Extending the integration-responsiveness framework: delivering a global service strategy at British Airways

Collinson, Simon; Sullivan-Taylor, Bridgette and Wilson, David (2010). Extending the integration-responsiveness framework: delivering a global service strategy at British Airways. Strategic Innovators(4)

URL: http://www.iipmthinktank.com/asp/strategic-innovat...

Abstract

The integration-responsiveness (IR) framework is one of the most widely cited and applied concepts in the international business literature. Like other generic theoretical frameworks it is used to explore and explain the management challenges of all types of multinational enterprises (MNEs). However, it was originally developed, and has predominantly been applied, to examine and explain strategic and organizational dilemmas in product-oriented manufacturing firms. References to the differences between product and service-oriented firms and the generic applicability of the IR framework are surprisingly rare.

This paper argues that to understand conceptually both the strategic and operational complexities of balancing between centralised, standardised and integrated organizations versus devolved, differentiated, and disaggregated organizations in the services sector requires a significant adaptation to, and enhancement of, the IR framework drawn from organization theory. The empirical basis for argument is based on an in-depth study of a major airline company, British Airways. Airlines transport passengers between two locations, but beyond this basic service there is a hierarchy of service characteristics that add value to the customer, from the speed and reliability of the journey, the convenience of the location and time of departure, to onboard refreshment options and the cultural appropriateness of entertainment options and personal services. Much of the value proposition lies in the service element, although precisely how much is at the heart of the strategic contest between traditional premium providers and low-cost airlines. This means that key elements of the service are dependent on front-line personnel and rather than being embedded in a product. The tailoring or customisation lies in the actions and behaviour of such personnel and cannot therefore be ‘fixed’ from the centre. Moreover, it changes continually as front line personnel adapt their behaviour at the point of delivery, responding to the ever-changing needs of different combinations of customers and the varying resource limitations of different in-flight situations.

Given that this kind of firm adds proportionally more value at the point of service delivery we argue that its competitive advantage rests predominantly on the balance struck between standardised versus differentiated services and centralised versus devolved control over the customisation process. As a result there is more of a premium in the airline industry on developing the kinds of dynamic capabilities that mediate between centre and periphery. These key differences have significant implications for understanding the integration-responsiveness dilemma for service firms. This is something that has been partially explored in the customer services marketing literature but not extensively in mainstream international business studies in relation to core frameworks like IR.

We propose that organization theory perspectives can more fully explain and enhance understanding of these challenges in global service firms, when mirrored against the IR framework. This also reflects calls by some of the architects of the IR framework to complement the framework with organization theories capable of explaining the sub-processes that underlie the formal structure of international firms (Doz and Prahalad, 2005). We specifically examine a time period in the recent history of the firm when on-going restructuring resulted in a series of cycles alternating between integrated, centralised and more standardised services, strategy and organizational structures, and more responsive, devolved and differentiated services, strategy and organizational structures. In doing so, we aim to gain a better understanding and explanation of IR dilemmas in the context of a service firm and contribute to approaches for better-understanding strategic and organizational change management. We also reflect on how the IR frame work needs to be adapted or supplemented with organizational theory approaches for studying all firms.

The IR framework is briefly introduced below, followed by a review of the origins, structure and applicability of organization process approaches. We then describe the research design and methodology, justifying the use of a single, in-depth, multi-level case study of British Airways for this research. A time-line showing the main I-R cycles, through a series of CEOs and strategic initiatives at British Airways from 1985 to the present provides an overview of the major changes of the past 20 years. We then examine the development and implementation of a set of strategies in the period from 1997 to 2000 which were part of a push for differentiation and customer-responsiveness.

Two major sets of initiatives during this period, one focused on crew training and the other on customising in-flight products and services are discussed in detail to illustrate the real-world complexities of the IR dilemma and the value of the revised framework for understanding these complexities. We deliberately contrast the tangible product and service dimensions of responsiveness, and the intangible expertise and in-flight behaviour of cabin crew to test and extend the traditional IR framework.

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