communication
TRANSCRIPT
LAPPEENRANTA UNIVERSITY OF TECHNOLOGY
Department of Business Administration
Supply management
INTRA-ORGANIZATIONAL USE OF COMMUNICATION TOOLS IN VALUE NETS–
CASES FROM THE ICT INDUSTRY
The Department Council of the Department of Business Administration has approved the subject of the thesis on March 15th 2001. Examiner: Professor Veli-Matti Virolainen Instructor: Liisa-Maija Sainio Lappeenranta 15.8.2001 Tiina Ojala Valtakatu 7 as 4 53600 Lappeenranta Tel. +358 50 593 5393
ABSTRACT Author: Ojala, Tiina
Title: Intra-organizational use of communication tools in value nets –
Cases from the ICT industry
Department: Department of Business Administration
Year: 2001
Master’s Thesis. Lappeenranta University of Technology.
109 pages, 22 figures, 11 tables and 3 appendices.
Examiner: Professor Veli-Matti Virolainen
Key words: Value net, communication tools, the Internet, the Web, Intranet,
Extranet, ICT industry
Hakusanat: Arvoverkosto, kommunikointivälineet, internet, web, intranet,
extranet, informaatio- ja kommunikaatioteknologian toimiala
The objective of this Master’s Thesis was to study the current state of internal communication in the case companies. These companies belonged to two case value nets in the ICT industry. The internal prospect was chosen as research subject because it creates the base for external, inter-organizational, communication. Particular attention was paid to the Web-based communication and its features as a communication tool in a value net. The research process followed both the qualitative as well as quantitative methods. The quantitative part of the study was implemented as a Web survey whose results revealed that communication in the case companies was mainly based on the use of traditional communication tools. In other words, the utilization of the Web for communication was quite low on which several factors have an influence. However, the Web has several features that improve communication in a value net and they should be considered when planning a universal communication system for the value net. In the theoretical part of this thesis the classification of communication tools was defined. The classification was based on the determination of interactivity related to communication. Additionally, the concept of a value net was described. The proceeding of the Web survey was explained in the beginning of the empirical part, and after that the discussion moved on to the results of the survey. The final chapter in the end of the thesis concluded the main findings and suggested subjects for further research.
TIIVISTELMÄ Tekijä: Ojala, Tiina
Nimi: Yrityksen sisäinen kommunikointivälineiden käyttö
arvoverkostossa – Caset informaatio- ja
kommunikaatioteknologian alalta
Osasto: Kauppatieteiden osasto
Vuosi: 2001
Pro gradu -tutkielma. Lappeenrannan teknillinen korkeakoulu.
109 sivua, 22 kuvaa, 11 taulukkoa and 3 liitettä.
Tarkastaja: Professori Veli-Matti Virolainen
Hakusanat: Arvoverkosto, kommunikointivälineet, internet, web, intranet,
extranet, informaatio- ja kommunikaatioteknologian toimiala
Key words: Value net, communication tools, the Internet, the Web, Intranet,
Extranet, ICT industry
Tutkimuksen tavoitteena oli selvittää sisäisen kommunikoinnin tilannetta case-yrityksissä. Yritykset kuuluvat kahteen case-arvoverkostoon, jotka toimivat informaatio- ja kommunikaatioteknologian alalla. Sisäinen kommunikointi valittiin tutkimusalueeksi, koska se muodostaa perustan ulkoiselle, yritysten väliselle kommunikoinnille. Tutkimuksen painopiste oli web-pohjaisessa kommunikoinnissa ja webin ominaisuuksissa arvoverkoston näkökulmasta. Tutkimusprosessissa käytettiin sekä kvalitatiivisia että kvantitatiivisia menetelmiä. Tutkimuksen kvantitatiivinen osa toteutettiin web-kyselynä, jonka tulokset osoittivat, että case-yritysten sisäinen kommunikointi perustuu pääasiassa perinteisten kommunikointivälineiden käyttöön. Toisin sanoen, webin hyödyntäminen on vähäistä, mihin vaikuttavat monet eri tekijät. Webissä on kuitenkin useita ominaisuuksia, jotka parantavat kommunikointia arvoverkostossa ja siksi nämä web-pohjaiset välineet tulisi huomioida, kun suunnitellaan yleistä kommunikointijärjestelmää. Tutkimuksen teoreettisessa osassa määriteltiin vuorovaikutteisuus-ominaisuuteen perustuva kommunikointivälineiden luokittelu. Tämän lisäksi määriteltiin myös arvoverkoston käsite. Empiirinen osa koostui web-kyselyn toteutuksen ja tulosten raportoinnista, jonka jälkeen yhteenveto kappale koosti merkittävimmät havainnot sekä mahdolliset jatkotutkimusaiheet.
FOREWORD
I would like to thank a few persons who have been involved with the project of
my Master’s Thesis. First of all, I appreciated the possibility to work with this
interesting research subject and therefore I am grateful for Telecom Business
Research Center, and particularly professor Veli-Matti Virolainen, of the
assignment. Secondly, I have Liisa-Maija Sainio and Sami Saarenketo to thank for
their advice as well as encouragement during the research project. Their assistance
has been of importance for me. Additionally, I am grateful for professor Kaisu
Puumalainen and Sanna Taalikka of their help with the Web survey. Last but not
least I would like to thank my husband Jarkko who has always believed in me and
also supported by saying “Things do always work out.”
TABLE OF CONTENT
1 INTRODUCTION ......................................................................................... 1
1.1 BACKGROUND TO THE SUBJECT OF THE STUDY......................................... 1
1.2 SUBJECT AND OBJECTIVES OF THE STUDY AND RESEARCH PROBLEMS....... 4
1.3 LITERATURE SURVEY................................................................................ 6
1.4 THEORETICAL FRAMEWORK.................................................................... 10
1.5 DELIMITATIONS ...................................................................................... 14
1.6 KEY DEFINITIONS .................................................................................... 15
1.7 METHODOLOGY OF THE STUDY............................................................... 18
1.8 STRUCTURE OF THE THESIS ..................................................................... 20
2 COMMUNICATION TOOLS AND A VALUE NET.............................. 22
2.1 WHAT IS A VALUE NET ............................................................................ 22
2.2 TYPES OF COMMUNICATION TOOLS ......................................................... 28
2.2.1 Interactive communication tools.................................................... 29
2.2.2 Non-interactive communication tools............................................ 31
2.2.3 Web-based communication tools ................................................... 32
2.3 CHALLENGES FOR THE COMMUNICATION TOOLS IN A VALUE NET ........... 40
2.4 ROLE OF THE WEB-BASED COMMUNICATION TOOLS IN A VALUE NET ..... 43
2.4.1 Motives for the use of the Web....................................................... 44
2.4.2 Vulnerabilities in the use of the Web ............................................. 47
2.5 SUMMARY............................................................................................... 49
3 USE OF COMMUNICATION TOOLS IN THE CASE
ENVIRONMENT ................................................................................................ 54
3.1 PRESENTATION OF THE INFORMATION AND COMMUNICATION
TECHNOLOGY INDUSTRY AND THE CASES ............................................................ 54
3.1.1 Typical features of the ICT industry .............................................. 56
3.1.2 Buyer A and its case value net ....................................................... 59
3.1.3 Buyer B’s and its case value net .................................................... 60
3.2 IMPLEMENTATION OF THE WEB SURVEY................................................. 62
3.2.1 Research frame.............................................................................. 63
3.2.2 Compilation of the questionnaire .................................................. 67
3.2.3 Challenges related to the implementation of the Web survey........ 69
3.2.4 Time schedule of the Web survey................................................... 73
3.3 RESULTS ................................................................................................. 74
3.3.1 Case A............................................................................................ 77
3.3.2 Case B............................................................................................ 83
3.3.3 Summary ........................................................................................ 88
4 SUMMARY AND MAIN FINDINGS........................................................ 91
REFERENCES
APPENDICES
LIST OF FIGURES
Figure 1. Allocation of the supply chain strategy in connection with product and
design strategy ................................................................................................. 3
Figure 2. Theoretical framework of the study ....................................................... 13
Figure 3. Delimitation of the study........................................................................ 15
Figure 4. Some examples of the Internet-based applications ................................ 17
Figure 5. Main dynamics behind the change from a value chain to a value net.... 23
Figure 6. Transforming value chains into value nets............................................. 24
Figure 7. Classification of the communication tools in this study ........................ 29
Figure 8. Web-based applications from the buyer's point of view with key
relationship types. .......................................................................................... 33
Figure 9. Formation of a virtual private network. Case European Network
Exchange........................................................................................................ 39
Figure 10. Location of communication tools in a value chain .............................. 40
Figure 11. Location of communication tools in a value net .................................. 41
Figure 12. Differences between the ways to communicate in a dyadic partnership
and a network structure.................................................................................. 42
Figure 13. Ideal model of the Web-based communication in a value net ............. 52
Figure 14. ICT cluster framework ......................................................................... 55
Figure 15. Discrepancies between the ICT and the process industry.................... 58
Figure 16. Buyer A's value net in this study.......................................................... 60
Figure 17. Buyer B's value net in this study.......................................................... 61
Figure 18. Limitation of the target group of the Web survey................................ 66
Figure 19. Proceeding of the Web survey ............................................................. 73
Figure 20. Availability of communication tools - Case A..................................... 78
Figure 21. Availability of communication tools - Case B ..................................... 84
Figure 22. Three internally most used communication tools in the case companies
....................................................................................................................... 89
LIST OF TABLES
Table 1. Structure of the thesis .............................................................................. 20
Table 2. The amount of communication ways in a value net ................................ 43
Table 3. Classification of the communication tools studied in this thesis ............. 53
Table 4. Sample of the Web survey....................................................................... 67
Table 5. Differences in the response rates between the case value nets ................ 76
Table 6. Use of the interactive, non- interactive and Web-based communication
tools in own company - Case A..................................................................... 79
Table 7. Use of the Web-based communication tools in own company – Case A 81
Table 8. Use of the specific communication tools in own company – Case A ..... 82
Table 9. Use of the interactive, non- interactive, and Web-based communication
tools in own company - Case B ..................................................................... 85
Table 10. Use of the Web-based communication tools in own company – Case B
....................................................................................................................... 86
Table 11. Use of the specific communication tools in own company – Case B.... 87
1
1 INTRODUCTION
The increasing interest in achieving and sustaining competitive advantage has
heightened the need for different forms of business-to-business co-operation.
Many researchers, such as Parolini (Parolini, 1999), Bovet and Martha (Bovet &
Martha, 2000c) and Andrews and Hahn (Andrews & Hahn, 1998), have studied
the concept of a value net as a certain form of inter-organizational collaboration.
In addition to several other factors, the importance of open and fluent
communication between the counterparts has been broadly stressed. Nevertheless,
only a few researchers have examined communication in practice. Moreover,
rather less attention is paid to the influences of the Web on the ways to
communicate in business networks.
Therefore, the purpose of the present study is to provide information about the
current state of the availability and the use of communication tools in the case
value nets. This study focuses on investigating internal communication that
happens in the case companies as well as the role of the Web in communication.
The internal aspect is chosen to the research subject due to its nature as a basis for
external communication between the members in a value net.
This thesis belongs to the research project of “Information Technology in
Business Relationships” in Te lecom Business Research Center Lappeenranta. The
project is implemented in co-operation with the University of Jyväskylä and the
companies operating in the industry of information and communication
technology.
1.1 Background to the subject of the study
Companies have noticed that satisfaction of the needs of their end-customers is of
crucial importance. The reason why supply chains are transforming into value
networks lies in the changes in environmental conditions and their impact on
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business. Political and economical changes, such as the formation of the European
Union (The European Union, 2001) and World Trade Association – WTO / Gatt
(World Trade Organization, 2001), structural change in the public sector,
globalization, changes in legislation and co-operation agreements, and finally, the
overall economic growth have forced the companies to re-organize their functions
to retain their competitive advantage (Saunders, 1997, 52-65). The five competitive
forces in Porter’s framework (Porter, 1985, 5) are going to meet with the change, so
that instead of five distinct rivals - competitors, substitutes, customers, new
entrants, and suppliers - the company collaborates with its suppliers and customers,
and thus, the competition happens between company networks, instead of between
single companies.
Environmental changes also affect the role of purchasing in a company.
Traditionally, purchasing has been perceived as a supporting function to marketing
and production. Bidding of suppliers and achieving of the lowest prices possible
have been the main tasks of purchasing department in a company. However, as the
role and the nature of purchasing were expanded, it was noticed that purchasing and
its co-operation with other departments were significant factors in a company’s
ability to compete (Saunders, 1997, 137-139). As Saunders states “Supply base
management and supplier development on a long-term basis, tied to manufacturing
and engineering strategies, have the potential to contribute to the achievement of
these [cost reductions, improvements in quality and delivery, faster time-to-market
and customer responsiveness] aims. (Saunders, 1997, 138)”
Figure 1 describes the connections between product – manufacturing - strategy and
design – engineering - strategy linked to the supply chain strategy. ”Product
strategies establish the basic task for the supply chain, which, therefore,
encompasses both internal and external activities. They include the determination of
priorities, with regard to product objectives, needed to meet customer requirements
and to beat the offerings of competitors. Differentiated strategies, with regard to
quality, cost, time and product innovation, impose different requirements on the
supply chain. They should play an important part in the design and development of
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both the structural and infrastructural features of the supply chain.” (Saunders,
1997, 150)
Figure 1. Allocation of the supply chain strategy in connection with product and
design strategy
(Source: Saunders, 1997, 150)
The structural features encompass the fundamental physical activities. The
infrastructural features, in turn, cover aspects which are related to controlling the
operation of the physical system, and include planning and control systems,
human resource policies and communication approaches. (Saunders, 1997, 151)
The framework attempts to show the need to maintain integrated control of the
supply chain and to provide the interface between internal operations and those
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conducted by members on both upstream1 and downstream sides (Saunders, 1997,
151). All of the three strategies – product, design and supply chain – are required
to fit in with each other as well as with the business and technology strategy of the
company. By capturing the benefits and advantages of the operations related both
to purchasing and marketing, the company uses its resources reasonably and it is
able to achieve its objectives.
The companies need different forms of collaboration to combine both their internal
and external strategies, and therefore, to co-operate with their partners. One of these
forms of collaboration is a value net. With good internal and external relationships,
based on such intangibles as trust and open communication and mutual sharing of
information, the value net is a significant alternative of collaboration to achieve
competitive advantage for business. What comes to the formation and the operation
of the value net, information technology can be named as one of the key enablers.
1.2 Subject and objectives of the study and research problems
Firms have to re-organize or even re-build their collaborative and communicative
networks to retain the competitive advantage in the market. Information and its
transfer, in other words communication, is the driving force behind the chain,
coordinating actions, while freeing them from time and space and potentially
involving customers in the supply process (Chandrashekar & Schary, 1999).
However, before companies can re-organize their ways to communicate, they have
to clarify the baseline related to the availability and the use of communication tools
for the possible improvements.
Therefore, the subject of the study is “Intra-organizational use of communication
tools in value nets – Cases from the ICT industry”. The availability and the use of 1 Upstream and downstream markets are concepts linked to the consideration of a supply chain.
Customers of the company are called downstream markets, and thus the upstream markets are
suppliers. (Karrus, 1998, 14)
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communication tools are described, and particular attention is paid to the Web-
based mediums. This study reviews two different cases from the ICT – information
and communication technology - industry and compares affinities as well as
differences between these cases.
The aim of this study is to create a report of the present availability and the
internal use of communication tools in the case companies in the case value nets.
The report is based on the results from the questionnaire survey and the findings
from interviews. Additionally, the purpose of the thesis is to create the base for
the development of value net communication in connection with the project
“Information Technology in Business Relationships”. Suggestions for further
improvements are presented.
Another concrete objective of this study is to examine the use of the Web in
implementation of the questionnaire survey. The use of the Web is a useful
experience when reviewing the benefits and difficulties related to the utilization of
the Internet technology.
As the main idea of this thesis is to investigate the current state of internal
communication in the case companies, and therefore the main research problem of
this study is defined in the following way:
How are communication tools used internally in the companies of the value
nets?
The main problem can be separated to the sub-problems (Home, 1994, 15). In this
study the main research problem is divided into theoretical and empirical sub-
problems:
??Theoretical sub-problems
1. What is a value net?
2. How to classify communication tools?
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3. How to study the role of the Web-based tools among the other
communication tools?
??Empirical sub-problems
1. How to describe the availability of communication tools in the case value
nets?
2. How to explain the current use of communication tools in the case
companies?
3. How to study the role of the Web-based communication tools in the case
companies?
4. How can the Web-based communication tools be used in the
implementation of the survey?
1.3 Literature survey
Literature survey represents previous writings about the subject of the study.
Moreover, literature survey describes the main perspectives and examinations
related to the subject, methodological solutions and consequential results (Hirsjärvi
et al., 2000, 115). In this study the literature survey proceeds as follows: First,
publications related to the supply management and thus networking are reviewed.
After that the literature survey moves on to the publications concerning value nets,
and the role of information technology related to the value networks. Finally,
studies and other publications related to the communication tools are discussed.
Saunders has written a basic publication in which he discusses supply
management and the role of strategic purchasing in business (Saunders, 1997). He
explains in his book that strategic purchasing is a central component of the
management function. In fact, the book from Saunders creates the base for this
study. Additionally, Lamming has researched issues related to the partnerships
(Lamming, 1993) as well as Virolainen in his dissertation (Virolainen, 1998).
They both highlight the fact that partnerships and networking are means to create
competitive advantage, but it is not a solution for every purchasing event. As
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presented in theoretical framework of this study, the value net is one of the forms
to achieve competitive advantage in the market.
Ollus et al. have examined the management of network organizations (Ollus et al.,
1999). They have studied the Finnish manufacturing industry and developed a
model of how to manage a network. Findings from their study are adapted also to
this study when considering the concept of a value net. Telecom Business
Research Center currently finished its large project concerning partnerships and
networking, and published a handbook related to the subject. The handbook is
aimed to the Finnish companies and it is based on studies from ICT industry
(Varis, 2001).
Only one dissertation which was in particularly related to purchasing and the ICT
industry was found. Leminen (1999) investigated and interpreted reasons for gaps
in buyer – seller relationships in his dissertation. The focus of his dissertation was
on telecommunication industry and closer review revealed that the gaps are due to
inflexible arrangements between buying and selling companies (Leminen, 1999,
321) Moreover, Leminen explains that to avoid major problems in inter-
organizational relationships, open communication is of very importance to accept
the existence of the insignificant gaps between counterparts.
Porter introduced the concept of a value chain which formed the early base for the
value net thinking (Porter, 1985). Recently, Reingoldt has studied the change from
the previous-mentioned concept of a value chain towards value net thinking
(Reingoldt, 2001). Bovet and Martha, in turn, have also dealt with the structures of
business networks as they have written a managerial book on value nets which
additionally includes several case examples (Bovet & Martha, 2000c). Gattorna has
edited a book which describes the supply chain and the value net on a general level
(Gattorna, 1998). He has also stressed the importance of effective utilization of
information technology in business-to-business collaboration and communication.
The book of Parolini deals with many separate case studies of value nets, and gives
therefore some beneficial perspectives to the formation of the concept of a value net
8
(Parolini, 1999). Additionally, Parolini has investigated background factors
affecting the value net creation as well as interpreted a fundamental value analysis
for companies.
In addition to the books, several articles from various authors were found dealing
with the topic of value net and its features. Andrews & Hahn have explained the
transformation from the supply chain to the value network in their articles
(Andrews & Hahn, 1998; Andrews & Hahn, 1999). Furthermore, they have
discussed typical features of a value network as well as details linked to the
formation of a value net. Besides their publications, Bovet & Martha have written
several articles considering value networks and their characteristics (Bovet &
Martha, 2000a; Bovet & Martha, 2000b). Some case examples and theory of value
networks are included in their publications. Allee, on the other hand, has got
acquainted with value creation, and thus developed an analysis of a value creation
in a value net (Allee, 2000, 36-39). In this study the concept of a value net is
formed on the basis of these references.
Timmers (2000) has approached the subject of value net and new business models
based on it in his book “Electronic commerce – Strategies and Models for
business-to-business Trading”. Timmers discusses topics from the marketing
point of view, but mainly his writings can be adapted to the supply management.
Timmers sees the role of information technology highly important in enabling the
operation of a value net structure. In addition to Timmers, Karjalainen
(Karjalainen, 2000) has studied the linkage between eletronic business models and
their influence on a firm’s business strategies. Karjalainen stress that the
development of information technology, onto which different electronic business
models are based, affect traditional value chains and therefore cause changes in
competitive advantages of the companies. He also highlights that value nets are
created as a result of the changes in the markets, and they are able to rapidly react
to the changes in the end-customers’ needs or competition (Karjalainen, 2000,
91).
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Only a few articles and studies of the communication tools were found. However,
some surveys on the use of communication tools were available, for example
surveys of Sherer (1999), Larson & Kulchitsky (2000), and Carbone (2000). Sherer
investigated the use of inter-organizational information systems in manufacturing
networks in the year 1999. She approached the subject by a survey from
approximately 20 different industry sectors, and consequently concluded that the
information technology was not a significant enabler in inter-organizational co-
operation at that time. The study of Sherer arises a question of what is the situation
now, two years later.
Larson & Kulchitsky, on their behalf, have studied the use and the impact of
communication tools in purchasing. The survey was made a few of years ago and it
measured the influence of a variety of media on buyer-supplier relationships and
performance. Additionally, it covered purchasing professionals’ preferences for
various communication tools. The statistical results show that the electronic media,
such as EDI, e-mail, and the Internet, were characterized by low utilization (Larson
& Kulchitsky, 2000, 36). Larson & Kulchitsky stress the importance of further
investigations which should be focused on the use of the Internet in business
relationships.
Carbone (2000) has introduced a survey of the use of the Internet and other
communication media among purchasers, which revealed some considerable points.
First, the results of the study show that 67 % of respondents think the Internet will
be used for online communication in the near future. Secondly, the respondents
argued that the travel costs decrease due to the improved communication tools and
effective use of IP networks. Thirdly, the respondents stated that new
communication tools enable more effective and efficient information exchange
between partners than at the moment and thus, stabilize relationships.
The following quotations show that opinions of the influence of the Internet on
business vary a lot. One respondent from the last-mentioned survey was referred as
he had stated, “ the Internet will become the primary means of communicating with
10
suppliers and will replace in-person meetings and even telephone calls, mail and
faxes.” (Carbone, 2000, 74) Contrary to this, another respondent had stated, “The
Internet will become the primary means of transferring data and doing routine
transactions, but in-person and telephone contact will cement good long-term
relationships that give us a strategic edge.” (Carbone, 2000, 75) According to these
statements it can be concluded that it is important to define the role of the Internet
and particularly the Web in a value net and thus to show the significance of the new
Internet-based communication tools.
1.4 Theoretical framework
The purpose of the theoretical framework is to show how the subject of the thesis
is linked to the business administration, and more accurately, to the supply
management. This thesis settles itself to the cross-scientific research area due to
its connection to both supply management and information technology.
The framework aims to define the role of a value net in supply management. In
addition, it also presents the link between the information technology and supply
management. The structure of this chapter is based on the description of the
theoretical framework, as can be seen from figure 2. The numbers in the following
text can be found in figure 2 as they illustrate the theories onto which the
framework is grounded.
Supply management is divided into operative and strategic decisions, which affect
the function of purchasing in a company. The first element in the strategic
decision making of purchasing is to decide whether to make the required product
itself or buy it outside the own company (Virolainen, 1998, 30). Number 1 in
figure 2 shows this phase, and thus directs the scope of this study towards the
distinct types of purchasing. Ellram and Carr (1994) have reviewed literature of
strategic purchasing and accordingly classified three distinct types of purchasing:
specific strategies employed by the purchasing function; the role of purchasing in
supporting the strategies of other functions and those of a firm as a whole; and the
11
utilization of purchasing as a strategic function of the firm (Ellram & Carr, 1994,
10). Although Ellram and Carr have classified functions of purchasing as distinct
operations, it is remarkable to notice that purchasing is presently considered as an
essential part of a firm’s business strategy. Purchasing includes different tasks
depending on the nature of the task at hand but the overall role of purchasing is
profoundly linked to the strategic business issues of the firm.
Number 2 describes the types of purchasing functions and according to the
quotation from Ellram and Carr: “…when purchasing is proactive and operating
at a strategic level, there are major opportunities to achieve a competitive
advantage through strategic purchasing” (Ellram & Carr, 1994, 17), the
framework shifts to the different strategic sourcing options which is marked by
number 3.
Number 3 in the figure reveals that sourcing options vary from various partnering
options (e.g. vertically integrated production, joint ventures) to options offered
from markets (e.g. bidding, spot procurement) (Virolainen, 1998, 39), (Cox, 1996,
63), (Parker & Hartley, 1997, 117). Due to the focus on business-to-business
collaboration, the stage of partnership is taken into closer consideration. As
number 4 in turn shows, the different types of partnerships are situated between
lean supply, parallel sourcing, network sourcing, and reverse marketing
(Virolainen, 1998, 44-65), (Cox, 1996), (Lamming, 1993). The emphasis of this
study is on network sourcing and its possibilities to create competitive advantage
to the companies in the network.
The concept of network sourcing can be defined as follows: “Network sourcing is
the idea that it is possible to create a virtual company at all levels of the supply
chain by engineering multiple-tiered partnership relationships at each stage, but
without moving to vertical integration (Cox, 1996, 64).” As can be seen in figure
2, number 5 illustrates the phase of network sourcing. Number 6, in turn, presents
that a value net is one of the forms of network sourcing. Naturally, there are also
other forms of network collaboration but they are excluded from this study.
12
The stages 6 and 7 consider one of the major concepts of this study. Bovet and
Martha (Bovet & Martha, 2000c), Andrews and Hahn (Andrews & Hahn, 1998),
Timmers (Timmers, 1999), to mention a few, have studied the concept of a value
net that is illustrated as number 6. In addition to those researchers, Reingoldt has
investigated the change from a value chain towards a value net structure in his
thesis (Reingoldt, 2001). The concept of a value net is discussed in a more
accurate way in chapter 2.
What comes to the linkage of information technology to the research subject,
number 8 and 9 represent the connection of information technology to the thesis.
Web-based communication is needed to complement other ways of
communication and simultaneously to make communication between members in
a value net more effective and efficient. As explained in forthcoming chapters, the
Web is based on the Internet. Furthermore, Internet Protocol, IP, enables the
operation of the Internet that can be seen as number 8 in the figure illustrating the
framework.
As a conclusion from the framework, number 10 shows the location of the subject
of this study in the cross-scientific research area. Supply management and
information technology are therefore connected together.
13
Information technology
Supply management
Operative decisions Strategic decisions
Make
Buy
Specific purchasing strategies
Purchasing as a supporting function in the firm
Purchasing as a strategic function of the firm
Network sourcing
Lean supply
Parallel sourcingReverse marketing
Partnership
Markets
Intra-organizational use of communication tools in value nets – Cases from the
ICT industry
Telecommunications technologyIP networks
1)
2)
3)
4)
5)
6)
The concept of a value net
7)Change from a value chain to a value net
8)9)
The Internet
The Web
10)
Information technology
Supply management
Operative decisions Strategic decisions
Make
Buy
Specific purchasing strategies
Purchasing as a supporting function in the firm
Purchasing as a strategic function of the firm
Network sourcing
Lean supply
Parallel sourcingReverse marketing
Partnership
Markets
Intra-organizational use of communication tools in value nets – Cases from the
ICT industry
Telecommunications technologyIP networks
1)
2)
3)
4)
5)
6)
The concept of a value net
7)Change from a value chain to a value net
8)9)
The Internet
The Web
10)
Figure 2. Theoretical framework of the study
14
1.5 Delimitations
This study is a case study research of value nets in the ICT industry and it
concentrates on clarifying the availability and the use of communication tools in
the case companies. Due to the nature of case study advanced generalizations
from empirical study are excluded because the sampling was done as judgment
sampling. The framework presents the delimitations of this study as well as the
subjects that are ignored in this thesis.
As the focus of the study is on the “buyer – suppliers” network, the value net is
considered from the buying company’s point of view. In other words, the
companies are classified as suppliers from separate tiers according to the buyer
(heading) company. To illustrate the hierarchy, the 1st tier supplier has a straight
connection to the buyer, as the 2nd tier supplier is linked to the previous-mentioned
1st tier supplier and so on. In this study Case A concerns the suppliers from the 1st
tier to the 2nd tier suppliers, contrary to Case B which has the levels of the buying
company and three different levels of suppliers. In this thesis the customers are only
seen as the driving force for the function of a value network.
Figure 3 describes the delimitation of the study. The figure illustrates that the focus
of this study is in the buyer-suppliers network, which is marked as gray area in the
picture, and customers are seen merely as end-customers. In this study the end-
customers can be, for example, paying customers or stockholders of the company
(Virolainen, 2001a). The figure shows that companies in a value net are linked to
each other and additionally they are situated in different levels of supplier tiers.
However, this study focuses only on studying internal communication in the case
companies because it creates the base and conditions for the external
communication between distinct members of a value net. In the future the
connections and the use of communication tools between separate value net
companies are examined.
15
BUYER CUSTOMER
2nd TierSupplier
1st Tier Supplier
End-customers
3rd TierSupplier
BUYER CUSTOMER
2nd TierSupplier
1st Tier Supplier
End-customers
3rd TierSupplier
Figure 3. Delimitation of the study
In addition to supply management, the subject of the study is related to
information technology and technically thinking, the limitation concerns the
Internet. Therefore, in this study the Internet is considered only as the enabler for
the operation of the Web-based communication tools that are applications which
are used through the browser to show Web pages.
1.6 Key definitions
This chapter presents the definitions of the main concepts such as value net,
communication, and the Web, which are closely related to the study. In fact, the
definition of some concepts such as “value net” or “communication” is
complicated due to the lack of standardization among business concepts. These
concepts have various meanings depending on the context, or on the speaker or
the author in case. As opposed to the business concepts, it is relevant to notice that
information technologies have accurate definitions, for example, the definition of
the GSM, Global System for Mobile communication, technology is based on the
certain protocols, components, and engineering to enable the GSM operations. In
16
addition, also the Internet has for example the certain protocols, IP-addresses, and
security systems to enable the information transfer. However, business concepts
lack these standard definitions, and thus, the concepts vary according to the
different authors and environments (Kemppainen, 2001). In this study, the
concepts “value net” and “communication” are defined in the following way:
Value net is a company network in which the member companies collaborate and
co-operate together aiming to serve their end-customers with best quality and as
fast and cost-effectively as possible. Additionally in this study, the value net is
defined to consist of more than two parties. In other words, the network has to
have three or more parties to be considered as a value net.
Communication: According to a dictionary, the word “communication” means
the act of communicating; exchange of ideas, conveyance of information. The
word “communication” also signifies that which is communicated, as a letter or
message. In addition, the word “communication” can be understood as means of
communicating, as a highway, telephone, radio, television, etc. (Landau, 1996,
142). Consequently, the word “communication” has many separate meanings
depending on the context.
However, in this study the concept of communication is defined as follows:
Communication is information transfer between two or more persons or larger
entities, such as departments of a firm or inside a firm itself.
Communication tools are the mediums which transfer information from one
place to another, or actually, from a sender to one receiver or several receivers.
In this thesis the communication tools are separated into the interactive and the
non- interactive communication tools. The non- interactive tools are additionally
divided into the Web-based and other communication tools.
The Web (World Wide Web or www): To fully understand the concept of the
Web, its background, the Internet, has to be explained. The Internet is simply the
17
sum of the worldwide inter- linked computer networks linking millions of
computers; peripherals such as printers and large hard disk assemblies; and
communications equipment, including wiring, satellites, routers, repeaters,
switches. A computer network is means such as copper wiring, optical- fiber
wiring, infra-red light, and microwaves, of linking computers so that computers
can communicate with each other. (Blueroom, 2001)
Only with this global network of computers in place is the Web able to exist.
Accordingly, the Web can be defined as follows: a hyper-linked communications
service that operates on top of the Internet's TCP/IP communications technology.
Furthermore, the Web is composed of millions of hyperlinked, graphical Web
pages that may host a wide range of text, image, audio, and video files; on the
other words, it may host the sources of multimedia. (Blueroom, 2001) Figure 4
below describes the difference between the Internet and the Web; the Internet can
be defined as a base for different applications.
The Internet
FTP The Web
E-mailIRC
Bulletin boards
Newsgroups
The Internet
FTP The Web
E-mailIRC
Bulletin boards
Newsgroups
The Internet
FTP The Web
E-mailIRC
Bulletin boards
Newsgroups
Figure 4. Some examples of the Internet-based applications
Interactivity vs. non-interactivity: In this study the interactivity is linked to
communication. Communication is interactive if it happens online and does not
leave any tracks after the event of communication. Non-interactive
18
communication, in turn, leaves tracks due to its documented information transfer.
For example, an e-mail message represents non-interactive communication as a
telephone call illustrates interactive communication.
1.7 Methodology of the study
“Case studies strength is its ability to deal with full variety of evidence –
documents, artifacts, interviews, and observations.” (Yin, 1994, 9) Case study is a
recommended research strategy when “a “how” or “why” questions are being asked
about contemporary set of events over which the investigator has little or no
control” (Yin, 1994, 9). Moreover, Yin quotes Schramm (1971) as he describes the
case study: “it [the case study] tries to illuminate a decision or set of decisions: why
they were taken, how they were implemented, and with what result.” (Yin, 1994,
12) As a conclusion from the previous statements, the case study is the most
obvious method in this study due to the formulation of the research problem: How
are communication tools used internally in the companies of the value nets?
Case study can be used to explain, describe, illustrate, explore, and evaluate the
subject of the study. A process of triangulation facilitates and makes more reliable
to conclude findings in a case study (Yin, 1994, 92). Accordingly, this study uses
both qualitative interviews and quantitative questionnaires to solve the research
problems.
Case studies typically combine data collection methods and the evidence may be
qualitative (e.g. words), quantitative (e.g. numbers), or both (Eisenhardt, 1989,
535). Triangulation provides stronger substantiation of constructs and hypotheses. It
is possible by multiple data collection methods such as archives, interviews,
questionnaire, and observations (Eisenhardt, 1989, 535-538) which not only
examine the same subject from manifold perspectives but also increase
understanding by allowing for new and deeper dimensions to emerge (Jick, 1979,
604). Various references state that qualitative and quantitative methods should be
regarded as complementary rather than as rival research methods. Furthermore, the
19
accuracy of the judgments can be improved by collecting different kinds of data that
consider the same phenomenon (Jick, 1979, 602).
Source material for this study was collected by the reviews from literature and
articles, the Web survey in the case companies, and interviews with representatives
from the case companies. Also related dissertations, proceedings and seminars were
considered as important sources of information for this study.
Articles, publications and other information were collected from various sources
as online article databases, such as Abi/Inform, Ebsco, Emerald, IEEE Xplore -
The Institute of Electrical and Electronics Engineers, Inc., literature, companies’
home pages and other Internet pages, various presentations and studies on the
research subject and related topics. Additionally, publications from different
research centers such as the National Technology Agency in Finland, Telecom
Business Research Center of Lappeenranta University of Technology, The
Research Institute of the Finnish Economy, were reviewed. Occasionally, useful
information was gathered from Elmar’s mailing list which is managed by the
Columbia University. The collection of appropriate material continued during the
study and potential sources were taken into closer consideration. Information was
searched mostly by words such as a value net or a value network, a network
organization, a value chain, the Internet, the Web, an Intranet, an Extranet, IP -
Internet Protocol - networks, (inter-organizational) communication, and (inter-
organizational) information transfer, to mention a few.
The Web survey represented the quantitative method in this study. Usually, a
quantitative study precedes the qualitative study because it creates the base for the
formation of qualitative interviews (Hirsjärvi et al, 2000, 133). The questionnaire
survey collected general data of the research area and thus the focus and the
direction of interviews were made more specific and sharpen. Nevertheless, in this
study the survey and interviews were made simultaneously to get as much
information about the current state as possible. By doing this, both of the methods
complemented each other’s results.
20
A qualitative study aims to describe and explain current practices and to find and
disclose facts of these practices (Hirsjärvi et al., 2000, 161). For the qualitative part
of this study material was collected by interviews, observations and reviews of
literature and articles. The findings obtained with qualitative methods supported the
conclusions made from the questionnaire survey.
1.8 Structure of the thesis
As can be seen from table 1, this study is divided into two main divisions which are
a theoretical part and an empirical part. Furthermore, the theoretical part is
distributed to two separate chapters: (1) Introduction, and (2) Communication tools
and a value net. The empirical part also consists of two chapters: (3) Use of
communication tools in the case environment, and (4) Summary and main findings.
Table 1. Structure of the thesis
Chapter Content of the chapter
Related research questions
Subject terms
1 Introduction Background, Subject and aims of the thesis, Research problems, Literature review, Theoretical framework, Delimitations, Key definitions, Research methods, Structure of the thesis
2 Communication tools and a value net
Definition of the value net, Classification of the communication tools, Challenges for communication in a value net, The role of the Web-based communication tools, Summary of the theoretical part
What is a value net? How to classify communication tools? How to study the role of the Web-based communication tools among the other tools?
Interactive and non-interactive communication, The Web, The Internet, Intranet, Extranet
The
oret
ical
par
t
21
3 Use of communication tools in the case environment
Introduction to the ICT industry, Presentation of the cases, Issues related to the Web survey, Results
How to describe the availability of communication tools is the case value nets? How to explain the current use of communication tools in the case companies? How to study the role of the Web-based communication tools in the case companies? How can the Web-based communication tools be used in the implementation of the survey?
The ICT industry, The Web survey
4 Summary and main findings
Summary of the thesis, Report on the main findings based on the study
How are communication tools used internally in the companies of the value nets?
Em
piri
cal p
art
Introduction to the subject creates the framework for the thesis as well as explains
the key concepts briefly. After the introduction phase the definition of a value net,
the communication tools, and also their division to the interactive and the non-
interactive tools are described. Additionally, some challenges related to
communication in a value net are briefly explained. Then the study moves on to the
discussion of the role of Web-based communication tools in a value net which deals
with the motives and the vulnerabilities related to the Web. Summarizing sentences
of the chapter close the theoretical part of this study.
The empirical part starts by the introduction of the ICT industry, its features and
problems. The cases - Buyer A, Buyer B and the members of their value nets - are
also briefly presented. Moreover, the empirical part consists of explanation of how
the Web survey was implemented among the case companies. In addition to the
implementation phase, the results from the survey are discussed and the most
important findings are highlighted. Finally in the empirical part, and also in the end
of the entire study, the summary and main findings combine together the main
issues related to the theory and the practice. Additionally, some further topics for
future research are presented.
22
2 COMMUNICATION TOOLS AND A VALUE NET
In business-to-business networks companies have many possibilities to use
different communication tools. Each of the tools has its characteristics, and
suitability for different events of communication varies a lot according to the
communication tool in case. Companies have several directions into which to
develop the use of the communication tools, especially the Internet-based ones, in
order to gain more benefits from them.
As the subject of the study refers to the use of communication tools in the
companies of a value net, the concept of a value net has to be explained at first.
Then the types of communication tools are presented as well as challenges that are
related to communication in a value net. Finally in this chapter, the role of the
Web-based communication tools is discussed.
2.1 What is a value net
The concept of a value net is based on Porter’s analysis of a company’s internal
value chain to attain competitive advantage (Porter, 1985, 37). Furthermore,
Porter sees that the interaction of separate companies creates a value system in
which the internal value chains of distinct companies are embedded into one large
value system. The ultimate goal of such a value system is to gain and to sustain
competitive advantage of its members. (Porter, 1985, 34)
As a reconfiguration of the theory of a value chain, some researchers have dealt
with the concept of a value net which is abundantly based on the development of
the information technology (Reingoldt, 2001, 16). Additionally, the collective
impact of other concepts, as core competence, virtual enterprises and total
customer experience, has contributed to the formation of the concept “value net”
(Andrews & Hahn, 1998, 7). In literature value nets are also known as value
networks, value Webs and value constellations (Varis, 2001, 21).
23
Researchers such as Porter (Porter, 1985), Lamming (Lamming, 1993), Cox (Cox,
1996), and Bovet and Martha (Bovet & Martha, 2000c) have dealt with the main
driving forces in the current markets that also have an influence on the change
from a value chain towards a value net. These driving factors of the change are
defined as follows: more demanding customers; the Internet and digital
technology; growing competitive pressure; and globalization. Figure 5 describes
these influencing factors and the direction of their affects.
The concept of a value net
Change from a value chain to a value net
More demanding customers
The Internet and digital technology
Growing competitive pressure
Globalization
Customer aligned Collaborative
Fast flow
Agile and scalable
Digital
The concept of a value net
Change from a value chain to a value net
More demanding customers
The Internet and digital technology
Growing competitive pressure
Globalization
Change from a value chain to a value net
More demanding customers
The Internet and digital technology
Growing competitive pressure
Globalization
Customer aligned Collaborative
Fast flow
Agile and scalable
Digital
Figure 5. Main dynamics behind the change from a value chain to a value net
On the other hand, figure 6 below illustrates the change from the form of a value
chain to the form of a value net. The chain is the set of internal or inter-
organizational processes that produce and deliver goods and services to
customers. Separate functions and operations are part of the value chain process,
but they are seldom included within the value chain organization (Bovet &
Martha, 2000b).
24
Figure 6. Transforming value chains into value nets.
(Source: Andrews & Hahn, 1999, 306)
Within a value net, each enterprise looks like an individual mini-network,
encompassing all of its businesses and partners – strategic, tactical, and virtual
partners and suppliers around the world. Each participant is forced by its
competitive environment to rethink the way it serves and remains close to its
customers and the way in which it develops its products and services with
customers (Andrews & Hahn, 1999, 305). Moreover, Andrews & Hahn offer an
illustrative overview of the term “value net” in one of their articles: “it [the value
net] looks like a web of virtual enterprises that behave like living, ameba- like
organisms – constantly changing shape, expanding, shrinking, multiplying,
dividing, shifting, and mutating.” (Andrews & Hahn, 1998, 7)
A value net is created from several companies linked together in a way that
provides at first value to the end customer, and secondly in a way that guarantees
timely and rapid information exchange among all the members in the net. The
25
fundamental factor that enables a value net requires co-operation and confidence,
not forgetting the basis for functionality – digitization that provides effectiveness
(Ollus et al., 1999).
Every company in a value net concentrates on its core competence. This means
that the focus of the company is on the operations that it can and it knows best. In
other words, the entire network consists of specialized companies which
collaborate together to achieve shared goals. In fact, a value net generates
economic value through complex dynamic exchanges between one or more
enterprises, its customers, suppliers, strategic partners, and the community (Allee,
2000, 37).
A value net combines the advantages of a traditional network and value chain
activities. The former emphasizes joint efforts when achieving efficiency, whereas
the latter focuses more on the value-creating activities. Parolini states that instead
of considering a value net as sets of economic players, it should be seen as sets of
activities that are jointly involved in the creation of value (Parolini, 1999, 59-68).
Timmers defines a value network as a multi-enterprise network of relationships
focused on integration of information flows to exploit information and knowledge
in the network for strategic business objectives.” (Timmers, 1999, 183) Bovet and
Martha, in turn, explain the concept of a value net in the following way: “A value
net is not a sequential, rigid chain. In fact, it is a dynamic, high-performance
network of customer / supplier partnerships and information flows.” (Bovet &
Martha, 2000, 2)
A value net is a network of companies which aims to serve end-customers and
fulfill their diverse needs. A value net has to be able to solve customer problems,
rather that simply sell products; it has also the ability to respond rapidly to
changing customer demands, to build a strong brand based on valuable services,
and to create such a high and professional level of know-how that is difficult, or
even impossible, to damage. “A value net is a business design that uses advanced
26
supply chain concepts to achieve both superior customer satisfaction and company
profitability. A value net is so named because it creates value for all the
participants — the company and its suppliers as well as the end-customers — and
because it's based on a collaborative, often digital, network that links the
numerous parties in the system.” (Mercer Management Consulting, 2001)
According to various sources, an end-customer can be defined, for example, as a
paying customer of the company or a stockholder who expect profit for his/her
investments (Virolainen, 2001a). The concept of an end-customer can also
concern a private investor or a financial institution, suppliers, government, council
or electorate (Saunders, 1997, 30). In other words, an end customer is the last
individual or purchasing group to make product / service differentiation decisions
that cause a supply network to be activated and who might usefully be influenced
(Harland, 2000).
The companies of the value net have to utilize information technology to operate
efficiently and effectively. The solutions of information technology enable fluent
communication and fast information transfer between the separate parties.
Concrete benefits can be seen as shortened lead-times of products and services,
decreased amount of bounded capital and diminished operation costs.
Additionally, information technology reduces transaction costs of obtaining
capabilities externally, while improving core competencies internally. Global
sourcing is also enabled. However, direct revenue and product exchanges are only
part of the important factors in the value net. Knowledge and intangible benefits
are of equal importance, and success depends on building a rich network of
trusted relationships. New technologies are only pipelines for information - data
and knowledge - and value exchange. The exchange of information itself is what
is really important. (Allee, 2000, 38) Therefore can be stated that information
technology is the key enabler of the value nets (Reingoldt, 2001, 17).
Bovet and Martha have studied the characteristics of a value net. The findings of
their study revealed that a value net contains the following features:
27
1) Customer aligned – Customer choice triggers sourcing, building, and
delivery activities within the network.
2) Collaborative – Companies engage suppliers and customers - and
sometimes competitors - in networks of value-creating relationships. Each
activity is assigned to the partner best able to perform it.
3) Agile and scalable – Responsiveness to change is assured through flexible
production, distribution, and information flows. Brick-and-mortar
restraints and capital requirements are minimized. In some cases, the entire
tiers of the traditional supply chain are eliminated. Thus the business can
easily be scaled up to meet growing demand.
4) Fast flow – Order-to-delivery cycles are fast and compressed. Inventories
are often entirely absent. Rapid delivery is connected to reliable and
convenient delivery.
5) Digital – Information technology is a key enabler. Information flows and
its intelligent use form the neural system of the net, connecting customers,
suppliers, and value-adding activities. (Bovet & Martha, 2000b)
Value nets use networked technologies and business processes to form and recast
themselves in response to dynamic customer demands, and simultaneously
optimizing their structure and performance at higher levels of efficiency and
responsiveness. This will require the movement and management of vast amounts
of knowledge in ways and to places not previously feasible or practical. In
addition to the definitions of Bovet and Martha, the value nets display three
characteristics that facilitate the fulfillment of their function. These characteristics
are:
1) Transparent – Value nets contain substantial amounts of information on
capabilities, capacities, inventories, and plans that can be exchanged
between communication tools, servers, and optimizing agents that
complement the human capabilities. It is complicated feedback
phenomenon that requires multilevel scheduling, coordination and
management of parallel resources (Ollus et al., 1999, 151).
28
2) Timely – Value nets are designed to meet the needs of the end-customer –
exactly when the customer wants it. To meet this feature, specified and
related information needs to be available.
3) Tuned – Through collaboration and sharing of knowledge, the value nets
serve the needs of the end-customers with a minimum of wasted effort or
assets. (Cross, 2000, 39)
As a conclusion, fast information delivery can be stated to be one of the key
premises for a value net. Although organizational structure and human thinking
always exist beyond partnerships and collaborative networks, the information
technology is needed to manage and control the network and enable effective and
efficient communication in and between the members of the value net.
2.2 Types of communication tools
For the comparison of different communication tools, a basic classification has to
be done. The classification arguments can vary, for example one of the previous
studies divided the communication tools into personal, mechanical and electric
tools (Larson & Kulchitsky, 2000, 25). On the other hand, the classification of the
communication tools could have been done to the traditional and the Web-based
tools, but then there would have been many defects in the classification
arguments. For example, the classification of the cellular phone and other mobile
devices would have been complicated. Consequently, to make the distinction clear
between the separate tools, the communication mediums are divided into the
interactive and non-interactive communication tools in this study.
The classification of the communication tools is based on the definition, in which
the interactive tools include the mediums that do not leave any tracks of the
communication. Communication just happens and information of it cannot be
returned in any readable form with out additional documentation. Interactive tools
enable real time communication, for example telephone conversation between two
29
or more persons, or videoconferencing with many persons around the world. The
non-interactive tools, on their behalf, consist of mediums that leave tracks related
to communication. Communication happens with visible and readable documents
which can be stored to certain place for further use. Examples of these non-
interactive tools are mailings or the Internet pages.
Figure 7 describes the classification system of the communication tools. The same
figure also highlights the stress of this study which is on the Web-based tools. The
differences between two classes of communication tools are discussed, as well as
their positive and negative features. Particular attention is addressed to the
characteristics and possibilities of the Web-based tools such as the Internet,
Intranet and Extranet.
Communication tools
Non-InteractiveInteractive
OthersWeb-based
Communication tools
Non-InteractiveInteractive
OthersWeb-based
Figure 7. Classification of the communication tools in this study
Before the presentation of the communication tools, the following chapter
describes the challenge which the communication tools face in the value net
structure. After that, the following two chapters explain both of the concepts of
the interactive and non- interactive tools.
2.2.1 Interactive communication tools
The interactive communication tools enable online and thus, real time
communication. The word interact has the meaning “to act on each other”
(Landau, 1996, 374), or “to have an effect on each other or something else by
being or working close together” (Longman, 1987, 547). Usually, interactive
30
communication happens when the exchange of information is informal, that is the
situation when information is not written in any readable form or it is not
documented in any way. Although interactive communication is fast, the lack of
readable information may, however, cause problems because that certain
information may be needed somewhere else later.
Based on the description above, it can be stated that the main criterion for
interactive communication tools is that communication with these tools is bound
to certain, mutual shared and committed time when communication can happen,
and additionally, it is a certain kind of an iteration process. According to the
dictionary, the iteration as a concept means “to utter or do again some problem
and thus approach the decision” (Landau, 1996, 384), but to fully understand the
meaning of the concept in the context of this study, a simple example is compiled.
It describes the idea of the iteration process related to the discussion of interactive
communication tools.
The example takes a closer look to the situation, in which a dating couple has
decided to go to the cinema. To go to the movie, they should make the first
decision of, at what time, and the second one, into which movie they would like to
go. Because both of these persons have their own opinions about the time and the
movie, they have to bargain on the issue. Now in this case, it is easier to use
interactive than non- interactive communication to get direct feedback from each
other. Thus approaching the solution by iterating the alternatives one after another
away gives separate parties improved possibilities to have an influence on the
decision because during the iterative process one party can immediately refine the
other’s ideas and consequently they get closer to the mutually agreed decision.
Finally, in the end of the interactive discussion they have a common decision of
the movie and the showtime. (Eerola, 2001)
If the iterative process is then transferred to the business environment, the
following example will explain it more: Three separate companies have a project
on software development. Their common customer has certain expectations of the
31
end-product and thus these companies have to collaborate closely to implement
these expected features. As these companies use interactive communication tools
when making important decisions, they can communicate real time and thus
influence on each other’s ideas and opinions due to the direct feedback. If they
used non- interactive communication tools, they had to wait for each other’s
reaction before they could give their own opinion of the topic at hand and the
process of problem solving or decision making would be slower and some vital
considerations could have been missed.
The interactive communication tools studied in this thesis are fixed phone, cellular
phone, video conferencing and face-to-face contact. Communicator and other
comparable devices could have been classified as interactive tools for their phone
features, but due to their additional use for e.g. reading and sending of e-mails,
they belong to the non- interactive communication tools in this study.
2.2.2 Non-interactive communication tools
Contrary to the interactive communication tools, the non-interactive tools do not
require an online connection between the parties who exchange information. The
use of non- interactive communication ignores the assumption of the presence of
the receiver because the information is left available into the non-interactive tool
waiting for suitable time from the receiver to read, and above all, to adapt that
information.
The ability to trace the exchanged information, and moreover, the usability of its
content besides the prevailing receivers, are the main points when discussing the
typical features of non- interactive communication tools. Nevertheless, also some
responsibilities exist when communicating in a non- interactive way: the sender
has to activate himself to carry out the message, and the receiver(s) has to be
active to receipt the message. This fact may cause difficulties in the use of non-
interactive communication tools because persons are required to collect the
information they need.
32
The distribution of information depends on the sender, because he or she can
decide whether to distribute the information or not. Activity is needed to get
connection to the information, and it has to be recognized that this fact may affect
the arrival of the information to the desired person at right time, at right place and
at right format.
The non-interactive communication is for the formal communication due to its
traceability. The documents related to communication are stored in the non-
interactive tools and therefore besides the prevailing receiver, some other persons
may also see the information. In the case of non- interactive communication, the
authentication and authorization of persons is thus of importance.
The non- interactive communication tools studied in this thesis are beeper, SMS -
Short Message Service, fax, mobile devices such as Palm and communicator, e-
mail, FTP – data transfer with File Transfer Protocol, the Internet, the Web-based
versions of the Intranet and the Extranet, electronic bulletin board, electronic
conversation channel, post and mailings. According to the focus of this thesis, the
following chapters describe the Web-based tools and their use in business
operations.
2.2.3 Web-based communication tools
The Internet Protocol networks enable the operation of the Internet and related
applications such as the Web. Internet Protocol – IP - can be explained that it is
the method or protocol by which data is sent from one computer to another on the
Internet (Whatis.com, 2001) The term IP network can also be explained in other
words, for example, Ollus et al. have defined the Internet Protocol to be a standard
protocol for the technical management of a network organization because it
enables worldwide connections through the Internet (Ollus et al., 1999, 151).
It has been stated that the Web has transformed business by largely reducing the
cost of gaining access to information electronically with a free browser and a
33
computer with an access to the Web. Also the value of the exchanged information
has greatly increased from the situation of the dyadic use of EDI to the multiple
exchanges of knowledge through the Internet, and additionally, through the Web,
for example, in terms of viewing images of products, listening seminars and
presentations, implementing video conferencing or even making virtual plant
tours. The influence of the Web can additionally be seen in the size of the
audience that can be reached electronically. (Cross, 2000, 38)
The widely known applications of IP networks are the Internet, as well as
companies’ Intranets and Extranets. These concepts have a varying meaning
depending on the context in case, for example, an Intranet can be a Web-based
portal or only a folder in a shared server (Project workshop, 2001). Figure 8
describes the area of each of these networks, and the following chapters explain
further the Web-based concepts of the Internet, Intranet and Extranet.
groups
-
Customer
Supplier
BuyerIntermediary
Other interest
Business-to business
Mainly business-to-business
Business-to-business or business-to-consumer
the Internet
Intranet
Extranet
groupgroups
-
Customer
Supplier
BuyerIntermediary
Other interest
Business-to business
Mainly business-to-business
Business-to-business or business-to-consumer
the Internet
Intranet
Extranet
group
Figure 8. Web-based applications from the buyer's point of view with key
relationship types.
(Source: Puska, 2000, 15)
34
Figure 8 illustrates the main relationships between the parties and the names of the
Web-based applications from the buyer’s viewpoint. The basic idea of the figure
is from Graham & Hardaker’s article, but slight modifications have been made on
it. (Graham & Hardaker, 2000, 286).
In the figure the buyer’s Intranet is the smallest box around the circle called
“Buyer Intermediary”. It is for the buyer’s distribution of internal information and
other parties do not have access to it. An enlarged version of the buyer’s Intranet
is the Extranet between the buyer and the supplier. This network is for the
management of the business-to-business relationships and it is usually built to
support and ease the partners’ communication. The Extranet exists as a box
surrounding both the supplier’s and the buyer’s circles in figure 8.
The frame of the whole figure illustrates the Internet. Each one of the interest
groups as well as customers, investors, researchers etc. have access to it. In the
Internet the types of relationships vary from business-to-business and business–to-
customer relationships right up to business-to-government relationships.
In fact, the Internet’s bandwidth and ubiquity of access allows migration from a
supply chain with a single serial flow of information to value networks where
visibility and transparency across the network increases the chances that each
participant will be able to choose the optimal partner for every transaction. (Cross,
2000, 39)
The Internet
The Internet is a worldwide network connecting many computer networks and is
based on a common addressing system and communications protocol called
TCP/IP, which is the basic communication language of the Internet. The original
uses of the Internet were electronic mail, file transfer, bulletin boards and
newsgroups, and remote computer access (Telnet). The Web, which enables
simple and intuitive navigation of the Web sites through a graphical interface,
35
expanded broadly during the 1990s and became the most important component of
the Internet (Anonymous, 2000). Also the Internet telephony has been developed
to transfer voice over the Internet (Whatis.com, 2001).
A common definition of the Internet is calling it a public Web site. Its primary
users are both current and potential customers and suppliers, the general public
and other people outside the company. The Internet can be described as a big
welcome mat, where the entrants step first when they get acquainted with the
company for the first time.
Types of available information on a company’s Internet site can be for example:
- Product and service information,
- Contacts such as sales, service, investor relations, media relations, etc.,
- Product and sales support,
- Value-add sections such as mailing lists, interactive areas, open vacancies,
etc.,
- Solutions and success stories. (Ringle, 1999, 16)
Intranet
An Intranet is a private network for internal company use only. Businesses might
deploy Intranets for sharing information and collaborating within the company,
usually insulated from the surrounding Internet by computer-security systems
(Zwass, 2000). Intranet is also an internally focused application used to
disseminate information throughout the company (Riggins & Rhee, 1998, 88). It
is a great advantage to utilize the Web and Intranet in daily processes such as
delivering reports and agendas, plans and proposals, to mention a few. But also
dangers exist in the net. It has to be checked that unauthorized users cannot read,
modify or copy confidential documents that are sent through the Internet.
36
Technically thinking, an Intranet is a private network that is contained within an
enterprise. It may consist of many interlinked local area networks and also use
leased lines in the wide area network. Typically, an Intranet includes connections
through one or more gateway computers to the outside Internet. An Intranet uses
TCP/IP, Hypertext Transfer Protocol, and other Internet protocols and in general
looks like a private version of the Internet. With tunneling, companies can send
private messages through the public network, using the public network with
special encryption/decryption and other security safeguards to connect one part of
their Intranet to another.
Typically, larger enterprises allow users within their Intranet to access the public
Internet through firewall servers that have the ability to screen messages in both
directions so that company security is maintained. When part of an Intranet is
made accessible to customers, partners, suppliers, or others outside the company,
that part becomes part of an Extranet. (Whatis.com, 2001)
Figuratively thinking, an Intranet is a castle surrounded by a moat. To enter the
castle, the entrant must have a suitable access code for the security guard standing
at the door. If he has the right code, he can get in, but if he does not, he is not able
to enter.
These types of applications suit perfectly to the added security and privacy of an
Intranet:
- Company directory,
- Project status reports,
- Budgets and forecasts,
- High- level reporting, such as customer satisfaction issues, supplier
performance data etc.
- Internal files that are meant for staff only, for example minutes of
meetings, summer holiday lists, and so on. (Ringle, 1999, 16)
37
Extranet
Businesses rely frequently also on Extranets, which are extensions of a company’s
Intranet and allow portions of its internal network to be accessed by collaborating
businesses (Zwass, 2000). In fact, an Extranet is a special Web site for partners,
suppliers and vendors. These people and organizations have a closer relationship
with the company’s operations because of their contributions to products and
services delivered to the end-customers. However, their access is more limited
than company employees’.
The real benefit of an Extranet is in its ability to bring together all of the extended
enterprise, serving no longer as just an authorized collection of corporate fact and
data applications, but as the neural center of corporate business transactions.
Bringing counterparts into the information exchange is important to a company’s
quick response and strategic movement as it adapts to a rapidly evolving market
environment (Baker, 2000, 42).
Let us imagine the same castle as in the Internet and Intranet chapters above. This
time the entrant has a right to go to certain, beforehand defined, places. The
entrant has consequently a restricted access to certain rooms in the castle and the
other rooms are only for the company staff.
Technically thinking, an Extranet is a private network that uses the Internet
protocol and the public telecommunication system to securely share part of a
business's information or operations with suppliers, vendors, partners, customers,
or other businesses. The same benefits that Hypertext Markup Language (HTML),
Hypertext Transfer Protocol (HTTP), Simple Mail Transfer Protocol (SMTP), and
other Internet technologies have brought to the Internet and to corporate Intranets
now seem designed to accelerate business between businesses and enable the use
of Extranets. (Whatis.com, 2001)
38
Here are some examples of Extranet applications for business:
- Inventory checking for the sales force or supplier,
- Ordering information with special pricing,
- Partners’ network with private discussion groups or mailing lists,
templates for requisitions,
- Work orders and expenses. (Ringle, 1999, 16)
An Extranet requires security and privacy. These require firewall server
management, the issuance and use of digital certificate or similar means of user
authentication, encryption of messages, and the use of virtual private networks
(VPN) that tunnel through the public network (Whatis.com, 2001). A closer
consideration is only taken to the concept of VPN, and the explanations of the
other terms can be found in appendix I.
A virtual private network is a private data network that makes use of the public
telecommunication infrastructure, maintaining privacy through the use of a
tunneling protocol and security procedures. A virtual private network can be
contrasted with a system of owned or leased lines that can only be used by one
company.
39
Figure 9. Formation of a virtual private network. Case European Network
Exchange.
(Source: ENX, 2001)
European Network Exchange, ENX, operates among automotive industry as it is a
business quality computer communications network which provides secure
communications with a guaranteed service level at a defined high performance
based on the Internet protocol TCP/IP. ENX uses virtual private networks to
enable secure connections between two or more confidential parties. For example,
as figure 9 shows, the partners B and E have a VPN connection to protect their
communication and information exchange from outsiders. Even if partners A, C
and D are connected to the same Extranet, they cannot see into the VPN between
partners B and E due to the encryption technique.
The idea of the VPN is to give the company the same capabilities at much lower
cost by using the shared public infrastructure rather than a private one. Phone
companies have provided secure shared resources for voice messages. A virtual
private network makes it possible to have the same secure sharing of public
resources for data. Companies today are looking at using a virtual private network
for both Extranet and wide-area Intranet. (Whatis.com, 2001)
40
2.3 Challenges for the communication tools in a value net
In a value chain the communication tools are used only between two parties as
figure 10 shows. In this situation the exchange of information to all of the
members in the chain becomes problematical. Usually, communication is
interactive, so that traceability of information is complicated, or even impossible.
In addition to the problem of traceability, the later availability of exchanged
information is not easy due to the lack of storing that information. Also in the case
of non- interactive communication in a value chain the traceability of information
is difficult because communication happens between two counterparts and
outsiders do not have access to their information systems. Only these prevailed
two parties have the exchanged information while other parties are excluded.
Information flow
2nd tier supplier
1st tier supplier
CustomerBuyer End User
COMMUNICATION TOOLS
Information flow
2nd tier supplier
1st tier supplier
CustomerBuyer End User
COMMUNICATION TOOLS
Figure 10. Location of communication tools in a value chain
In a value net the basic requirements for ideal operation of communication are
transparent, timely and tuned flow of information between parties. Therefore, the
arrangement of organizations involved in a value net has to be changed as figure
11 presents. Opposite to the situation in a value chain - as in figure 10, figure 11
describes the location of communication tools in a network structure. To share
41
information between the members of the value net, information has to available
continuously, not depending on certain times. This means that non-interactive
communication tools have to be used for the exchange of information because
they can store the exchanged information, and additionally it can be used later.
2nd tier supplier
1st tier supplier
Customer
Buyer
End User
COMMUNICATION TOOLS
INFORMATION FLOWS
2nd tier supplier
1st tier supplier
Customer
Buyer
End User
COMMUNICATION TOOLS
INFORMATION FLOWS
Figure 11. Location of communication tools in a value net
Also the network structure creates challenges for communication. Usually, a value
net consists of many separate members and mostly the members are also globally
located. The global feature increases requirements for the communication tools
due to the different time zones in the world. For example, when Finnish persons
are working, American citizens are spending their leisure time, and vice versa.
Differences in working hours create thus a problem of information availability
meaning that a universal communication system is needed to share information
regardless of time, and therefore, to enable the fluent and timely management of
business operations.
In addition to the global feature of a value net, there is another factor influencing
on communication. This factor is the increased number of ways to communicate
42
when the network structure is formed. To illustrate this problem, figure 12
describes the change in communication when the form of business relationships
develops from a dyadic partnership to a network structure, such as a value net.
Dyadic partnership Network structure
Two-way communication Multi-way communication
Dyadic partnership Network structure
Two-way communication Multi-way communication
Figure 12. Differences between the ways to communicate in a dyadic partnership
and a network structure
In a dyadic partnership the amount of collaborating, and consequently
communicating parties, is two. Then communication happens in a bilateral way as
figure 12 shows. The situation in the network structure is more complex because
typically a lot of companies have joined the network. For example, figure 12
presents a network which consists of seven separate parties. Merely in this
example the amount of ways to communicate is broad. As the example shows,
there are 22 ways to communicate. A question thus remains: what if there were
much more members in the network?
Table 2 shows how the situation becomes more complicated as more members
join the value net. In the table the amount of members in a value net is limited to
ten parties, but in practice, the amount of members in a typical business network
43
approaches hundreds, or even thousands of different counterparts (Holmalahti,
2001), (Director, 2001b). Therefore, it is significant to consider effective and
efficient ways of communication.
Table 2. The amount of communication ways in a value net
The amount of members in a value net
The amount of alternative ways to communicate
Increase from the previous stage
3 6 - 4 12 6 5 20 8 6 30 10 7 42 12 8 56 14 9 72 16 10 90 18
Based on the table above, a formula can be defined to express the amount of
alternative ways to communicate in a value net. As the definition of a value net
determines, the amount of the members in a value net has to be more than two
parties. In that case the following formula will express the amount of alternative
ways to communicate when the amount of the members is up from three members
and more. The amount of ways to communicate can be calculated as follows: n *
(n-1), when n = the amount of members in a value net.
2.4 Role of the Web-based communication tools in a value net
Asymmetric relationships cause challenges for the use of information technology
in a value net. Small- and medium-sized enterprises - later SMEs - and large
companies have unequal resources for information technology solutions. This
situation causes difficulties in the implementation of a universal communication
system in a value net. Typically, conflicts occur between flexible system and
functionality when the integration of an SME’s systems and a large company’s
systems are considered (Project workshop, 2001). One solution for the system
integration and information transfer can be the utilization of the Internet which is
based on Internet Protocol technology. It is worth noticing that in the simplest
44
way for these IP network solutions is for example the use of Web-based solutions,
for which the user only needs a computer, a connection to the Internet and a
browser. Naturally, the main system behind the user interface has to be competent
(Project workshop, 2001).
New information technologies, for example the Web-based Internet - Extranet -
Intranet, enable fast and timely communication between parties, and thus
accelerate information exchange in the value net. Companies which have already
used value chain management, have gained reduced operating costs, increased
revenue growth and improved customer service levels (Cross, 2000, 36).
However, easy access to complex networks does not only create value, but it also
creates vulnerabilities such as data security problems and dependence on the
digital information (Cartwright, 2000, 32).
In the following chapters both the motives and the vulnerabilities of the Web are
discussed. The last chapter concludes the theoretical part of this study and
describes an ideal situation of the utilization of the Web in a value net.
2.4.1 Motives for the use of the Web
Particularly in the dynamic information and communication technology industry,
many factors are unreliable and unpredictable. Many motives exist also behind the
plans of new information systems and have therefore a positive effect on the
investment decisions. However, it is worth noticing that besides the total expenses
related to the investment, the most important factor in the implementation of a
new information system in business operations is recognizing the benefits that the
new system should forge (Director, 2001a). What comes to the benefits of the
Web, Timmers has listed some positive key features for the Web-aided business
which are worth considering when planning the utilization of the Web (Timmers,
1999, 10-19):
45
1) Available – A Web server is usually online 24 hours per day, 7 days per
week and 52 weeks per year, and virtually immediately accessible -
depending on line speed, network traffic, and other technical issues. This
creates time independence and enables information transfer,
communication, to be decoupled from the local business hours. Thus, time
constraints do not exist, and thus achieved all-day availability is a strong
facilitator of a global presence, overcoming time differences.
2) Ubiquitous – Fixed, mobile, cable, and satellite information networks
enable the global ubiquity. The consequences of ubiquity are: First,
electronic global reach all over the world up to the smallest and in the
remotest corner. Secondly, the changing role of gatekeepers2 causes
changes in business processes, in fact, in the ways of operation. For
example, purchasing will become part of the department of business
development and the specific purchasing department will disappear.
3) Global – The global presence opens new markets at low cost, especially
for small companies that previously could not afford to build up global
efforts – therefore the size of the company matters less. As a counter-
balance to this, there is the fact that companies that previously divided the
local market up from them find themselves confronted with the new
competition in their own backyard. Integration of the Internet with new
forms of application-to-application data exchange is now expected to link
suppliers and their customers globally. With no physical borders for
access, the mental map of what is near and far will change. In fact, the
distance becomes irrelevant.
4) Local – The Internet not only enables global business operations, but it is
also a tool to reinforce local physical presence and local person-to-person
business relationships. The local physical presence can be focused on
improved service rather than on basic provision of purchasing information.
2 A simple example describes well the role of a gatekeeper: A director’s secretary is a gatekeeper
because she filters the necessary contacts away from the unnecessary ones who try to access the
director. In the sector of supply management, the gatekeeper may for example, represent a vendor
manager who limits the amount of qualified suppliers related to the company.
46
For example, the Internet can be used as information and purchasing
resource such that a supplier is better prepared for the physical delivery of
the product or service.
5) Digitization – “The Internet and the communication and computer systems
connected to it are all processing digital and digitized information. Digital
information can be easily stored, transmitted, processed, mixed,
transformed, in short manipulated in many ways, independent of its source
or carrier (Timmers, 1999, 15)”. The main consequences of the digitization
are on the one hand the convergence of communications; information
processing and media, and on the other hand, increasing returns to scale as
the fixed costs are shared among more players while marginal costs do not
increase.
6) Multimedia – The capability to deal with and deliver information in
several ways (text, graphics, sound, video, animations, etc.) enriches the
opportunities for the information provision, and what is of importance, for
the person-to-person interaction.
7) Interactivity – Interactivity is a way of making up for the loss of this type
of personal contact. Contrary to e.g. EDI, which is application-to-
application data exchange, the Internet offers person-to-person and person-
to-application interactivity. (In this study the concept of interactivity is
defined in other way, see Key definitions from chapter 1.6.)
8) One-to-one – Based on data processing and personalized profiling, the
Internet makes supplier and other partner profiling fairly easy by saving
some information about the supplier / partner on the supplier’s / partner’s
computer (e.g. a “cookie”). When the same partner returns to the site, the
information is retrieved and the environment for the personalized dialogue
is ready.
9) Network effects and network externalities – Low cost and fast growth in
the number of relationships enable business models that require a
significant number of parties in the network and whose benefits increase
grow faster than linearly in the number of participants.
47
10) Integration – It has been to some extent demonstrated that the value of
combined information across steps of the value chain is more than the sum
of its parts. The Internet and particularly, the Web with its extensions,
provide at least part of the technology for value-chain functional and
information integration. The single user interface facilitates the transaction
of various business operations. Information integration can be realized
within one company of across companies, in value networks or other
forms of business relationships.
As can be seen, many factors support the utilization of the Web to conduct
business operations. In addition to the list above, one more factor favors its use for
business. This factor is mobility. Mobility is related to the mobile devices that
enable the availability of the person despite his or her geographic location. A
mobile device connected to the company’s data network frees the person to
communicate almost everywhere around the world, and the person is not
dependent on his or her desktop computer, fax, or some other fixed device.
Current mobile devices make possible, for example, to access through secured
remote connection to the company's server and thus receive the latest information
whilst working away from the office, to update mobile workforce, to find useful
travel information, to train and learn on the move or to look for the right word
with a dictionary (Nokia, 2001).
2.4.2 Vulnerabilities in the use of the Web
In addition to the positive features of the Web, there are also a number of negative
characteristics. The main vulnerabilities of the Web are linked to two key issues:
first, the uncertainty related to the security of information available in the Web,
and secondly, the uncertainty of the achievement of the planned economical
benefits from the Web-based systems (Project workshop, 2001). Also problems
relative to trust between partners and international trade barriers are seen as
important disincentives (Timmers, 1999, 9). Timmers lists difficulties in
language, culture, payment and delivery methods linked to the electronic business
48
in global environment to belong to the vulnerabilities of the Internet and its
applications (Timmers, 1999, 14). Additionally, Timmers has captured more of
these vulnerabilities as can be seen in the list below (Timmers, 1999, 8):
1) Lack of awareness and understanding of the opportunities of the Internet
and the Web,
2) Defects in implication and uncertainty about the appropriate business
model for the electronic business,
3) Concerns about total costs, including the costs of retraining the personnel
and the costs related to telecommunications connections and required
equipments,
4) Concerns about security of sensitive data, such as credit-card numbers,
personal data and business confidential data,
5) Concerns about interoperability between separate information systems and
the risk that competition between major suppliers will lead to incompatible
sets of standards,
6) Uncertainty about information property rights, applicable law in universal
business operations and the overall appropriateness of the legal framework
for the electric environment,
7) Lack of usability of the technology, as well as the difficulties in
performing slightly more complicated electronic business than merely
being present with a Web page and information on it.
One more factor can be added to the list above that is the lack of top
management’s commitment. To understand the importance of top management’s
commitment, its content and meaning are defined below. Therefore, the top
management’s commitment consists of several issues:
- Approval of new information systems,
- Allocation of resources,
49
- Supporting gestures for the personnel, for example, the
representative of the top management joins bargaining to help
employees with new supplier or customer,
- Overall understanding of the business,
- Open communication with persons at the same stage and below
(Virolainen, 2001b).
To sum up the main points related to the use of the Web in a value net business
model, a few remarks need to be made. First, the technical solutions have to
function properly. This is very essential because of the supportive role of
information systems in communication among value net members, and also when
transferring a lot of information timely and rapidly. Secondly, no information
system is efficient until the users really can exploit it and the human factors and
leadership issues are emphasized.
2.5 Summary
A value net environment creates challenges for communication between separate
parties. The interactive and non- interactive communication tools are used in
miscellaneous ways and therefore it results many kind of documents, or in some
cases, no documents at all. Therefore, the purpose of this chapter is to present
some theoretical conclusions of how communication tools should be used in a
value net. Additionally, some main points that consider the utilization of the Web-
based communication tools are discussed.
The communication tools are divided into two classes: interactive and non-
interactive tools. Moreover, the Web-based communication tools are separated
from the non- interactive tools. To recapitulate the main typical features of these
two classes of communication tools, a following list has been made:
50
o Interactive tools
??Online communication
??Non-traceable communication
??Enable an iterative decision process
??Direct feedback
??Require personal presence of the counterpart
?? Informal messages
o Non-interactive tools
??Not time-bound communication
??Traceable communication - leave visible documents of the
event of communication
??Require activity from both the sender and the receiver to
get information
??Formal messages
As the list above shows, both types of communication tools have their typical
characteristics. It depends on the case which of the tools is the most suitable one,
but in every case the most important issue is to consider which the requirements
for the information availability are, and what the level of importance of
information to other persons is, or in other words, should other people have access
to that information also.
When discussing the use of communication tools in a value net environment –
whose typical features are, for example collaborative, customer-aligned, digital,
timely and transparent - some issues have to be dealt with: First, information
should be available for everyone who needs it and naturally, who have rights to
access and to handle it. Secondly, information on the paper form should be
converted to electric form which therefore enables easier and faster handling of
information. Nevertheless, these requirements create challenges for the
information management as well as it complicates the determination of
authentication and authorization of the users of information systems.
51
The third significant point to notice is that interactive communication tools should
only be used for issues of minor importance. This is very complex and difficult in
practice because a lot of things are handled during telephone conversations, and
the documentation of these events is troublesome and time-consuming without
additional value for business.
After all, it can be stated that the overall objective of communication tool is
twofold: first, the tool has to help the user to gain and to manage his or her
objectives, and secondly, it has to produce concrete and measurable benefits to its
users. Even if there were many technical and practical factors which favor the
utilization of information technology and thus the use of Web-based
communication, some additional focus must also be on the change management,
so that the users were motivated and they had a reason to use the new
communication tool. Therefore it is important that the idea of the new tool is
clarified to every single user, and its use is controlled and followed continuously.
This is the way that a company can achieve increased competitive advantage with
the help of the new communication tool (Project workshop, 2001).
What comes to the utilization of the Web in a value net, figure 13 illustrates an
ideal situation of the Web-based communication in a value net. Internet-based
applications, which in this study are Web pages, are used for the whole value net,
as the Web-based Extranets are seen as more restricted applications directed to the
separate interest groups. The Web-based Intranets, in turn, are developed for
internal company use only.
52
2nd tier supplier
1st tier supplier
Customer
Buyer
End User
COMMUNICATION TOOLS
INFORMATION FLOWS
the Internet
Extranet
Intranet
2nd tier supplier
1st tier supplier
Customer
Buyer
End User
COMMUNICATION TOOLS
INFORMATION FLOWS
2nd tier supplier
1st tier supplier
Customer
Buyer
End User
COMMUNICATION TOOLS
INFORMATION FLOWS
the Internet
Extranet
Intranet
Figure 13. Ideal model of the Web-based communication in a value net
As can be stated, the Web offers many possibilities as well as challenges to the
value net. In the value net the main benefits are related to the time-regardless
availability of information that also is not depending on the location of a company
or an individual person who needs to get access to information.
In the following chapters the current state of communication is examined in the
case companies. What comes to the communication tools studied in the empirical
part of this thesis, table 3 presents the mediums which are included to the
research. As can be seen, there are twice as more non-interactive tools as
interactive ones. This is due to the emphasis on the Internet-based communication
tools, and particularly the Web-based ones.
53
Table 3. Classification of the communication tools studied in this thesis
Interactive Non-interactive Fixed phone Beeper Cellular phone SMS Communicator or other comparable device
Fax
Videoconferencing Mobile device Face-to-face –contact E-mail FTP The Internet (Web-based) The Intranet (Web-based) The Extranet (Web-based) Electronic bulletin board Electronic conversation
channel Post, mailings
54
3 USE OF COMMUNICATION TOOLS IN THE CASE
ENVIRONMENT
The study of the use of communication tools in the case environment was
expanded as follows: First the ICT industry and its characteristics are briefly
presented. Then there are short descriptions of each case value net which give an
overview of the case companies. After that the discussion moves on to the Web
survey which includes subjects related to the implementation of the survey and the
analysis of the results. Finally, a short summary of the results is presented.
3.1 Presentation of the information and communication technology
industry and the cases
Fundamental structural changes owing to the convergence of information and
communications technologies and services have modified the telecommunications
environment. These changes have contributed to renaming the environment to the
information and communications technology (ICT) cluster (Paija et al., 2001, 11).
Paija (2001) has studied the formation of the ICT cluster and therefore defined
clusters to be networks of organizations, in which competitive advantage grows
from dynamic interaction between actors. Relationships in the ICT cluster pass the
boundaries of separate sectors, and advance innovation and upgrading through
spillovers and knowledge transfers.
55
Figure 14. ICT cluster framework
(Source: Paija et al., 2001, 15)
The ICT cluster consists of different categories of sectors as it can be seen in
figure 14. In the core of the ICT cluster, there are the key industries which
manufacture information and communication equipment and networks, and
provide network services. Around the key industries are those industries that are
considered to contain special potential in enhancing the competitive advantage of
the system through innovative applications of the ICT, or though improving its
functional preconditions (Paija et al., 2001, 15). The supporting industries supply
the key industries with specialty inputs and manufacturing services. These are
mainly provided by, for example the electronics industry. Associated services, in
turn, enhance the functional premises of the cluster firms. These services are
provided, for example, the financial sector, regulatory bodies and universities and
other units of the national knowledge infrastructure. Related industries represent
for example media, news agency and entertainment services which complement
56
the key products and further their demand. Finally, individuals and organizations
form a groups of Buyers and Appliers of the ICT products and services that have
an important role in advancing manufacturers in innovation and quality
improvement (Ali-Jyrkkö et al., 2000, 21-22). In many contexts can be stated that
many of the related industries have a dual role: first, as providers of value-added
content to the infrastructure, and second, as buyers/appliers of ICT (Paija et al.,
2001, 16).
3.1.1 Typical features of the ICT industry
Some characteristic of the ICT cluster has to be stressed to understand the
importance of effective and efficient communication in a value net, and particularly,
in the sector of information and communication technology. Elfvengren et al. have
listed several features typical for the telecommunication industry. In addition to the
features suitable also for other industry sectors, the typical features of
telecommunication sector include changing earning logics; convergence of
networks, terminals and services; turbulence; shortening lifecycles and time-to-
market, to mention a few (Elfvengren et al., 2001). Besides these factors the
development of digital data and information has a major role in the ICT sector:
Digitalization of content, provided by related industries, is seen as the most
prominent factor in augmenting the forthcoming demand for data and information
network infrastructures (Paija, 2000, 2).
Particularly, the decreased amount of time available for the product development
and the launching of the product creates challenges and difficulties for the suppliers
in the ICT industry. To meet the objectives of the buyer (the head company), the
supplier should have at least two-years forecasts of the economic trends, as the
investment process at the minimum requires one and half year (Director, 2001a).
An ICT company can be seen as a multi- industry player due to its manifold
spectrum of the products and services it offers. In fact, the products may vary
from the construction of network infrastructure to the providing of services for
57
consumers’ mobile phones. Therefore, the ICT company needs partners and other
suppliers to implement various solutions because its core competence is to be, for
example a telecom operator, as opposed to a software developer or a manufacturer
of cable.
For example, when considering the construction of a cable network, the ICT
company needs a cable supplier to produce the raw material, which in this
example is cable. The cable supplier typically represents the traditional type of
company from process indus try. In this example it is important to notice that the
ICT company expands the capacity of the network due to the increased demand in
the capacity of the data or telephone connections. Indeed, the increased demand of
the network capacity could be due to, for example, the new applications which the
consumers have adopted, or the discounts in connection prices. The cable supplier
may have known about the increase in cable demand, but due to the nature of the
process industry, the adaptation to the increased demand may not be quick. The
managers in the process industry needs to decide, for example, whether to invest
on a new production machine or to build an entire new factory. Usually, the raise
of the capacity in a factory spends at minimum one and half year (Director,
2001a).
Contrary to the process industry, the changes in the ICT industry happen more
frequently, and the process industry follows afterwards. Although the previous
example considered the process industry, there are also other industries that have
to adapt to the turbulent changes in the ICT sector such as component
manufacturing or even textile industry that produces working clothes for the
constructors of the networks. Therefore can be stated that the bigger the
investments required in the supply side, the slower the adaptation to the increased
demand, and simultaneously the bigger the discrepancy between buying and
supplying companies from different industry sectors. Thus, early reactions for the
changes and against the bullwhip effect on the upstream companies require
efficient and effective communication in the value net.
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Figure 15 describes the adoption life cycle of a new technology. Usually, the
figure is related to the marketing discussions because it illustrates the curve of a
product lifecycle: Early markets describe the situation when customers are
innovators and technology enthusiast; The Chasm illustrates the phase of vast
despair; and The Bowling Alley is a period of niche-based adoption in advance of
the general marketplace. While The Tornado describes the phase of mass-market
adoption continuing up to a period of Main Street, the last phase illustrates
diminishing demand curve that ends the life of the product (Moore, 1995, 14-25).
Life cycle of a new communication technology
Adaptation to the increased demand in process industry starts (investment decisions etc.)
Investments in process industry are complete
Life cycle of a new communication technology
Adaptation to the increased demand in process industry starts (investment decisions etc.)
Investments in process industry are complete
Figure 15. Discrepancies between the ICT and the process industry
(Modified from Moore, 1995, 25)
However, in the context of this study, figure 15 can be used to describe the
discrepancy between the ICT industry and other industry sectors. Figure 15 itself
illustrates the ICT company and the life cycle of its product. In this example the
product is considered as a new communication technology. The additional lines in
59
the figure describe the distinction between the ICT and exemplarily the process
industry that occurs when the suppliers are not able to adapt to the situation as fast
as the buyer company does.
3.1.2 Buyer A and its case value net
Buyer A is a large company operating in mobile communications with functions
in several countries. Therefore, Buyer A can be defined as a communication
company belonging to the key industries of the ICT cluster. By combining its
knowledge in mobile communications, the Internet and service provision, Buyer
A is a global telecom operator and provider of transaction and content services.
Through its network access business, Buyer A offers voice and data services to
consumers as well as corporate customers in Finland and nearby areas.
Buyer A’s case network consists of eight suppliers, so that four of these suppliers
are the 1st tier suppliers and the rest four are 2nd tier suppliers. The natures of these
suppliers vary, and they can be described as follows:
- Cable 1: According to the definition of ICT cluster, this company includes
to the supporting industries as manufacturers cable for network
infrastructures. (Large company, status in this study is the 1st tier supplier)
- Cable 2: This company allocates raw material to the cable manufacturers;
thus, it includes to the supporting industries. (Large company, 2nd tier
supplier)
- Software 1: This company includes to the supporting industries because
develops software for invoicing and the management of the
telecommunication networks. (Large company, 1st tier supplier)
- Software 2: This supplier is an internal division of the company Software
1, and thus includes to supporting industries. (Large company, 2nd tier
supplier)
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- Component 1: As this company supplies components to the
communication networks, it belongs to the supporting industries. (SME, 1st
tier supplier)
- Component 2: The firm is a representative of supporting industries due to
the manufacturing of components to the communication networks. (SME,
2nd tier supplier)
- Textile 1: As a contract manufacturer of textiles for the builders of the
networks this firm is classifies as supporting industries. (SME, 1st tier
supplier)
- Textile 2: This supplier produces raw material for the company Textile 1
and includes also to the supporting industry. (SME, 1st tier supplier)
The location of every case company can be seen in figure 16.
Buyer A
Cable 2
Cable 1
Software 2
Software 1 Component 1
Component 2
Textile 1
Textile 2
Buyer A
Cable 2
Cable 1
Software 2
Software 1 Component 1
Component 2
Component 1
Component 2
Textile 1
Textile 2
Textile 1
Textile 2
Figure 16. Buyer A's value net in this study
3.1.3 Buyer B’s and its case value net
Buyer B is a provider of mobile, broadband and IP network infrastructure
including related services. Buyer B is a representative of the key industries. The
company has operations in many countries worldwide and it is classified as a large
company. Buyer B can be classified as a telecom company.
61
Buyer B’s case network consists of three suppliers, so that each of these
companies form a separate tier in the Buyer B’s supply chain. These suppliers can
be presented in the following way:
- Equipment 1: This supplier assembles components to the communications
networks and belongs to the supporting industries. (SME, status in this
study is 1st tier supplier)
- Equipment 2: As a manufacturer of components to the communications
networks also this supplier belongs to the supporting industries. (SME, 2nd
tier supplier)
- Equipment 3: In addition to the above-presented suppliers, this company is
a 3rd tier supplier and it manufacturers components to the
telecommunications networks. It also represents the supporting industries.
(Large company, 3rd tier supplier)
The location of these case companies can be seen in figure 17 below.
Buyer B
Equipment 2
Equipment 1
Equipment 3
Buyer B
Equipment 2
Equipment 1
Equipment 3
Figure 17. Buyer B's value net in this study
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3.2 Implementation of the Web survey
The implementation of the questionnaire survey included several phases until the
final Web survey was ready. In the following chapters the research frame, and the
proceeding of the compilation of the questionnaire is described, as well as the
related challenges that occurred during the different phases of the survey.
Additionally, some of the details linked to the utilization of the Web as a survey
tool and the time schedule are described in this chapter. The questionnaire form is
attached as appendix II in the end of this thesis.
This Web survey had two objectives. First, the questions were composed to
measure the current state of the case companies. The questions were divided into
three separate divisions due to the different scope of every researcher among the
project. What comes to the objective of the survey related to this thesis, the
purpose of the questions were to measure the current state of internal
communication in the case companies. Although the research area of this thesis is
linked to the concept of a value net, and additionally on that basis also onto inter-
firm relationships, it was found important to clarify the intra-organizational
situation which, in fact, creates the base for the external communication with the
other members of the value net. That is the reason why inter-organizational
communication is excluded from this thesis, and the focus in on internal
communication in different levels – Buyer, and 1st tier, 2nd and 3rd suppliers - of a
value net.
According to the name of the project “Information Technology in Business
Relationships” the second aim of the survey was to test how the Internet, and
particularly the Web, can be utilized to the collection of data. To meet the second
objective, the advantages of the Internet - low cost of the fieldwork, potentially
quick responses and turn-around times and the possibility of very large sample
sizes (Ramsay, 1998, 83) - were examined to get feedback from the use of the
Internet as a data collection tool. In fact, the easiest way to implement the
questionnaire survey would have been the mailed questionnaire in a paper form,
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but due to the purpose of this study and this project, the Web survey was an
obvious selection to the survey tool. Also the statements related to the advantages
of a Web survey supported the implementation of a Web questionnaire.
However, it was known that the procedures for managing a Web-based survey
may differ from those used by telephone, mail and face-to-face surveys, and it is
possible that response rates and speed of response may differ as well (Ramsay,
1998, 83; Heikkilä, 1998, 68).
Benefits of the Web survey were mentioned not only the lower costs of access to
the respondents - the Internet version excluded all the printing costs of
questionnaires and covering letters, postages; additionally, it saved a lot of time to
make the survey available to the respondents - and easiness and quickness of the
implementation of the survey, but the ability of data collection from respondents
all over the world. The Internet allows the delivery of the survey at the same cost
and at the same time to everywhere without delay of the mail delivery to the
respondent and sending by return. (Couper, 2000, 464-465) Besides these facts,
the formation of the response data can continuously be followed during the
survey. What comes to the practice, the above-mentioned statements about the
costs agreed closely with the facts related to the implementation of this survey
because after all the overall costs of this Web survey consisted of the license of
the statistical software and the time usage of the researchers.
3.2.1 Research frame
Due to the objective of the survey to collect descriptive data for the case study
research, the sampling of the survey was done as judgment sampling. Judgment
sampling concentrates on studying of the case companies, and therefore the
sample is based on named respondents, as opposed to random sampling. In the
context of this study, the judgment sampling was implemented to get information
about the current use of communication tools in the case companies, and therefore
the results are not, and in fact, they cannot be generalized either to other
64
companies or to other industries. If the results would like to have been
generalized, the sampling should have been done as random sampling from the
entire supplier networks of Buyer A and Buyer B (Puumalainen, 2001).
In other words, the aim of this descriptive study was just to encapsulate the data of
the current state into numeric form and therefore made descriptive figures and
tables to describe the topic at hand. The nature of this study is thus quantitative
due to the questionnaire survey and the basic statistical tests, but the lack of
further statistical implications and therefore generalizations ignore the statistically
significant conclusions.
The most essential point in this survey was to achieve reliable, accurate, and right
information about the subject of the research. Particularly in this thesis, the
essential information concerned issues related to the availability and the use of
communication tools in the companies of two case value nets. Due to the lack of
statistical implications related to judgment sampling, reliability was tried to
achieve by selecting the essential and right persons to key informants. In fact, the
highest possible reliability was tried to approach by having personal contacts with
the main representatives from the case companies, and then the proceeding and
the objective of the Web survey was explained to them in details. Additionally,
special attention was stressed that how important it was to name the right persons
as respondents, and thus enable the achievement of reliable and right information
from the survey.
The target group of this survey consisted of Buyer A and Buyer B which are the
heading case companies in the project. Besides these companies, also some of
Buyer A’s 1st tier and 2nd tier suppliers and some of Buyer B’s 1st tier up to the 3rd
tier suppliers were included into the target group. As a whole, the size of the target
group was 13 companies. The sample itself was formed according to the certain
criteria: every respondent must be linked to the other case companies in the
project. For example, Buyer A’s respondents had to have a connection to some of
their 1st or 2nd tier suppliers which also participate in this project. Respondents
65
from Buyer B had also to have something to do with their named suppliers.
Additionally, the suppliers had to have connections to the other companies both to
the upstream and the downstream of the chain.
The value net of Case A was based on representatives from Buyer A’s separate
sourcing categories. In fact, four of the seven possible sourcing categories were
linked to the survey. Eight companies from these four categories were included:
two companies from the cable industry, as well as two from the software, textile,
and component industry. Buyer B’s value net was related to the Buyer B’s main
product and the case suppliers were selected accordingly.
After the case companies were named, the remaining task was to search for key
informants for the survey. The key informants were persons who represented all
the employees of the company in a broad way. For this survey the selection of
these persons was quite clear because there were only a few persons per case
company who fulfilled the selection criteria. The selection criteria defined that the
key informants must have a connection to other case companies in the determined
case value net. Furthermore, the selection of the key informants was based on the
beforehand made definition of the relevant functions which were planned to
include in the sample.
66
Buyer B
Element 2
Element 1
Element 3
Buyer A
Cable 2
Cable 1
Software 2
Software 1 Component 1
Component 2
Textile 1
Textile 2
Buyer B
Element 2
Element 1
Element 3
Buyer B
Element 2
Element 1
Element 3
Buyer A
Cable 2
Cable 1
Software 2
Software 1 Component 1
Component 2
Textile 1
Textile 2
Buyer A
Cable 2
Cable 1
Software 2
Software 1 Component 1
Component 2
Component 1
Component 2
Textile 1
Textile 2
Textile 1
Textile 2
Figure 18. Limitation of the target group of the Web survey
Nevertheless, some difficulties occurred during the collection of the judgment
sample for this survey. The overall objective of the sample size was defined to
consist of 416 (13 companies * 8 divisions * 4 persons) respondents. The sample
was planned to consist of 13 companies in which eight different divisions were
named - financial administration, purchasing / supply management, sales /
marketing, production, data administration, research & development, general
management and logistics. From each of these eight divisions 4 respondents were
tried to reach, but it was not possible due to the limitation of the research area.
Within the limits of the project, some of the relationships were dropped out of the
sample and thus cause the complicated situation related to the sample.
Figure 18 describes the problematic situation of the sampling: The arrows
illustrate relationships within the limitation of the project related to the case
companies, and the crosses figure the outlined relationships. Naturally, the case
companies also have outside-remaining relationships, but they are excluded from
the survey because they do not include to the scope of this study. Due to this fact,
67
Buyer A and its 2nd tier suppliers, which are the undermost companies in the
picture of Buyer A’s value net, do not have all of the required respondents. The
same fact can be found in the Buyer B’s value net, as Buyer B and its 3rd tier
supplier are missing some of the divisions expected to include in the sample. The
dotted lines in figure 18 describe relationships that remain outside the sample.
The final sample of the Web survey consisted of 168 respondents. The
distribution of the respondents between the case companies can be seen in table 4.
Table 4. Sample of the Web survey
The name of the company The number of the respondents
The status of the company in the case value net
Buyer A 29 Buyer Buyer B 18 Buyer Cable 1 22 1st tier supplier Cable 2 1 2nd tier supplier Component 1 15 1st tier supplier Component 2 7 2nd tier supplier Element 1 8 1st tier supplier Element 2 16 2nd tier supplier Element 3 13 3rd tier supplier Software 1 12 1st tier supplier Software 2 5 2nd tier supplier Textile 1 20 1st tier supplier Textile 2 6 2nd tier supplier TOTAL 168
As can be seen, the number of the respondents is quite irregularly distributed. Due
to the descriptive objective of this study, irregularity does not cause significant
barriers to the implementation of the survey.
3.2.2 Compilation of the questionnaire
The research group of the Web survey included three project researchers and
some external researchers and assistants.3 The project researchers started
3 Huhtinen, Heli; Ojala, Tiina, and Vahtera, Hannu (project researchers), and Puumalainen, Kaisu
(external researcher of the project) and Taalikka, Sanna (external research assistant of the project)
68
compilation of the questions in March 2001 when the questionnaire was divided
into three different categories based on the scope of every researcher in the
project. One of the researchers composed queries related to communication tools,
and the other researcher made questions related to knowledge management in a
value net. The third researcher compiled questions that were linked to information
systems.
The compilation of the questions started by drafting issues at the topics. When the
first drafts were ready, the research group met a few times to refine the questions,
and during the final meeting the group decided one by one which questions
remain to the final questionnaire. After the elimination phase there were 15
questions left, and the programming of the Web form was able to start.
The Web questionnaire was made with SPSS Data Entry Builder. Other software
for data collection was also available, for example, Survissimo (2001) and
QuestNet (2000), but SPSS Data Entry Builder (1996-2000a) was chosen first,
due to its direct suitability to the statistical software SPSS for Windows (SPSS,
1996-2000b) and secondly, due to its reputation as a scalable “Drag and drop” –
tool for creation of the Web survey.
The assemblage of the questionnaire furthered as follows: First, the objects were
drawn to the form. Then these objects were completed with setting the right
variable properties to each of them and after that the questions were created. After
building the questions, revising the properties, and ascertaining each of the
variables, the questionnaire was exported to the html-format to the network server.
A few difficulties occurred during the export phase but after the software had been
reinstalled, the export of the Web form was managed to implement without further
problems.
The Web form was pre-tested using various browsers and operating systems
inside the university’s local area network, as well as outside the campus area.
Additionally, a few test respondents also answered to the questions and gave their
69
comments on it. Based on the comments and findings during the test period, the
Web survey was once revised before the final version. There were two main
changes which had to be made to improve the Web form, and thus to make the
form more comfortable to answer. The first change was to decrease the number of
the questions from fifteen to twelve, and the second change was to insert a
comment field at the end of the questionnaire. The free comment field allowed the
respondents to express his or her opinions to the research group as well as to
inform about possible problems occurred in the form. Valuable information could
therefore be received also from that field.
3.2.3 Challenges related to the implementation of the Web survey
Several challenges occurred during the implementation of the Web survey. The
main concerns were linked to the phrasing of the questions, information flows
between the members of the research group, technical issues, and the overall use
of the Web instead of the paper questionnaire. Additionally, some difficulties
were met when contacting with the main representatives of the case companies
during the sample collection. What comes to the previous experiences of the
challenges related to the Web surveys, some other studies have revealed that the
main challenges of a Web survey are linked to the capturing of the motivation of
the respondents, technical problems, confidentiality concerns, and low response
rates compared to mail surveys. (Couper, 2000, 464-470)
The phrasing of the questions was complicated due to the complex research
arrangement of two value nets. Therefore, the research group decided to use one
general questionnaire form to collect the data from every respondent because
another alternative was to compile thirteen different forms, individually for each
case company. For technical reasons, the general form was selected because
thirteen individual questionnaires would have required as many individual forms,
and thus also individual Web addresses, as there were different and modified
forms. Therefore, the research group decided that one universal Web address is on
one hand enough due to the easiness of the update of the form, and on the other
70
hand, to avoid confusion between separate forms. The respondents were informed
about their situation related to the survey with customized covering letters. As can
be seen from the covering letter, the respondents were presented an example of
how they were expected to answer to the questions. An example of the covering
letters is attached as appendix IV in the end of this thesis.
To examine the relationships between the members of a value net requires as
many aspects as there are members in the value net. In the value net the location
of the company affects that how the respondent concerned answers, and from
which point of view he or she looks the entire value net. For example, in these
case value nets some of the companies are the 1st tier suppliers and they consider
other companies as buyers or their 1st tier suppliers. In some other value net the
same company can be situated as a buyer who has the same companies as its own
1st and 2nd tier suppliers. Consequently, it is very important to recognize that the
aspect and location of every case company is correct in the value net, and that the
respondents understand right their location related to the case value net.
Flow of information between the researchers was the third challenge during the
compilation of the questions. Due to the distinct geographical locations of the
researchers, face-to-face meetings were arranged quite rarely and conversations
about the modifications were made by phone. Therefore the comprehensive
modifications were quite complex to implement because the relevant researcher
was not available online during the formation of the questionnaire. Probably, the
compilation of the questions might have taken a shorter period of time if the
project researchers have met more frequently in face-to-face contacts.
However, technical problems arose above of all challenges. These problems could
be divided into two separate parts: First, problems linked to the SPSS Data Entry
software, and secondly, problems linked to the use of the Web. What comes to the
first problem, the SPSS Data Entry software is a quite new tool for implementing
a Web survey. For example, in the Lappeenranta University of Technology only a
couple of surveys have previously been made with this tool, and the level of
71
expertise related to the use of the software is thus quite low. Despite the fact,
learning to use this tool was quite easy due to the researcher’s previous use of
different software tools. Without the basic knowledge of the html- language and its
behavior in a browser, the compilation of the survey would have been more
difficult to implement.
Problems linked to the use of the Web occurred during the export phase. When the
draft versions of the survey were exported to the html-format, the rows and
columns did not appear as they did in the design view. Some of the text boxes
were also overlapped. In addition to those difficulties, the software did not create
the required folders to the network server that hindered the answering to the
questionnaire. These problems were not known before but after a few
experimental changes the form operated properly. The solution was to reinstall the
software by allowing full administrator privileges to the user at the moment of re-
installation of the software. After the re-installation the application began to
operate properly, and the network server was able to receive the Web form.
The use of the Web required modifications onto the form because of the spectrum
of different browser software used in the case companies. The problem of browser
compatibility is recognized also in other Web surveys (Couper, 2000, 490).
Related to this study, the main challenge was to make a suitable form for certain,
widely known browsers. The form was designed to suit for different versions of
Microsoft Internet Explorer and Netscape Navigator. Occasionally, the browser of
Opera was also found to be one of potential software allowing the answering to
this survey. Despite accurate design of the layout, various versions of these above-
mentioned browsers caused problems because the layout varied a lot depending on
the used browser version. The solution to this was to leave large empty space
between separate questions and to limit the width of the Web form as narrow as
possible. The layout itself and the size of the objects required recognizing of the
variance in size of the respondent’s screen, the speed of data transfer, and also the
speed of the processor in the respondent’s computer.
72
The characteristics of the Web became apparent when planning the way of how
the respondents were contacted. For example, the format of the covering letter had
to be adaptable to any environment, so that the letter would be opened up with any
computer. After considering separate alternatives, such as Word document or an
html-based document, the portable document format, PDF, was chosen due to its
anti-virus characteristics and its nature of free software for reading the PDF
documents.
Another challenge was to consider how the respondents were motivated to answer
to the survey. It became apparent that an e-mail message with an attached
covering letter was quite easy to skip and forget; almost in case of busy
respondents who receive many e-mail messages during one working day. This fact
has also been recognized in other studies, as the response rate remains low due to
the disappearance of the e-mail messages (Couper, 2000, 473).
The research group considered the possible use of some incentives to achieve a
better response rate. In traditional mail survey a common practice is to use some
kind of incentive to encourage people to respond (Ramsay, 1998, 83-92). The
incentives can vary, for example, from prize draws and tickets for a free cup of
coffee to the price reductions in certain stores (Ramsay, 1998, 83-92). However,
the idea of an incentive was remained without implementation because the
suitable type of the incentive was difficult to decide. As the sample consisted of
representatives of the case companies which were volunteered to participate in the
project, the key informants – the respondents - had their duties to answer to the
questions. As a result the research group concluded that the overall end results
would be the appropriate incentive to the respondents. Additionally, the
respondents had thus a good possibility to get information about the current state
of their companies with issues related to the combination of the use of the Web
and business operations.
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3.2.4 Time schedule of the Web survey
The Web survey was implemented according to a planned time schedule. The time
schedule was strict because the phase of implementation started in the beginning
of March, and the data had to be collected already in the middle of June. As a
whole, the scheduling went fine and large problems were managed to avoid.
Figure 19 shows the proceeding of the Web survey in weeks.
Research ScheduleMonth March April May June JulyWeek 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Ideas of what to askFormulation of questionsInternet Questionnaire designTechnical preparing Cover letter designPretesting the questionnaireCollecting the sampleFinishing the questionnaireMailing arrangementsPrenotificationsMailingResponse timeMailing the reminderCoding the responses (if needed)Preparing the data fileOverall review for companiesAnalysing the data for the thesisWriting the report
Figure 19. Proceeding of the Web survey
As can be seen from figure 19, the process of implementing a Web survey with
three separate researchers took altogether almost five months. The formulation of
suitable questions and the creation of the form, which is named as Internet
Questionnaire Design in the figure, were the longest phases during the survey.
Despite of this a little bit longer period, the Web survey proceeded fluently and
the time schedule needed no changes.
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As a whole, the implementation process required one full-time researcher’s job
during one and half month. This phase consisted mainly of the formulation of the
questionnaire and technical testing. During the other remaining time the
researcher was able to do complementary research such as reviewing of literature
or writing the report.
3.3 Results
A total of 168 mails were sent to the beforehand-named respondents for
answering to the Web survey. From these respondents 96 answers were returned.
After data checking, the amount of acceptably filled questionnaires was 84. The
main reason for the decreased amount of the acceptable answers was the
elimination of duplicated answers which were due to fact that the Web server had
received the data from the same form twice or more. Therefore the response rate
was confirmed as 50 per cent, which was very satisfactory compared to the
response rates of other similar Web surveys (Kardaras & Papathanassiou, 2000,
287; Teo & Tan, 1998, 340).
On one hand, the factors affecting the good response rate might have been
personal interest and encouragement of the respondents which resulted from the
fact that in the case companies the contact persons had beforehand been informed
and had agreed to participate in this study. These contact persons, in turn, had told
the respondents to answer to the questionnaire. On the other hand, one motivating
factor might have been the presence of a large company as a principal of the
survey. The small- and medium-sized companies probably respect the large
companies and thus they are eager to participate in the projects of the large
companies.
The response rate might have even been higher if the survey would have been
made both in the forms for the Web and the paper. In that case the respondents
would have had the possibility to choose the form they preferred, and thus the
response rate might have increased more. One decreasing factor may have been
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the use of the Internet as the main information channel. Some of the respondents
did not have the access to the Web and a paper form was sent to them.
Additionally, some of the respondents may have an anti-Internet attitude, or they
have been busy and thus ignored the survey. However, due to the empirical
research problem related to the utilization of the Web in this thesis, the survey was
consciously made only for the Web form.
Differences in response rates existed between Cases A and B. It is worth noticing
that the respondents from Case B were more eager to answer than the respondents
from Case A. Reasons for the difference may have been the distinction between
the sizes of the value nets, as case A included nine firms opposite to four firms of
Case B. Therefore in case A, three lower levels of the response rates of the
companies have had such a significant influence on the overall response rate of
the entire case value net. Additionally, even the head company Buyer B achieved
a better response rate than Buyer A did. Reasons for this may be based on
differences in personal preferences or business cultures. Additionally, the
respondents may have had various opinions about the importance of this survey.
Above-mentioned reasons may have affected that also the companies in the supply
side answered more frequently than the buyer companies did.
Table 5 shows the difference in response rates between the case value nets. As can
be seen, Buyer A, Cable 1 and Component 2 had the lowest levels of the response
rates per company. On the other hand, the highest proportions are found in
connection with Cable 2 and Textile 2. Nevertheless, these companies had a quite
small sample and it might have had a positive influence on the ir response rates.
76
Table 5. Differences in the response rates between the case value nets
The name of the company
Case A or Case B
The number of the respondents
The number of acceptable responses
Response rate per company
Buyer A A 29 7 24,1 % Cable 1 A 22 6 27,2 % Cable 2 A 1 1 100,0 % Component 1 A 15 7 46,7 % Component 2 A 7 2 28,6 % Software 1 A 12 9 75,0 % Software 2 A 5 3 60,0 % Textile 1 A 20 11 55,0 % Textile 2 A 6 6 100,0 % Buyer B B 18 8 44,4 % Equipment 1 B 8 6 75,0 % Equipment 2 B 16 11 68,8 % Equipment 3 B 13 7 53,8 % TOTAL 168
Case A: 113 Case B: 55
N = 84 Case A: N= 52 Case B: N= 32
Overall: 50,0 % Case A: 46,0 % Case B: 58,2 %
The following chapters describe the results related to the research problems of this
thesis that are the questions related to the availability and the use of
communication tools that are questions 1 and 2. Results concerning the question 3
and the other parts of the survey, such as “Information systems” (questions 4, 5, 6,
7, 8, 9 and 10) and “Information management” (questions 11 and 12), are
discussed in other reports of the project “Information Technology in Business
Relationships”.
The structure of the following chapters is divided into two separate parts
according to Case A and Case B. First, each of the chapters is based on the
description of the availability of communication tools in the case value net. The
investigation of the current availability of communication tools is of importance
because it forms the base for the further improvements of communication. Then
the study furthers to the report of the use of communication tools concentrating on
the use that happens internally in the companies in different levels of the value
nets.
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The report of the use advances in the following way: First the distribution of the
use of the interactive and non-interactive communication tools is considered as
well as the proportion of the Web-based tools among the non- interactive tools.
Findings from these results give an overall review of the nature of communication
in the case value nets. Secondly, a closer look is taken to the Web-based tools
which are regarded as the Internet, Intranet and Extranet applications. The
proportion of the Web-based tools is linked to their possibilities in a value net,
and these results review the current state of the use of the Web-based
communication tools in the case value nets. Thirdly and finally, the use of the
most utilized communication tools is described based on the results from the
survey. After the result presentations from the cases, the summary phase captures
the main findings and differences between these two case studies.
3.3.1 Case A
Availability of communication tools
Before the use of communication tools can be presented, the availability of
communication tools have to be described. In the survey the respondents were
asked to mark the communication tools they used or they did not use but they had
the tool with them. The markings were rated as number 1 if they chose the tool,
and if they ignored it, the marking was 0. Thus, these results are only descriptive
when considering the availability of the communication tools. Additional point to
notice is that face-to-face contact is left away from the examination of the
availability due to its self-evident presence with each of the respondents.
Figure 20 shows the availability of communication tools in Case A. The bars are
based on the number of 52 respondents (N=52). As can be seen, the most typical
communication tools seem to be fixed phone in addition to fax, e-mail, Internet
pages, and post. These five tools approach the availability rate of 100 per cent
meaning that almost every one of the respondents had that communication tool.
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However, it has to be noticed that the proportion of the availability of Extranets is
quite low.
Case Buyer A
PostElectr. conversation
Electronic bulletin
Extranet
IntranetInternet
Communicator
E-mailMobile device
FaxSMSBeeper
Videoconferencing
Cellular phone
Fixed phone
%
100
80
60
40
20
0
Figure 20. Availability of communication tools - Case A
The difficulty in interpreting the data is probably a consequence of weaknesses in
the experimental design (see question 1 in appendix II). The respondents may
have had problems and misunderstandings when considering the markings related
to Internet, Intranet and Extranet. In the form these applications were only
mentioned by their names, and no further information was given. Therefore, the
possibility of uncertain answers is prevailing.
However, the interpretations from the data reveal that the availability of
communication tools is good in overall. When considering the value net and its
characteristics linked to the use of the Web-based tools, the shortage of Intranets
and particularly Extranets might require some investments on them to improve the
level of Web-based communication.
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The use of communication tools in the case companies
The presentation of the use of communication tools starts with describing the
distribution of the means of the interactive, the non- interactive and the Web-based
tools. The interactive tools enable online and thus real-time informal
communication as the non- interactive tools are for the formal and time-
independent communication. Web-based tools, in turn, are reviewed as an
independent group due to their similar basis on the Internet and IP technology.
Table 6. Use of the interactive, non- interactive and Web-based communication
tools in own company - Case A
Company’s status Interactive tools Non-interactive tools
Web-based tools
Buyer A 3,71 **) 2,28 2,90 1st tier suppliers 3,68 2,30 2,64 2nd tier suppliers 3,44 2,16 2,45 TOTAL *) 3,63 2,27 2,64 *) The total means may vary from the individual means with buyer and supplier due to the rounding **) 5 = Uses very much, 4 = much, 3 = sometimes, 2 = rarely, 1 = not at all
As can be seen from the total means in table 6, interactive tools are the most used
ones when communicating inside own company. Statistically significant
differences do not occur among the different tiers - Buyer A, 1st tier or 2nd tier
suppliers - in Case A, and neither in any of the three classes of communication
tools studied in table 6 above 4.
However, it is worth noticing that the Web-based communication tools are used
more than which can be seen by the total average related to the group of the non-
interactive tools. Additionally, the means reveal that the communication in own
company happens most frequent ly with the interactive communication tools. As
the rate of 4 illustrates using the tool “much” and 3 illustrates using “sometimes”,
the average of closely 4 illustrates the level of regular interactive use.
4 See one-way anova tests in appendix III
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In this context it is significant to remember that the use of the interactive tools do
not leave any tracks – documents - linked to communication if they are not
separately compiled. The availability of information for other, outside-of-the-
discussion, persons depends on the tracks based on the event of communication,
and in the case of important interactive communication it might be beneficial to
consider some kind of documentation of communication at hand. The non-
interactive communication tools enable the traceable communication and it would
be worth considering their use for tracking of the documents.
Total means in table 6 reveal some discrepancies which may be due to the
respondents’ difficulties in understanding the question. As could be expected,
communication in own company would be frequent between persons. Therefore, it
is complicated to notice that according to these results, communication in own
company remains rather at the level of “sometimes” than “much” and “very
much”. This discrepancy may be due to an incorrect sample of representatives
from one company as the level of employment should have been better checked
before the respondents were selected. This means that more emphasis should have
been directed to the status of the respondents as for example, the employees, and
the middle managers should have been separated from the representatives of the
top management when the sample was constructed.
The means illustrating the classified use of the Web-based communication tools
are given in table 7. As can be seen, the Intranet is the most used Web-based
application when communicating internally in the own company. Additionally,
Buyer A seems to have the most active respondents who use the Internet pages
and company’s Intranet. However, Buyer A simultaneously represents the most
inactive side of the Extranet users. The 2nd tier suppliers favor the use of Extranet
but on the other hand, in addition to the 1st tier suppliers, they are the most
inactive users of the Internet.
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Table 7. Use of the Web-based communication tools in own company – Case A
Company’s status The Internet (www)
Intranet Extranet
Buyer A 2,83 **) 3,86 1,50 1st tier suppliers 2,63 3,14 1,50 2nd tier suppliers 2,00 3,22 1,60 TOTAL *) 2,54 3,30 1,52 *) The total means may vary from the individual means with buyer and supplier due to the rounding **) 5 = Uses very much, 4 = much, 3 = sometimes, 2 = rarely, 1 = not at all
According to the results, there seems to be a connection between theory and
empirical findings that support the definition of the Intranet which states that
Intranets are classified for the internal company use. As can be seen from table 7,
the level of the use of Extranets is very low, actually it approaches the use of “not
at all”. This may be due to the scope of this analysis which concentrates on
clarifying the internal use of communication tools in the companies, and therefore
Extranets might receive unexpected results. However, to conclude the data from
table 7, it can be stated that no statistically significant differences were met
between the separate tiers of Case A.
As a whole, the use of Web-based communication tools lies on a quite low level
in case A. The total means show that Intranets are used sometimes, as the use of
the Internet is located somewhere in the axis of “rarely” – “sometimes”. The lack
of use may be due to the embarrassment by the new technology, the company
structure and its human and technical resources, or due to the age structure of the
personnel alias the users.
Besides the Web-based tools, a closer look is taken also to the tools that really are
used in the case companies, or actually in this context, in the separate tiers of the
case companies. These tools are chosen to the more detailed review according to
their rating at the top of the most used communication tools resulted from this
survey. The reviewed tools are fixed phone, cellular phone, e-mail, face-to-face
contact and Intranet. These five communication tools were the most used ones
both in Case A and in Case B.
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Table 8. Use of the specific communication tools in own company – Case A
Company’s status Fixed phone
Cellular phone
E-mail Face-to-face contact
Intranet
Buyer A 4,71 **) 4,14***) 4,71 3,50 3,86 1st tier suppliers 4,37 3,56 4,63 4,04 3,14 2nd tier suppliers 3,82 2,80***) 4,09 4,50 3,22 Total *) 4,29 3,48 4,52 4,07 3,30 *) The total means may vary from the individual means with buyer and supplier due to the rounding **) 5 = Uses very much, 4 = much, 3 = sometimes, 2 = rarely, 1 = not at all ***) Statistically significant difference
Table 8 provides means which show the use of specific communication tools
inside the own company. As the data from table 8 shows, the most popular tool is
e-mail while the major differences appear by the use of cellular phone. It is worth
noticing that Buyer A uses “much” or “very much” the cellular phone as the 2nd
tier suppliers use it only “sometimes” or “rarely”. Reasons for this may be the
differences in the level of innovation adoption in the case companies and the
varying distribution of cellular phones as a perk. Additionally, Buyer A is a
telecom operator that may create different conditions for the use of cellular phone.
Table 8 also reveals that the level of the use of e-mail approaches very frequent
use. What comes to the use of e-mail and its connection to the operation of a value
net, it is important to recognize the difficulty in distributing and storing of
information in the format of e-mail. E-mail messages are easy to send and forward
but a question remains that who is responsible for the clear organization of the
information storage and further management of that information. For example,
without organized storing of the information lying in e-mail messages, later
searchers for some details are quite complicated to implement.
In the value net one solution for the information management can be the
utilization of Intranets. Intranets enable that information can be saved in electronic
form and it also can be read simultaneously from different places. At the moment
of the survey the use of Intranets is situated at middle level meaning that their use
mainly happens sometimes. Only Buyer A shows indications of more regular use.
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3.3.2 Case B
Availability of communication tools
Figure 21 provides the availability rates of communication tools in Case B. The
bars are based on the amount of 32 respondents (N=32). As can be seen from the
bars, the most typical communication tools are fixed phone, fax, e-mail, the
Internet and post. It can also be noticed that the availability of Intranets and
Extranets follow the same line of percentages as in Case A. Therefore can be
stated that over half of the respondents have an Intranet as opposed to the about
one-fifth having Extranet as well.
When reviewing the figures related to the availability of communication tools in
accordance with both case A and case B, some highlighting can be made. First,
the main five communication tools available with the respondents are same in
both of the cases. Secondly, the distribution of the Web-based tools follows the
same line which illustrates that Extranets have a such low level of availability
compared to those of the Internet and Intranets.
These congruent inferences may probably be a consequence of the two separate
case studies from the same industry. Both of the case value nets are based on the
key industries in the ICT industry and the suppliers represent the supporting
industries as well in the ICT industry. Although the end-product and thus the
internal business processes of these two case value nets differ from each other, the
typical features of the ICT sector can be identified even in connection with the
availability of communication tools. As figure 21 shows, typical features are
found being linked to the frequent availability of cellular phones and the Internet.
For example, the high rate of the Internet connections reflects the use of
innovative possibilities in business operations compared to the other industries
with probably more limited resources. It may be possible that the ICT cluster can
offer better resources than others due to their first-rate knowledge of the new
technologies.
84
Case Buyer B
PostElectr. conversation
Electronic bulletin
Extranet
IntranetInternet
Communicator
E-mailMobile device
FaxSMSBeeper
Videoconferencing
Cellular phone
Fixed phone
%100
80
60
40
20
0
Figure 21. Availability of communication tools - Case B
The use of communication tools in case companies
As already presented in connection with Case A, this chapter forwards with the
certain structure: First the use of the interactive, non-interactive and Web-based
communication tools is explained, and after that the discussion moves on to the
more specific interpretation of the use of the Web-based tools. Finally, the third
phase reports on the internal use of five specific communication tools in the
companies.
85
Table 9. Use of the interactive, non- interactive, and Web-based communication
tools in own company - Case B
Company’s status Interactive tools Non-interactive tools Web-based tools Buyer B 3,90 **) 3,05 3,83***)
1st tier supplier 3,19 2,14 2,11 2nd tier supplier 3,43 2,23 1,26***)
3rd tier supplier 3,71 2,06 2,33 TOTAL *) 3,57 2,40 2,37 *) The total means may vary from the individual means with buyer and supplier due to the rounding **) 5 = Uses very much, 4 = much, 3 = sometimes, 2 = rarely, 1 = not at all ***) Statistically significant difference
The use of interactive, non- interactive and Web-based communication tools is
shown in table 9 above. To emphasize some points, it can be noted that the use of
the interactive tools approaches the level of “much”, as the use of the non-
interactive, and also the use of the Web-based tools, remains just at the scale of
“rarely”- “sometimes”. Additionally can be stated that Buyer B is the most active
one when considering whatever of the three groups of communication tools. As
well can be remarked the low levels related to the use of the Web-based
communication tools in 2nd tier supplier.
The statistical analysis revealed the existence of the significant difference exactly
by the use of the Web-based tools between Buyer B and the 2nd tier supplier. The
difference may be due to dissimilar backgrounds of the companies as the Buyer B
is a large company and the 2nd tier supplier represents small- and medium-sized
enterprises. These companies may have distinct premises for the development of
the solutions of information technology as well as they may have variances in
human and technical resources.
Generally speaking, the overall use of communication tools seems to be
approximately at the same level as it was in case A. As already been stated by
Case A, the interactive communication tools do not leave any tracks related to
communication. Therefore and particularly in the case of the value, the focus may
be of importance to direct communication to the Web-based tools which enable
the time- independent information delivery.
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Due to the focus of this study on the Web-based communication tools, the
Internet, Intranet and Extranet are examined in a more detailed way also by case
B. It has to be remembered that concentration is now only on the Web-based
communication and therefore interpretation of the results happens on that basis.
In general, the results from case B follow the same line as the results from case A
also by the Web-based communication tools. As table 10 below shows, Intranets
are the most used ones for communication in own company. According to table
10, Buyer B seems to be the most active user of the Web-based tools. Contrary to
the activity of Buyer B, the 2nd tier supplier represents the lowest means when
considering the Web-based communication.
Table 10. Use of the Web-based communication tools in own company – Case B
Company’s status The Internet (www)
Intranet Extranet
Buyer B 3,71 **) ***) 4,50 ***) 1,67 1st tier supplier 1,60 2,83 1,00 2nd tier supplier 1,44 ***) 1,20 ***) 1,00 3rd tier supplier 1,80 3,50 1,00 TOTAL *) 2,15 3,20 1,12 *) The total means may vary from the individual means with buyer and supplier due to the rounding **) 5 = Uses very much, 4 = much, 3 = sometimes, 2 = rarely, 1 = not at all ***) Statistically significant difference
Statistically significant differences can be noticed by the use of the Internet as
well by the use of Intranets. When considering the Internet option, a major
difference occurs between Buyer B and the 2nd tier supplier. In fact, the same low
level related to the use of the Internet can be seen by every one of the suppliers,
and Buyer B therefore easily distinguishes from the others. The same situation
holds true also in connection with the use of Intranets as Buyer B has the highest
mean which, in fact, approaches the level of “very much”. Reasons for the
differences may be found on variances in the company size, available - both
human and technical - resources, types of innovations, and type of company.
87
One important finding is necessary to consider closer. Based on the data from
table 10 above, the overall use of Extranets seems to be at very low level. Outside
of Buyer B, the other tiers do not use Extranets at all. On one hand, this weakness
may probably be a consequence of the scope of the statistical analysis which
concentrated on the use of communication tools in the companies, not between
them (for which the use of the Extranets is actually defined). Additionally, the
question of the survey may have been understood wrong if there has been some
misunderstanding in concepts such as the Internet, Intranet and Extranet. On the
other hand, the low levels of Extranet use may also result from the actual situation
in which Extranets are not implemented within the separate tiers of suppliers, but
in which Buyer B (the head company) has built its own Extranet and the other
companies are connected to it.
Specific communication tools are also reviewed with case B as was earlier done
with case A. Table 11 below shows the average use of fixed phone, cellular
phone, e-mail, face-to-face contact and Intranet in separate tiers of case B.
Table 11. Use of the specific communication tools in own company – Case B
Company’s status Fixed phone
Cellular phone
Face-to-face contact
Intranet
Buyer B 3,14**) ***) 4,13 5,00 5,00 4,50 ***)
1st tier supplier 4,50 ***) 1,50 ***) 4,67 4,33 2,83 2nd tier supplier 4,20 3,33 4,80 4,63 1,20 ***)
3rd tier supplier 3,80 4,75 ***) 4,67 4,20 3,50 TOTAL *) 3,93 3,52 4,80 4,56 3,20 *) The total means may vary from the individual means with buyer and supplier due to the rounding **) 5 = Uses very much, 4 = much, 3 = sometimes, 2 = rarely, 1 = not at all ***) Statistically significant difference
As can be seen from the total means, e-mail is the most used communication tool
also in case B. Its average use approaches the quantity of “very much” which may
cause difficulties in information delivery to the other than the prevailing person(s)
as receiver(s) on the actual sending moment. It is worth noticing that although the
overall trend favors Buyer B as the most active user of any of those
communication tools, there is an extensive difference between the use of cellular
88
phone by the 1st and the 3rd tier supplier. As the 1st tier supplier’s use of cellular
phone approaches the level of “not at all”, the 3rd tier supplier uses it almost “very
much”. An explanation for this can be found in different backgrounds as the 1st
tier supplier includes in small- and medium-sized enterprises and the 3rd tier
supplier is a large company. Therefore in context of the last mentioned company,
the cellular phones may be perks and that is the reason for the high levels of its
use.
Statistically significant differences appear by fixed phone and cellular phone, in
addition to Intranet. Contrary to three distinguishable groups of case B, case A
had just one group in which the means differed remarkably from each other.
Therefore can be stated that case B has more variance in means than case A have.
The reason for the discrepancy between case A and B can be attributed to the
different power of the buying company. Case B may have a more innovative and
advanced heading company (Buyer B) which develops its operations in a clear
sense of direction and in knowledge of future technology possibilities. Moreover,
case B had just a few suppliers and the amount of suppliers in case A approached
nearly ten companies. This fact may also have had some influence on the
discrepancies between these cases.
3.3.3 Summary
This chapter concludes the main results from the empirical survey. Some points
related to the availability as well as to the use of the communication tools are
discussed. Also some issues related to the survey are stated. The major findings
that concern communication tools and their linkage and role in a value net
environment are dealt with in the next chapter - Summary and Conclusions.
First the consideration is addressed to the availability of the communication tools.
Both of the case value nets had the same top five tools that were fixed phone, fax,
e-mail, the Internet and post. According to the classification presented in the
theoretical part of this study, the fixed phone represents interactive
89
communication tools and the rest of those five tools belong to the group of non-
interactive tools. One thing related to fax is interesting to state: Faxes were well
available as they included in the most common devices. However, when
concerned the five most used tools, the fax did not appear in any case. This may
be due to the fact that faxes are mainly used for external communication between
distinct companies, for example, to send orders and stock balances to the
counterparts or to receive some other documents. There are other tools which are
utilized when communicating internally.
What comes to the Web-based communication tools, the findings reveal that the
Internet was quite well available, but the lead over the presence of Intranets and
Extranets is remarkable. Additionally, the levels of the use of Web-based
communication reflect the trend that the benefits of the Web need to be proofed.
Both case A and case B revealed that the Web-based communication tools are
only sometimes used for internal communication. The only exception was Buyer
B which showed the level of nearly “much” use of the Web-based tools.
Buyer A (N=7)Fixed phone (4,71)E-mail (4,71)Cellular phone (4,14)
1st tier suppliers (N=33)E-mail (4,63)Fixed phone (4,37)Face-to-face –contact (4,04)
2nd tier suppliers (N=12)Face-to-face contact (4,50)E-mail (4,09)Fixed phone (3,82)
Buyer B (N=8)E-mail (5,00)Face-to-face contact (5,00)Intranet (4,50)
1st tier supplier (N=6)E-mail (4,67)Fixed phone (4,50)Face-to-face contact (4,33)
2nd tier supplier (N=11)E-mail (4,80)Face-to-face contact (4,63)Fixed phone (4,20)
3rd tier supplier (N=7)Cellular phone (4,75)E-mail (4,67)Face-to-face contact (4,20)
Buyer A (N=52) Buyer B (N=32)
Buyer A (N=7)Fixed phone (4,71)E-mail (4,71)Cellular phone (4,14)
1st tier suppliers (N=33)E-mail (4,63)Fixed phone (4,37)Face-to-face –contact (4,04)
2nd tier suppliers (N=12)Face-to-face contact (4,50)E-mail (4,09)Fixed phone (3,82)
Buyer B (N=8)E-mail (5,00)Face-to-face contact (5,00)Intranet (4,50)
1st tier supplier (N=6)E-mail (4,67)Fixed phone (4,50)Face-to-face contact (4,33)
2nd tier supplier (N=11)E-mail (4,80)Face-to-face contact (4,63)Fixed phone (4,20)
3rd tier supplier (N=7)Cellular phone (4,75)E-mail (4,67)Face-to-face contact (4,20)
Buyer A (N=52) Buyer B (N=32)
Figure 22. Three internally most used communication tools in the case companies
90
Figure 22 presents three of the internally most used communication tools. As can
be seen, e-mail exists among the three most used communication tools in every
level in both of the case value nets. While other companies use some kind of
device to communicate, the 2nd tier suppliers in case A prefer the face-to-face
contact when communicating internally in the company. As a whole, none of the
firms deviate significantly from others.
After the follow-through of the Web survey some statements for the further
research can be made. First, the size of the sample was quite small due to the
purpose of a descriptive case study. If generalizations were aimed to make, the
sample should have been bigger and random. On that basis, it had represented the
population better. Additionally in this study, the distinct firms in case A were
integrated with each other which meant that individual details of the companies
may have disappeared. However, the main features of the distinct tiers of the
suppliers were able to found.
As a whole, more attention should have been paid to the scales which measured
the level of the use of the communication tools. In this survey the scale – from
“very much” to “rarely” and “not at all” - was quite open to various
interpretations. In this context, the adjectives such as “daily”, “weekly” or
“monthly” would have described the level better.
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4 SUMMARY AND MAIN FINDINGS
In this study the use of communication tools was examined. In the theoretical part,
the purpose was to define the concept of a value net as well as to argument the
classification of communication tools into the interactive and non-interactive
mediums. Furthermore, the objective of the empirical part was twofold: First, the
aim was to clarify the answer to the research problem of how communication
tools are used internally in the companies in the value nets. Secondly, there was a
need to examine that how the Interne t, and particularly the Web, can be utilized
during the data collection process. Finally, the end results tend to show the current
state of the use of the communication tools in two separate case value nets. Due to
the delimitation of the subject of this thesis and the manifold spectrum of possible
relationships in the structure of the value net, the empirical part was limited to
concern only the communication inside the case companies in the separate levels
of the value net in case. Internal communication was chosen as the focus of the
study because internal conditions create the base for external communication.
In the theoretical part of the study the classification of communication tools was
made. After failed to search for suitable classification arguments, the researcher
compiled the classification which divided communication tools into the interactive
and non-interactive tools. Moreover, the non-interactive communication tools
were divided into the Web-based and other communication tools. The ground for
this classification was based on the conversations with the specialists of the ICT
industry.
The empirical part of the study focused on clarifying the current availability and
the use of the communication tools in two case value nets. Particular attent ion was
paid to the Web-based communication tools which are the Internet pages, and the
Web-based applications of an Intranet and an Extranet. Additionally, the nature of
the Web was studied in practice as the questionnaire survey was made for the use
in the Web.
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Despite its descriptive nature, this study reported here would seem to indicate
some issues which are important to consider when planning a universal
communication system for a value net. Once more it is pointed out that this study
has aimed to answer the question of how are communication tools used internally
in the companies of the value nets. The answers create a base for further research
of inter-organizational communication and development of a universal
communication system for a value net environment.
Due to the emphasis on the Web-based communication tools in this thesis, the
Web-related issues are discussed at first. The results of this study revealed that in
both of the cases the use of Web-based communication is still either a new or
unfamiliar medium to exchange information. In fact, Buyer B seems to the at the
most advanced state of what comes to the use of the Web-based communication
tools as opposite to some of the case companies that are just starting to implement
the Web solutions.
The reasons for the low levels of the utilization of the Web can be explained in
several ways. First of all, there has to be need for such a Web-based system before
any further plans or implementations are made. Managers in all level of the
company must understand and accept the role of the Web, and the Internet, in
business operations because in addition to the firm’s know-how, it is information
technology that enables and creates competitive advantage in today’s market.
Secondly, the starting costs as well as costs of maintenance may create barriers to
the implementation of the Web tool because such information systems must have
proper data security solutions to protect critical business information.
Additionally, the managers need to have adequate knowledge and gumption to
follow through the forth-coming reforms of business processes and ways to work.
Finally, the company must find suitable persons who have the know-how of the
way of how to implement the Web-based communication tool, either an Intranet
or an Extranet.
93
To improve inter-organizational communication, the internal aspects must be well
managed and controlled at first. Benefits and weaknesses of each of the
communication tools need to be clarified, understood and adopted, and on that
basis a universal communication system can be built. Due to the number of
dynamic members in a value net, common and lean communication conventions
should be developed and implemented in the companies involved. For example,
advices for the situations when interactive communication have to be replaced
with non- interactive communication should be compiled and alternative
communication tool should be named. Also regulations and recommendations for
the information management should be available for the employees and managers
of the value net companies. Additionally, due to the dynamic nature of a value net,
these regulations and their compliance have to made so simple and easy that
persons are able to adopt them when entering a value net. In any case,
communication between persons and therefore between companies is the function
which enables all of the business operations.
The results of this study revealed that value net needs efficient and effective
communication to operate properly, and thus Web-based communication tools are
required to enable transparent and timely availability of information and its
accurate delivery to the members of a value net. Therefore, further research
should be addressed to the investigation of the influence of the company’s
background on the use of the Web-based communication tools. In other words,
does a large company have different premises for the use of the Web-based
communication tools than a small- and medium-sized enterprise? Additionally for
the development of universal communication system, it is worth studying the state
of external communication between the members of a value net.
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Appendix I
EXPLANATIONS OF TECHNICAL TERMS
Authentication
The process of determining whether someone or something is, in
fact, who or what it is declared to be. In private and public
computer networks (including the Internet), authentication is
commonly done through the use of logon passwords.
Digital certificate
An electronic "credit card" that establishes your credentials when
doing business or other transactions on the Web.
Encryption Encryption is the conversion of data into a form that cannot be
easily understood by unauthorized people
EDI Electronic Data Interchange- a standard format for exchanging
business data.
Firewall A firewall is a set of related programs, which are located at a
network gateway server that protects the resources of a private
network from users from other networks.
FTP File Transfer Protocol - a standard Internet protocol, is the simplest
way to exchange files between computers on the Internet
HTML Hypertext Markup Language - the set of markup symbols or codes
inserted in a file intended for display on a Web browser page
HTTP The Hypertext Transfer Protocol - the set of rules for exchanging
files (text, graphic images, sound, video, and other multimedia
files) on the Web.
IP The Internet Protocol - the method or protocol by which data is
sent from one computer to another on the Internet.
SMTP Simple Mail Transfer Protocol - a TCP/IP protocol used in sending
and receiving e-mail
TCP/IP Transmission Control Protocol/Internet Protocol - the basic
communication language or protocol of the Internet.