The doctoral dissertations of the former Helsinki University of Technology (TKK) and Aalto University Schools of Technology (CHEM, ELEC, ENG, SCI) published in electronic format are available in the electronic publications archive of Aalto University - Aaltodoc.
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Managing Cross-Functional Interdependencies – The Contingent Value of Integration

Virpi Turkulainen

Dissertation for the degree of Doctor of Science in Technology to be presented with due permission of the Faculty of Information and Natural Sciences for public examination and debate in Auditorium TU2 at Helsinki University of Technology (Espoo, Finland) on the 17th of October, 2008, at 12 noon.

Dissertation in PDF format (ISBN 978-951-22-9533-3)   [1281 KB]
Dissertation is also available in print (ISBN 978-951-22-9532-6)

Abstract

This research focuses on designing organizations, especially on the integration of functional units (e.g., manufacturing, R&D, marketing/sales). Cross-functional integration is one of the focal concepts in Operations Management (OM) and it has been approached both in the context of on-going operations as well as in the context of new product development. The existing literature on cross-functional integration focuses primarily on assessing the performance effects of integration and often takes the benefits of integration for granted. Some recent literature, however, suggests that there are costs related to integration. Hence, integration can be considered as an investment, inducing significant financial and managerial costs to the organization. Therefore, it is of fundamental importance to assess when integration is needed and the conditions under which it is essential. In order to understand the value of integration, the antecedents and effects of integration are addressed in this research. The research focuses on cross-functional integration at the manufacturing plant level. A theory-driven empirical research approach is taken.

The theoretical basis of this research is in the contingency theory of organizations, especially the work of the early structural contingency theorists. In this research, integration is approached as an information processing phenomenon. Following the arguments of contingency theorists and information processing scholars, the research makes a distinction between three integration constructs: achieved integration, integration mechanisms, and requisite integration. Furthermore, it is suggested that organizations vary in terms of their needs for integration, and emphasis on complex lateral integration mechanisms is needed only when the requirements for integration are significant.

The first main finding of this research is that the integration dimension of achieved integration has direct consequences in terms of performance; a high level of achieved integration has a positive effect on comparative manufacturing performance. The effect of cross-functional integration on different dimensions of performance is not similar, however; integration provides more value on some dimensions. The second finding is that plants differ in terms of the requirements for integration, and subsequently in terms of the use of integration mechanisms; when the requirements for integration are substantial, more emphasis is needed on lateral integration mechanisms, including cross-functional job rotation and cross-functional teams. Finally, the results indicate that especially a high emphasis on the development of new technology and product customization increase the need for cross-functional integration at manufacturing plant level.

This research contributes to both Operations Management (OM) and Organization Theory (OT), although the main contribution of the research is to OM. To OM literature, this research contributes by (i) providing conceptual clarity to the concept of integration, (ii) conceptualizing and empirically assessing integration as an endogenous variable, and (iii) discussing and assessing the intra-organizational variant of the contingency theory, introduced by Lawrence and Lorsch (1967), in the OM context. Hence, the contribution to OM literature is empirical and theoretical by nature. The contribution to OT literature, on the other hand, is highly empirical by nature. This research contributes to the contingency theory by providing a holistic empirical assessment of the intra-organizational contingency theory argument on integration, including the empirical assessment of the concept of requisite integration.

The research results have implications for practice as well. The concept of requisite integration is highly relevant for managers. Because of variations in the requirements for integration, lateral integration mechanisms are not equally important to all organizations; in certain conditions the integration challenge can well be managed with traditional vertical mechanisms like centralization and standardization. The results also imply that managers' need to pay attention to cross-functional integration depends on which performance dimension is strategically important; integration is more valuable on some dimensions of performance than on others.

Keywords: cross-functional integration, organization design, contingency theory, High Performance Manufacturing

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© 2008 Helsinki University of Technology

Last update 2011-05-26