Development of a theoretical model based on the evaluation of the impact of business process management as a dynamic capability on organisational performance' in the banking sector in a developing country context

Abstract

The most difficult question for companies in today’s dynamic business world is to gain and sustain a competitive advantage. One of the reliable answers for such a call is going beyond product innovation, that is, the innovation of business processes. The most sought-after practice for attaining the goal of process innovation is business process management (BPM). Abundant empirical researches on BPM are carried out especially in the developed world. But these research works are short of theoretical explanation, suffer from a limited stock of variables, and many recent studies look at single organizations and single BPM projects. Besides, most of the studies were undertaken within the context of developed economies which underlies little applicability in less developed economies. And yet these developing countries have been making huge investments in BPM undertakings which necessitate the conduct of empirical investigations to see whether such investments bring about good performance outputs. Hence, in an answer to the call for BPM theorization especially in terms of research on developing economies, the research investigated how dynamic capabilities theory explains BPM in a developing country context. Thus, the key research questions addressed in this research are: How can we conceptualize the concept of business management theoretically? and How can BPM and its effect on performance in organizations be validated in practice in developing countries? The research developed and validated a conceptual framework that links dynamic capabilities theory with BPM and shows how success in BPM has a positive effect in improving process and overall organizational performance in the Ethiopian context. Conceptually this framework is founded in understanding the theory of dynamic capabilities and its constituent parts or micro foundation of dynamic capabilities, the literature on BPM, business process and overall company performance. The conceptual framework establishes the link between activities in dynamic capabilities theory, such as sensing, seizing, and transformation constructs, and their impact on BPM success, and in turn BPM success and its performance effect on process and organization. To this end, the research develops 6 hypotheses. ii The positivist worldview is the paradigm of choice for this research and followed a quantitative approach by using the survey method. Hence, it uses the survey (n=210) method of research to collect data from commercial banks in Ethiopia. The reliability and validity of the measurement instrument have a test of exploratory and confirmatory analysis by using SPPS and AMOS respectively. The findings of this research show that companies in a developing country like Ethiopia can implement BPM as a dynamic capability project to improve the performance of business processes that have high organizational impact. This PhD research contributes to theory by making a relationship between BPM and dynamic capabilities theory and its impact on business process and overall organizational performance in a developing economy. Besides, the thesis offers recommendations to management in developing economies on implementing BPM as a dynamic capability. As the nature of the study is cross-sectional and as the measurement instrument is tailored to banking institutions generalization may be difficult on the findings of the study. This study may demand a longitudinal study and the replication of the study on diverse industries and geographical settings to show what the relationship may be between variables over a longer period of time and diverse geographical places to enrich the framework. Also, a qualitative study could also be used to understand the model in order to gain an in-depth understanding of why viewing BPM as dynamic capability is more appropriate. Hence further case studies could be undertaken in the future to have a generalized theoretical framework