sources is needed for supporting a dynamic body of

knowledge that can be continuously edited and improved in a way similar to Wikipedia (Garner,

2014). In this way, the design science approach and design theory can be seen as a methodological

contribution to accumulating a body of design knowledge, specifying logistics innovations and

linking observed outcomes to relevant theoretical perspectives explaining the generative

mechanisms.

Further research

We have outlined a design theory on a logistics innovation in construction, adding a novel

perspective to the emerging theory of logistics innovations. Although the single-case design of our

study enables a rich description of the phenomenon as well as in-depth explanations, evidence of

the validity and generalizability of the design theory is limited. Based on a single-case study, we

cannot evaluate whether our emergent findings are simply idiosyncratic to the problem context of

the case or whether they could be consistently transferred to further cases (Eisenhardt and Graebner,

2007).

The proposed design theory requires further research, particularly examination of the testable

propositions on generative mechanisms for adoption. An avenue for such theory testing research

would be comparing successes and failures in the adoption of On-site Shop as the logistics

innovation spreads to other country organizations within the case company. Moreover, approaching

other construction companies with possibly similar efforts of innovation in small-item logistics

could be a way to further develop and test the design theory on adoption of logistical innovations.

Such comparative case studies would not only enable testing propositions but also contribute to

building the theory further by identifying additional design constructs and mechanisms affecting

adoption.

Another direction for future research is to expand the scope to other logistics innovations and other

industries. This line of research could deepen our understanding of the influence of information-

intensive settings on logistics innovation design and the mechanisms that produce desired and

problematic outcomes. Such potential information intensive problem contexts are, in addition to

construction, Internet retailing, project delivery, and spare parts provision. The theoretical

understanding of the logistics innovation process in the existing body of knowledge could then be

complemented by a growing body of research on solution designs, providing a deep and practically

relevant understanding of logistics innovation design for adoption. A specific logistics innovation

for further study, with potential applications in many information intensive settings, is in-transit

services for redirecting, merging, and delaying small shipments during transportation (Kärkkäinen


25

et al. 2003). This logistics innovation has been described using design theory elements (Arnäs et al.

2013) but has not yet been adopted in practice.

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Appendix I: Interview calendar Date Title Type Region Telephone (T)

or Face-to-Face


31

(F2F) interview

25.5.2011 Site manager Site South F2F

Foreman Site South F2F

Electrician Site South F2F






Production engineer Site South F2F



Site manager Site South F2F




Production engineer Site South F2F



Sales manager Supplier South F2F

Key account manager Supplier South F2F

10.6.2011 Site manager Site West F2F

Work safety delegate Site West F2F

Foreman trainee Site West F2F

Technical salesman Supplier West F2F

13.6.2011 Logistics manager Solution designer

South F2F

Logistics engineer Solution designer

South F2F

Systems specialist Solution designer

South F2F

Systems specialist Solution designer

South F2F

14.6.2011 Technical salesman Supplier East T

16.6.2011 Managing director Solution designer

South F2F

29.6.2011 Site manager Site East F2F

Foreman Site East F2F

Foreman trainee Site East F2F

30.6.2011 Site manager Site North F2F

Foreman Site North F2F



Technical salesman Supplier North F2F

1.7.2011 Manager of Nordic purchasing division

Solution designer

South F2F

12.7.2011 Site manager Site North T

Sales manager Supplier North T

Technical salesman Supplier North T

14.7.2011 Sales manager Supplier South F2F

Sales representative Supplier South F2F

Sales representative Supplier South F2F

18.7.2011 Sales manager Supplier West T

21.7.2011 Sales manager Supplier South T

5.8.2011 Sales representative Supplier North T

8.8.2011 Technical specialist Solution South T


32

designer

9.8.2011 Technical salesman Supplier South T

19.8.2011 Production manager Solution designer

South F2F

Equipment manager Solution designer

South F2F

Technical specialist Supplier North T

22.8.2011 Key account manager Supplier South F2F

26.8.2011 Regional manager Supplier North T

Appendix II: Interview guide

1. Background information (all)

a. Name, task, and job description

b. How long have you worked at Skanska/at the Supplier

c. What were your previous tasks at Skanska/at the Supplier

d. In which firms/tasks were you previously engaged before being employed at Skanska/at

the Supplier

e. Education

2. Describe the small-item stock concept (all)

3. When/from where did you hear about the new small-item stock concept? (all)

4. When/where did you first use the small-item stock? (all)

5. Were you involved in deciding to implement the small-item stock? If you were, what were your

reasons for implementing or not implementing it? (users and suppliers only)

6. Has your opinion about the small-item stock changed at some point of time? If it has, why? (all)

7. How has the small-item stock affected your work in practice? (all)

8. How do you think the small-item stock has affected the site supervisor’s work? (solution

designers and suppliers only)

9. How has the small-item stock affected the suppliers? (solution designers only)

10. How do you think the small-item stock has affected the site operations? (all)

11. What has been the firm level effect of the small-item stock at Skanska? (all)

12. Why do you think the small-item stock has increased its popularity at Skanska? (all)

13. Do you know someone who has not been satisfied with the small-item stock implementation?

(all)

14. In short: What are the advantages and disadvantages of the small-item stock? (all)

15. How could the small-item stock be improved? (all)

16. Anything else that you would like to bring up? (all)

Appendix III: First order categorizations of advantages/disadvantages, classified as

construction site, corporate, and supplier focused

Advantages Disadvantages

Makes the work of the foremen easier (Construction site)

Requires resources and effort (Construction site)

Ensures material availability (Construction site) Weakens site independence in procurement (Construction site)

Improves construction site efficiency Cannot be applied in all contexts (Construction


33

(Construction site) site) Reduces logistics costs (Construction site) Is too reliant on IT, which is considered a risk

(Construction site) Improves control of material flows (Construction site)

Parallel use of old and new systems is challenging (Construction site)

Induces indirect benefits (Construction site) Long-term profitability is questionable (Construction site)

Improves efficiency of procurement (Corporate) Unifies operations within the corporation (Corporate)

Successful operation requires commitment to shared agreements of use (Interface)

Makes introducing new logistics development projects easier (Corporate)

Shared agreements of use are not clear (Interface)

Improves cooperation (Interface) Adopting a new form of cooperation is challenging (Interface)

Makes supplier operations easier (Supplier) Complication of the procurement process leads to problems of communication (Interface)

Supports achieving business objectives (Supplier)

Long-term profitability is questionable (Supplier)

Develops and deepens the relationship between supplier and buyer (Supplier)

Enforcement of procurement contracts is inadequate (Supplier)

Enables more efficient assortment management (Supplier)

Causes extra work for the supplier, especially if the site does not follow shared agreements of use (Supplier)

Acts as a catalyst for improving operations (Supplier)

Way of operating does not comply with supplier’s standard processes (Supplier)

General positivism (Construction site) General positivism (Supplier) Function improves as time passes (Interface)


34

TABLE 1

Descriptive design theory elements of On-site Shop

Design theory component Description

Purpose and scope Solution to ensure material availability at construction sites to reduce production disruptions and visits by site personnel to hardware stores. Establish a pre-defined way of operating and doing business across project sites, company purchasing organization, and suppliers to project sites.

Principles of form and

function

Physical small-item store supplied using vendor managed inventory (VMI) replenishment system. Procedures for joint construction company-supplier planning of the store assortment, day-to-day operations of the supplier.

Principles of

implementation

Construction firm’s centralized organization owns, develops, and coordinates the logistics solution for individual sites. Platform is furnished centrally and delivered to site when project begins. Site personnel and suppliers plan assortment collaboratively

TABLE 2

On-site Shop vs. previous similar solutions

On-site Shop Supplier-owned shop (e.g., Wurth)

Site-owned, small-item containers

Ownership Construction firm Supplier Individual site Supplier selection Based on competitive

bidding carried out by central purchasing

Site is locked in by the supplier that offers the shop

Purchases made by site personnel on ad hoc basis

Assortment planning Done by site personnel and selected suppliers following a standard procedure

Done by supplier following its procedure

No systematic assortment planning

Purchasing Users read the barcodes of items taken from the On-site Shop; purchase information is automatically transferred to the firm’s ERP system and the supplier

Users take items from the shop; supplier manually checks and replenishes inventory

Site personnel place orders by phone or visit hardware store

Availability control Supplier has real-time information about inventory levels and

Supplier replenishes inventory during visits to the site

Usually no systematic availability control; replenishment occurs


35

replenishes according to the VMI principle

when there is a stock-out

Stock layout Standard layout planned by construction firm; all items have fixed and clearly market places in the store

Standard layout planned by supplier

Items placed in stock on ad hoc basis

Ramp-up and ramp-down

Assortment and inventory reset following a standard procedure when On-site Shop is moved to a new site

Supplier removes shop when project ends and offers it to other sites

Site manager usually takes the container and remaining items to the next site


36

TABLE 3

Technological frames describing the innovation

Solution designers Users Suppliers Five most commonly mentioned names for the solution

Lab

el

Small-item stock (33%) Stock (22%) Container (22%) Hardware store (22%) VMI store (11%)

Shop (24%) Hardware store (17%) Small-item stock (14%) Kiosk (10%) Store (10%)

Stock (24%) Container (18%) Small-item stock (12%) Shop (12%) Store (6%)

Rol

e

A channel for acquiring small items on site

An emergency stock, a buffer

A distribution channel

TABLE 4

Technological frames that describe the advantageous effects of the innovation

Developers Users Suppliers - Increases effectiveness of site operations (89%) - Reduces workload of site supervisor (89%) - Improves effectiveness of small-item purchases (78%) - Harmonizes logistics practices (67%) - Reduces total logistics costs (67%) - Improves availability of small items (67%) - Makes work of the supplier easier (56%) - Improves collaboration with suppliers (44%)

- Increases effectiveness of site operations (83%) - Reduces workload of site supervisor (79%) - Reduces total logistics costs (55%) - Improves availability of small items (38%) - Improves effectiveness of small-item purchases (21%) - Harmonizes logistics practices (10%) - Improves collaboration with suppliers (10%)

- Increases effectiveness of site operations (100%) - Reduces workload of site supervisor (76%) - Makes work of the supplier easier (71%) - Improves availability of small items (71%) - Reduces total logistics costs (53%) - Improves collaboration with construction sites (29%) - Improves effectiveness of small-item purchases (24%) - Harmonizes logistics practices (18%)


37

TABLE 5

Technological frames that describe the disadvantageous effects of the innovation

Developers Users Suppliers Maintaining the system requires resources (44%) Communication and collaboration between parties is more challenging (33%) Requires all parties to follow the rules (33%) Does not suit all construction sites (33%) Differs from suppliers’ standard practices (33%) Overall profitability is unclear (22%) Reliance on ICT technology (11%) Rules are not always followed (11%) Decreases site independence (11%)

Maintaining the system requires resources (59%) Requires all parties to follow the rules (52%) Decreases site independence (28%) Communication and collaboration between parties is more challenging (21%) Reliance on ICT technology (10%) Does not suit all construction sites (3%)

Overall profitability is unclear (71%) Requires all parties to follow the rules (53%) Rules are not always followed (53%) Differs from suppliers’ standard practices (47%) Maintaining the system requires resources (35%) Communication and collaboration between parties is more challenging (24%) Reliance on ICT technology (12%) Does not suit all construction sites (12%) Decreases site independence (6%)

TABLE 6

Technological frames that describe positive and negative user experiences of the solution

Developers Users Suppliers

Pos

itiv

e

Simple and easy to use (67%) Replenishment is automatic (33%) Users can influence the assortment in the On-site Shop (22%)

Simple and easy to use (24%) Users can influence the assortment in the On-site Shop (24%) Replenishment is automatic (7%)

Simple and easy to use (18%) Replenishment is automatic (12%) Users can influence the assortment in the On-site Shop (12%)

Neg

ativ

e

Problems with network connection (56%) Suppliers’ long lead times (11%)

Suppliers’ long lead times (14%) Limited assortment (14%) Problems with network connection (10%) Supplier does not put items on shelves (10%) IT system does not work properly (3%)

Problems with network connection (18%) IT system does not work properly (18%) Suppliers’ long lead times (12%) Purchases are not recorded immediately (12%) Orders are made in too small lots (12%)


38

TABLE 7

Outline of design theory for adoption of logistics innovation in the construction industry

involving temporary sites and implemented repeatedly over a long period of time

Design theory component Description

Design constructs Solution set-up; Relationship triad; Technological frames

Testable propositions

Proposition 1: Standard and efficient solution set-up enables the

adoption of logistics innovations at temporary construction sites

Proposition 2: Communication and operating rules in the

relationship triad of site users, solution designers, and suppliers

facilitate the adoption of logistics innovations in the construction

industry.

Proposition 3: Internal and external integration in the relationship

triad of site users, solution designers, and suppliers advance the

adoption of logistics innovations in the construction industry.

Proposition 4: Trilateral collaboration among centralized

organization, site organization, and suppliers sustains the adoption

of logistics innovation in the construction industry.

Proposition 5: Congruent technological frames of users, suppliers,

and solution designers for innovative supply chain solutions sustain

the adoption of logistics innovation in the construction industry.

Artifact mutability

On-site Shop can be used in unintended way as an emergency stock


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Figure 1: Generative mechanisms of the adoption of a logistics innovation in construction

industry.

generative mechanisms of the adoption of logistics innovation: the case of on-site shops in...

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