business process improvement methodology adoption for improving service quality

262 Pages·2010·4.67 MB·English

BUSINESS PROCESS IMPROVEMENT METHODOLOGY
ADOPTION FOR IMPROVING SERVICE QUALITY:
CASE STUDIES OF FINANCIAL INSTITUTIONS
IN THAILAND

Nattapan Buavaraporn, BEng, MEng, MRes

Thesis submitted to the University of Nottingham
for the degree of Doctor of Philosophy

June 2010
ABSTRACT

To stay competitive and sustain long-term profitability, Business Process Improvement
(BPI) methodologies have become strategically important for financial institutions in
recent years. These include well-known approaches such as Total Quality Management
(TQM), Business Process Reengineering (BPR), Six Sigma and Lean. The customer-
focused themes of BPI should be of particular interest to service practitioners, in order
to achieve both process excellence and superlative customer service. The adoption of
BPI in the financial services sector, however, still appears to be at an early stage. There
is limited empirical research reported in the academic literature. This research therefore
explored the existing phenomena of BPI adoption through case studies, carried out in
leading Thai financial institutions.

The study was carried out in three main phases, following a literature review of BPI and
service quality issues, which provided the initial theory context. First, three case
companies were investigated to find out how the financial institutions introduced BPI,
and conducted BPI projects. The resulting insights helped to develop a theory model
that aimed to provide understanding of the outcomes of BPI initiatives, in this context.
The second research phase refined and validated the proposed theory model, aiming to
elevate the conceptual level of the findings. The empirical data was analysed, by
iterating between observed evidence and the literature, also using experts’ comments
and suggestions. In the final phase, the key relationships in the evolving theory model
were established and verified, employing further empirical evidence from revisiting the
case studies, specifically focusing on four important areas of financial services. A final
theory model was proposed, and in a further development aimed at practitioners, this
model was used as the basis for a proposed BPI evaluation framework, taking account
of current performance measurement approaches.

This research contributes to knowledge in the area of quality management, in particular
to BPI methodology and service quality for the financial services sector, but potentially
also in a broader context. The main contribution is the development of a theory model
to explain how financial institutions adopt BPI methodology for improving service
quality, providing a better understanding for managers in accurate targeting of the
I
operations process to be improved, through BPI adoption. The model also provides a
constructive foundation for further development of a practical BPI evaluation
framework, at the project level. The proposed theory model is, therefore, considered a
basis for further empirical work, both qualitative and quantitative, relating to the BPI in
the services context.

II
ACKNOWLEDGEMENT

First and foremost, I would like to take this opportunity to express my deep and sincere
gratitude to my respected supervisor, Dr. James Tannock, for all his dedication,
guidance, assistance, encouragement, and generous support. He was consistently
understanding and helpful throughout my Ph.D. study. I owe him my deepest thanks
and appreciation for all his thoughtful supervision.

I would like to thank Dr. Mike Byrne, Dr. Jane Guinery, and Professor Roger Maull for
their valuable comments and suggestions regarding the annual review, transfer panel,
and viva voce sessions. My thanks also go to all academics and administrative staff in
the Nottingham University Business School, who have provided kindly support during
my Ph.D. programme.

I would like to acknowledge the three collaborating case study companies. My special
thanks are also offered to: Ms. Ongorn Abhakorn, Ms. Sirintip Junsawad, Ms. Naruwan
Luepromchai, Dr. Piyawat Jirapongsuwan, Dr. Preeprem Nontaleelak, and other
interviewees whom I may not mention here, who have provided me with time and
information during the data collection process. I am also thankful to all key experts who
have given me suggestions with their professional knowledge and experience.

I would like to express my gratitude to the University of the Thai Chamber of
Commerce, who provided me with the scholarship to pursue my Ph.D. study. Many
thanks go to all of my friends in the University of Nottingham for friendship and robust
support. Many thanks also go to Ann Wright for her help in proofreading my thesis.

Last but not least, I would like to express my deepest gratitude to my family for their
unconditional love, encouragement, and entire support along my Ph.D. journey. Dad,
your advice inspired me to achieve my dream. Grand mom, you are always in my mind.
Pearl, you are my best sister. My special gratitude goes to my mom, for always being
there for me and helping me to get through the hardest moments. Mom, you are the
guiding light in my life, your support and endless love are the greatest motivation to
complete this Ph.D. thesis.
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TABLE OF CONTENTS
ABSTRACT .................................................................................................................. I
ACKNOWLEDGEMENT ........................................................................................... III
TABLE OF CONTENTS ............................................................................................IV
LIST OF FIGURES ...................................................................................................... X
LITS OF TABLES .....................................................................................................XI
LIST OF APPENDICES .......................................................................................... XIII
LIST OF ABBREVIATIONS .................................................................................. XIV

CHAPTER 1: INTRODUCTION ............................................................................... 1
1.1 BACKGROUND ................................................................................................. 1
1.2 SCOPE OF THE RESEARCH ............................................................................ 5
1.3 RESEARCH AIMS, QUESTIONS, AND OBJECTIVES .................................... 5
1.4 STRUCTURE OF THE THESIS .......................................................................... 6

CHAPTER 2: LITERATURE REVIEW ................................................................... 8
2.1 BUSINESS PROCESS IMPROVEMENT METHODOLOGIES .......................... 8
2.1.1 Sig Sigma ..................................................................................................... 9
2.1.2 Lean .......................................................................................................... 11
2.1.3 Other BPI methodologies ............................................................................ 13
2.1.3.1 TQM .................................................................................................... 13
2.1.3.2 BPR ..................................................................................................... 15
2.1.4 BPI methodology in the service sector ......................................................... 18
2.1.5 BPI implementation ..................................................................................... 19
2.1.6 The evaluation of BPI methodologies ......................................................... 21
2.2 SERVICE QUALITY ........................................................................................ 24
2.2.1 SERVQUAL service quality model (PZB) ................................................... 24
2.2.2 Grönroos’ service quality model ................................................................. 26
2.2.2.1 Technical service quality (TSQ) ............................................................ 26
2.2.2.2 Functional service quality (FSQ) .......................................................... 27
2.2.3 Service quality dimensions ......................................................................... 29
2.2.4 Research papers on TSQ and FSQ .............................................................. 30
IV
2.2.5 Service quality improvement perspectives ................................................. 32
2.2.6 Two key service quality improvement models ........................................... 34
2.3 RESEARCH GAPS, RESEARCH QUESTION AND THE INITIAL
CONCEPTUAL FRAMEWORK ............................................................................ 40
2.4 PERFORMANCE MEASUREMENT SYSTEM ............................................... 42
2.4.1 Performance measurement .......................................................................... 43
2.4.2 Performance measurement frameworks ...................................................... 47
2.4.2.1 The balanced scorecard ....................................................................... 47
2.4.2.2 Other performance measurement frameworks ...................................... 48
2.5 CONCLUSION .................................................................................................. 50

CHAPTER 3: RESEARCH METHODOLOGY ..................................................... 52
3.1 RESEARCH PHILOSOPHY ............................................................................. 52
3.2 RESEARCH DESIGN ....................................................................................... 55
3.3 CASE STUDY RESEARCH .............................................................................. 58
3.3.1 Case study selection .................................................................................... 59
3.3.2 Data collection methods............................................................................... 61
3.3.2.1 Semi-structured interview ..................................................................... 62
3.3.2.2 Documentation/ archives ...................................................................... 62
3.3.2.3 Questionnaires ..................................................................................... 63
3.3.2.4 Field notes ........................................................................................... 63
3.3.2.5 Case study database ............................................................................. 63
3.3.3 Data collection............................................................................................. 64
3.3.4 Data analysis ............................................................................................... 67
3.3.4.1 Case study analysis .............................................................................. 67
3.3.4.2 Refinement and validation of theory constructs .................................... 68
3.3.4.3 Verification of relationships chain ....................................................... 69
3.3.5 The quality of case study research ............................................................... 69
3.4 THE FINANCIAL INSTITUTIONS IN THAILAND ....................................... 71
3.5 CASE COMPANIES BACKGROUND ............................................................ 73
3.5.1 Company A ................................................................................................. 73
3.5.2 Company B ................................................................................................. 74
3.5.3 Company C ................................................................................................. 75
3.6 CONCLUSION ................................................................................................. 75
V
CHAPTER 4: THE EXPLORATORY EMPIRICAL STUDY .............................. 77
4.1 INTRODUCTION TO THE CASE STUDIES .................................................. 78
4.2 CASE STUDY A .............................................................................................. 80
4.2.1 BPI adoption background ........................................................................... 80
4.2.2 The initiation of improvement projects ....................................................... 82
4.2.3 The implementation of improvement projects ............................................. 82
4.2.3.1 Define .................................................................................................. 82
4.2.3.2 Measure ............................................................................................... 84
4.2.3.3 Analyse ................................................................................................ 84
4.2.3.4 Improve ................................................................................................ 85
4.2.3.5 Control ................................................................................................. 86
4.2.4 The measurement of improvement project outcomes ................................... 87
4.3 CASE STUDY B .............................................................................................. 88
4.3.1 BPI adoption background ........................................................................... 88
4.3.2 The initiation of improvement projects ....................................................... 90
4.3.3 The implementation of improvement projects ............................................. 91
4.3.3.1 Identifying the voice of customers (VOC).............................................. 92
4.3.3.2 Measuring the gap for improvement ..................................................... 92
4.3.3.3 Defining the improvement solutions ..................................................... 93
4.3.3.4 Selecting the improvement approach .................................................... 93
4.3.3.5 Maintaining the process performance ................................................... 94
4.3.4 The measurement of improvement project outcomes ................................... 94
4.4 CASE STUDY C .............................................................................................. 96
4.4.1 BPI adoption background ........................................................................... 96
4.4.2 The initiation of improvement projects ....................................................... 97
4.4.3 The implementation of improvement projects ............................................. 98
4.4.3.1 Define .................................................................................................. 98
4.4.3.2 Measure ............................................................................................... 99
4.4.3.3 Analyse ................................................................................................ 99
4.4.3.4 Improve ................................................................................................ 99
4.4.3.5 Control ............................................................................................... 100
4.4.4 The measurement of improvement project outcomes ................................. 100
4.5 CROSS CASE ANALYSIS ............................................................................. 102
VI
4.5.1 The initiation of BPI projects .................................................................... 102
4.5.2 The implementation of BPI projects .......................................................... 104
4.5.2.1 Define ................................................................................................ 105
4.5.2.2 Measure ............................................................................................. 106
4.5.2.3 Analyse .............................................................................................. 107
4.5.2.4 Improve .............................................................................................. 109
4.5.2.5 Control ............................................................................................... 110
4.5.3 The measurement of BPI project outcomes ............................................... 111
4.6 CONCLUSION ................................................................................................ 114

CHAPTER 5: THEORY REFINEMENT AND VALIDATION - THE EXPERT
INTERVIEWS ......................................................................................................... 118
5.1 THE EXPERT INTERVIEWS ........................................................................ 119
5.2 REFINEMENT OF THEORY CONSTRUCTS ............................................... 121
5.2.1 The difference between ‘process’ and ‘customer’ perspectives .................. 121
5.2.2 The emergence of ‘internal quality’ and ‘external quality’ dimensions ...... 123
5.2.3 Definition of the ‘internal quality’ and ‘external quality’ dimensions ......... 124
5.2.3.1 The theoretical foundation of internal and external quality
dimensions ..................................................................................................... 125
5.2.3.2 The underlying definition of the internal quality dimension ................ 126
5.2.3.3 The underlying definition of the external quality dimension ................ 128
5.3 VALIDATION OF THE LOGICAL CONSEQUENCE .................................. 130
5.3.1 Logical consequence.................................................................................. 130
5.3.2 The organisational structure of the case study institutions .......................... 132
5.4 CONCEPTUAL REFINEMENT ..................................................................... 134
5.4.1 The importance of the customer value concept .......................................... 135
5.4.2 Customer value concept ............................................................................ 136
5.4.3 Incorporating the customer value concept into the theory model ................ 138
5.5 CONCLUSION ............................................................................................... 139

CHAPTER 6: DEVELOPMENT OF THEORY MODEL .................................... 142
6.1 THE RELATIONSHIPS VERIFICATION ..................................................... 142
6.1.1 Relationship 1: A BPI initiative will help in improving the internal
quality dimension .............................................................................................. 143
VII
6.1.1.1 Senior executive interviews................................................................. 144
6.1.1.2 Operations manager interviews .......................................................... 145
6.1.1.3 Operations employee interviews ......................................................... 146
6.1.1.4 Relationship 1 - Summary................................................................... 146
6.1.2 Relationship 2: The internal quality dimension is closely linked with
the external quality dimension ............................................................................ 148
6.1.2.1 Senior executive interviews................................................................. 148
6.1.2.2 Operations manager and employee interviews .................................... 149
6.1.2.3 The relationship investigation matrix ................................................. 151
6.1.2.4 Relationship 2 - Summary................................................................... 152
6.1.3 Relationship 3: The internal quality dimension is closely linked with
cost/price dimension perceived by customer ...................................................... 154
6.1.4 Relationship 4: The external quality dimension and price are the key
mediators of BPI methodology adoption as regards customer satisfaction .......... 155
6.2 THE FINAL THEORY MODEL...................................................................... 159
6.3 THE DEVELOPMENT OF A BPI EVALUATION FRAMEWORK ............... 160
6.3.1 The reflection of the proposed theory model .............................................. 160
6.3.1.1 BPI adoption ..................................................................................... 161
6.3.1.2 Internal quality dimension ................................................................. 162
6.3.1.3 External quality dimension ................................................................ 163
6.3.1.4 Cost (price) dimension ...................................................................... 165
6.3.1.5 Customer satisfaction ........................................................................ 166
6.3.2 The proposed BPI project evaluation framework ....................................... 167
6.3.3 Guidelines for assessing the BPI project .................................................... 170
6.3.3.1 Reviewing and weighting the evaluation criteria ............................... 170
6.3.3.2 Weighting the importance of BPI project outcomes ............................ 172
6.3.3.3 Scoring the outcomes of BPI project .................................................. 173
6.3.3.4 Analysing the results from evaluation ................................................. 175
6.4 CONCLUSION ................................................................................................ 176

CHAPTER 7: DISCUSSION AND CONCLUSION ............................................. 178
7.1 SUMMARY OF RESEARCH FINDINGS ...................................................... 178
7.1.1 Establishing the conceptual background .................................................... 178
7.1.2 Exploratory empirical case studies ............................................................. 179
VIII
7.1.3 Theory refinement and validation .............................................................. 179
7.1.4 Development of theory model ................................................................... 180
7.2 COMPARISON WITH EXISTING THEORY MODEL ................................. 183
7.3 CONTRIBUTION TO KNOWLEDGE ........................................................... 185
7.4 LIMITATIONS AND AREAS FOR FUTURE RESEARCH ........................... 186

REFERENCES ........................................................................................................ 189
APPENDICES ......................................................................................................... 213

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