Sensemaking, sensegiving and absorptive capacity in complex procurements

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Abstract

This study explores and describes i) the nature of knowledge exchange processes at the frontline employee (FLE) level and ii) how FLE sensemaking processes affect buyer firm knowledge management practices in complex procurement contexts. The study utilizes an in-depth case analysis in the mining industry to identify a taxonomy of four buyer sensemaking investment/supplier collaboration profiles, to describe three sensegiving supplier roles (“confidence builders”, “competent collaborators”, and “problem-solvers”) and to explore how these evolve during complex procurement implementation. The study concludes with a conceptual model of the apparent linkages between sensemaking, sensegiving and buyer firm absorptive capacity in complex procurements. This study shows how micro-level (FLE) interactions influence macro-level knowledge integration (absorptive capacity) in the buyer firm. For managers, the study shows how the allocation of time and resources affects FLE-level knowledge exchange, with ultimate effect on buyer firm absorptive capacity.

Introduction

Complex procurements involve the acquisition and integration of technically sophisticated products and services (Brown and Jones, 1998; Chen, Law, and Yang, 2009). Common in industries such as mining, construction, manufacturing, information technology and infrastructure, the buyer firm generally seeks overall improvements in their capabilities from complex procurements (Brady, Davies, and Gann, 2005; Flowers, 2004, Flowers, 2007). Many of these outcomes rely on interactions between highly skilled frontline employees (FLEs) acting on behalf of exchange partners. These interactions aid in knowledge transmission and creation and, ultimately, produce the innovations, the creativity and the adaptability necessary to ensure successful outcomes (Andersen, Kragh, and Lettl, 2013; Levin, Thaichon, and Quach, 2016). In many cases, however, knowledge exchange processes are either unsuccessful or only partially successful (Reich, 2007; Shore, 2008). The persistence of these outcomes has led to speculation as to the causes of ineffective knowledge exchange in complex procurements (Reich, 2007; Shore, 2008).

Previous studies suggest that FLEs are more likely to share knowledge if they have sufficient motivation, skills and experience (Cadwallader, Jarvis, Bitner, and Ostrom, 2010; Wang, Wang, Long, Hou, and Ching, 2015). However, it is necessary for the behaviors of FLEs on both sides of the buyer-supplier dyad to complement each another (Brach, Walsh, Hennig-Thurau, and Groth, 2015). This can be difficult if FLEs have strong psychological associations with their own firms (Korschun, 2015), and if the culture of the firm is not conducive to knowledge sharing (Grabher, 2004). Complementarity is also important at the inter-firm level. Resource and systems compatibilities are necessary for productive inter-firm knowledge exchange (Ho and Ganesan, 2013; Vanpoucke, Vereecke, and Boyer, 2014; Vargo, Maglio, and Akaka, 2008). Despite acknowledgement that both micro and macro level dynamics are important, few studies consider the interactions between these levels of analysis, particularly for complex procurement scenarios (Lewin, Massini, and Peeters, 2011; Mattsson, Corsaro, and Ramos, 2015; Robertson, Scarbrough, Swan, and Scarbrough, 2003).

The central purpose of this study is to understand how FLE cognition affects task-related learning in complex procurement contexts and, as such, the study responds to calls for research in this area (Henneberg, Naudé, and Mouzas, 2010; Mattsson et al., 2015). The findings begin with a taxonomy of FLE profiles according to buyer firm sensemaking investment (i.e. allocations of time, effort and resources towards interpreting supplier information) and supplier collaboration approach. In this, we argue that complexity affects sensemaking activities relative to the degree of buyer-supplier engagement at the dyadic level. These findings extend the view that social integration mechanisms allow development of shared meanings (Peters, Pressey, and Johnston, 2016) by identifying two sorts of “levers” available to partner firms – buyer sensemaking investments and supplier collaboration approach – and by describing the implications of four different combinations of these mechanisms.

Earlier studies suggest that networks are formed by the views of the involved actors (Ellis and Hopkinson, 2010; Gadde, Huemer, and Håkansson, 2003; Leek and Mason, 2010). Despite this, the roles of actors as sensegivers in this process receives little attention. Our next set of findings reveal three sensegiving roles that supplier firm representatives adopt during complex procurements: confidence-builders, competent collaborators, and problem-solvers. This finding supports a theorization about the effects of value creation roles with specific reference to task-relevant knowledge creation and transfer and builds on earlier studies that demonstrate the importance of actors' perceptions of network roles when understanding network dynamics (Abrahamsen, Henneberg, and Naudé, 2012). By focusing on the sensegiving roles of supplier representatives, the study partially addresses current concerns in the service logic literature about the clarity of roles in value co-creation processes (Grönroos, 2008; Grönroos and Voima, 2013).

The final set of our findings map how complex procurement implementation stage affects the interplay between buyer FLE sensemaking and supplier representative sensegiving. While several studies suggest sensemaking is important for individuals when interpreting network change (Colville and Pye, 2010; Corsaro, Ramos, Henneberg, and Naudé, 2011; Leek and Mason, 2010), the effects of this process at the dyadic level are less clear. It appears that current views assume a situated notion of sensemaking in that actors have relatively stable identity profiles in dynamic situations (Weick, Sutcliffe, and Obstfeld, 2005) and that this helps them understand “why” and “how” networks shift (Abrahamsen et al., 2012). While this may be true, our findings suggest that role prominence differs depending on the task requirements of complex procurement implementation stage. This is consistent with changes in network position (Leek and Mason, 2010), yet ours is the first study to link this process to a specific implementation process. In uncovering this view, we develop a dynamic notion of absorptive capacity that illustrates the interplay between micro and macro levels of analysis.

The outcomes of this study highlight the importance of FLEs in supplier knowledge management practices during complex procurements. The findings draw on an in-depth case analysis of a complex procurement in the mining industry1 and, as such, they are most relevant to FLEs and managers operating in similar contexts. For managers in buyer firms, it is clear that buyer sensemaking investments affect the absorptive capacity of the buyer firm as a whole. By not supporting sensemaking activities, the effects of complexity become acute. This is likely to produce organizational paralysis through perceptions of high task diversity, information asymmetry and environmental dynamism. Excessive sensemaking investments, on the other hand, are also counterproductive since this produces slack while also encouraging supplier opportunism (i.e. they may take advantage of the situation). From a supplier firm's perspective, the recognition that supplier firm representatives adopt different sensemaking roles, and that these contribute to different relational dynamics according to implementation stage, should allow a clearer set of decision-making cues when determining collaboration approach.

Section snippets

Sensemaking and sensegiving in business-to-business interactions

As the primary interfaces between the firm and its environment, FLEs have two important roles. First, they are gatekeepers that determine what information to allow entry to the firm from external sources (Cohen and Levinthal, 1990; Lewin et al., 2011). Second, FLEs also determine the format in which information enters the firm. Supply chain studies generally support the notion that FLEs act as the social mechanisms that interact with members of the firm's supplier network (Preston, Chen, Swink,

Research design

To address the goals of the study, we adopted a research design that centers on theory development. Hence, we conducted a three-year case analysis of a large, Finnish mining company with global operations. A single case research design aims at understanding phenomena in detail and providing rich descriptions (Dubois and Gadde, 2014, Dubois and Gadde, 2002; Yin, 2009). Given this, the outcomes of our study are most relevant to complex procurement contexts. These are more likely to resemble

Findings

The findings from the study appear in three sections. The first section develops a taxonomy that categorizes supplier collaboration according to the degree of investment the buyer firm makes in sensemaking activities. The second section describes three main supplier sensegiving roles that emerge from the data. The third section maps the relative importance of supplier sensegiving roles in terms of implementation stage and the types of supplier collaboration that emerge in the first findings

Discussion

The findings suggest that the sensemaking and sensegiving processes between FLEs are important considerations in complex procurements. The buyer sensemaking investment approach determines i) how much information an FLE is exposed to and ii) how they appraise that information. While earlier studies suggest that upward dialogue (Nonis, Sager, and Kumar, 1996; Tourish and Robson, 2006) can translate FLE-level information to firm-level outcomes, the present study suggests that buyer sensemaking

Conclusion

We develop a taxonomy containing four buyer sensemaking investment/supplier collaboration profiles that categorizes the likely combinations of sensegiving and sensemaking activities of FLEs in complex procurements. This interplay also relates to three sensegiving supplier roles (“confidence builders”, “competent collaborators”, and “problem-solvers”), with these evolving dynamically during implementation. These findings support a conceptual model of the apparent linkages between sensemaking,

Acknowledgments

The research was conducted in the RIVIS (Realizing Intangible Value from Integrated Solutions)-project funded by the Finnish Funding Agency for Technology and Innovation. The authors would like to thank Paavo Ritala, Asta Salmi, Robyn Prior, Sue Williamson and the anonymous reviews for their thoughtful suggestions that have helped improve the final manuscript. The majority of this work was conducted while the first author was employed at the University of New South Wales, Australia.

Daniel D. Prior is currently Reader in Marketing and Director of the Executive MBA at Cranfield University, UK. Previously, he was Senior Lecturer in Management at the University of New South Wales Australia. Daniel's research interests center on the effects of buyer-supplier relationships on economic outcomes. Daniel's work appears in the Journal of Business Research, Industrial Marketing Management, the Journal of Business & Industrial Marketing, the Journal of General Management as well as

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  • Cited by (0)

    Daniel D. Prior is currently Reader in Marketing and Director of the Executive MBA at Cranfield University, UK. Previously, he was Senior Lecturer in Management at the University of New South Wales Australia. Daniel's research interests center on the effects of buyer-supplier relationships on economic outcomes. Daniel's work appears in the Journal of Business Research, Industrial Marketing Management, the Journal of Business & Industrial Marketing, the Journal of General Management as well as others. Daniel received his PhD from Macquarie Graduate School of Management, Macquarie University in 2008.

    Joona Keränen is currently Associate Professor and Project Director at Lapeenranta University of Technology, Finland. Joona's research focuses on customer value management in B2B markets, developing sustainable value propositions, and the marketing of complex projects and solutions. Joona's work appears in Industrial Marketing Management, the Journal of Business Research as well as others. Joona obtained his D.Sc in 2014.

    Sami Koskela is currently Sales Manager at Latex Oy Currently responsible of selling conveying solutions to customers as well as developing internal sales tools to improve sales outcomes. Sami received his Master's in Engineering and Industrial Management from Lapeenranta University of Technology, Finland in 2015.

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