Absorbing new knowledge in small and medium-sized enterprises: A multiple case analysis of Six Sigma

Abstract

The primary aim of this article is to critically analyse the development of Six Sigma theory and practice within small and medium-sized enterprises (SMEs) using a multiple case study approach. The article also explores the subsequent development of Lean Six Sigma as a means of addressing the perceived limitations of the efficacy of Six Sigma in this context. The overarching theoretical framework is that of absorptive capacity, where Six Sigma is conceptualized as new knowledge to be absorbed by smaller firms. The findings from a multiple case study involving repeat interviews and focus groups informed the development of an analytical model demonstrating the dynamic underlying routines for the absorptive capacity process and the development of a number of summative propositions relating the characteristics of SMEs to Six Sigma and Lean Six Sigma implementation.

Keywords

absorptive capacity lean multiple case studies Six Sigma SME

Introduction

Considerable attention has been afforded to how Six Sigma applications and derivates, such as Lean Six Sigma, lead to significant improvement in cost, cycle time and profit margins in large organizations (see for example, Buch and Tolentino, 2006; Gowen et al., 2008). However, as Antony (2008), Chen et al. (2010) and Thomas et al. (2009) argue, there is a need for further research in relation to the application of Six Sigma in smaller firms. Further, Llorens-Montes and Molina conclude that ‘Six Sigma is an organizational phenomenon that has been given little research attention’ (2006: 485), and that this is particularly relevant with regard to small and medium sized enterprises (SMEs), a view reiterated by Antony et al. (2005). In this context, research has probed the development of Lean Six Sigma in response to the perceived difficulties in applying Six Sigma (as outlined by Achanga et al., 2006 and Thomas et al., 2009). These studies conclude that a Lean Six Sigma approach has the potential to augment a Six Sigma approach in smaller firms with the multifarious tools and techniques of lean thinking, including waste reduction methods and value streaming techniques.

Due to the emergent nature of the Six Sigma and Lean Six Sigma discourse in the SME literature, many key questions remain unanswered as yet. A number of assumptions are made about adopting business improvement methods, such as Six Sigma, in relation to resources, skills, education and training (Achanga et al., 2006; Bennett and Smith, 2004). These assumptions stem from the underlying premise that potential new knowledge and methods can be viewed in a scalar manner: i.e. that the resources needed for SME applications will be some fraction of that for a larger organization. However, as pointed out by Welsh and White (1981), SMEs are not ‘little big businesses’; rather, they are distinct entities with specific views and interpretations of new knowledge, such as Six Sigma (Martinez-Costa and Jimenez-Jimenez, 2009; Thomas et al., 2009). Hence, SMEs need to engage with the underlying principles of Six Sigma and Lean Six Sigma to determine how they might benefit.

A theoretical framework developed for understanding the acquisition, development and application of new knowledge in organizations, such as Six Sigma and Lean Six Sigma, is that of absorptive capacity (Cohen and Levinthal, 1990; Easterly-Smith et al., 2008; Zahra and George, 2002). This theoretical perspective is useful in that it allows an eclectic range of theories to be both situated and juxtaposed within an overall framework that is underpinned by a series of dynamic routines (Zahra and George, 2002). There are many examples of absorptive capacity as a theoretical framework to analyse new business improvement applications within smaller firms (see for example, Cohen and Levinthal, 1990; Jones, 2006; McAdam and Hazlett, 2010). The theorizing in the Six Sigma and Lean Six Sigma literature is eclectic and lacks an overarching perspective, and so adopting an absorptive capacity perspective adds to our understanding of applications within SMEs.

Therefore, the primary aim of this article is to critically analyse the development of Six Sigma theory and practice within SMEs using a multiple case study approach to obtain the necessary deep rich data. A secondary aim is to enquire into the subsequent development of Lean Six Sigma while remaining aware of perceived limitations regarding the efficacy of Six Sigma. The overarching theoretical framework used is that of absorptive capacity, where Six Sigma and Lean Six Sigma is absorbed as new knowledge. The key dimensions of the absorptive capacity framework, as outlined in Figure 1, cover the acquisition, assimilation, transformation and exploitation of Six Sigma and Lean Six Sigma knowledge within SMEs.

Figure 1.

Absorptive Capacity Framework.

In pursuing these aims, the article makes a threefold contribution. First, it contributes to the body of knowledge on how smaller firms acquire, assimilate and transform or use Six Sigma and Lean Six sigma business improvement knowledge and approaches. Second, it develops the absorptive capacity perspective by identifying and examining the underlying dynamic informal and implicit routines used when attempting to adopt and adapt these approaches. Third, an analytical model is outlined which shows how these routines are related to the key absorptive capacity knowledge constructs of acquisition, assimilation and transformation or use. This model offers potential for further studies of new business improvement applications in SMEs.

What is Six Sigma and Lean Six Sigma?

From both a statistical and a historical perspective, the development of Six Sigma theory is based on process control theory (Nonthaleerak and Hendry, 2008; Thomas et al., 2009). In definitional terms, sigma is a Greek alphabet letter that denotes the standard deviation used to describe variability. As shown by Breyfogle (2003), a sigma quality level offers an indicator of how often defects are likely to occur in the process being reviewed: the higher the sigma level, the less likely a process is to create defective parts. The sigma levels and corresponding defect levels are derived from the normal probability distribution curve for an organizational process. These levels are expressed in terms of defects per million opportunities (DPMO). Thus, a Sigma 2 level equates to 308,537 DPMO; a Sigma 3 level to 66,807 DPMO; a Sigma 4 level to 6,210 DPMO, a Sigma 5 level to 233 DPMO and a Sigma 6 level to 3.4 DPMO (from Breyfogle, 2003). As a result, the term ‘Six Sigma’ has developed as an aspirational quality measure for organizational processes.

Accordingly, the main theme of Six Sigma is that of focusing on reducing variability in processes (Schroeder et al., 2008). In applying Six Sigma to business improvement projects, almost all projects use the Define, Measure, Analyse, Improve, Control (DMAIC) nmemonic as the formulaic guide for structuring the project stages (Thomas et al., 2009). Each of the five areas has a series of related tools and techniques, mainly statistical, that project teams apply, using training involving levels of competency denoted by different coloured belts (Llorens-Montes and Molina, 2006). However, the progression of Six Sigma in organizational praxis is not supported with a commensurate development of theory (Linderman et al., 2006; Llorens-Montes and Molina, 2006; Schroeder et al., 2008). Six Sigma has begun to develop towards a broader change management philosophy (Buch and Tolentino, 2006; Nonthaleerak and Hendry, 2008; Wiklund and Wiklund, 2002), being ‘not referred to as a quality tool, but rather as a business strategy’ (Breyfogle, 2003: 2).

These findings reflect the emergence of Lean Six Sigma within the literature and organizational practice, due in part at least to the perceived limitations of Six Sigma (Thomas et al., 2009). In this approach, Six Sigma’s DMAIC structure is retained with a series of tools and techniques integrated within each of the DMAIC stages to eliminate waste and improve process flow. These myriad tools and techniques, which are relatively simple to use in a team situation, are referred to as ‘Lean tools’ (Breyfogle, 2003) and include cause-and-effect analysis, the Six Sigma (6S) tool and Pareto analysis. Moreover, Lean Six Sigma also addresses operational process changes by incorporating a process view known as value streaming (Chen et al., 2010) and process analysis in terms of value-added and non-value-added to eliminate waste. Thus, Lean Six Sigma can contribute to improving the flow of a process and reducing process variability and waste, whereas Six Sigma’s original main focus is on process variability (Breyfogle, 2003). However, as Chen et al. (2010) and Antony et al. (2005) remind us, there is a paucity of in-depth empirical studies investigating Six Sigma and Lean Six Sigma within smaller firms.

Six Sigma and Lean Six Sigma in an SME context

While the existing literature on Six Sigma in SMEs is relatively scarce compared to larger organizational applications, it can be divided into two broad categories: first, that which takes a narrow statistical definition of Six Sigma in SMEs focusing on operational process variability issues (e.g. Chen et al., 2010; Nabhani and Shokri, 2009); and second, work that takes a broader interpretation of Six Sigma, usually involving the subsequent development of Lean Six Sigma. However, such firms are usually and unhelpfully conceptualized as scalar versions of larger organizations (typically within vertical supply chains, where large organizations in the chain have directly influenced the application of Six Sigma and Lean Six Sigma; Box, 2006).

Reflecting the second category, Anthony et al. (2005) use a broad definition of Six Sigma with specific implementation methods and tools. They identified a number of SMEs which had implemented Six Sigma over a one-year period and explored the reasons for non-implementation. A key explanation for not using the system was the perception of inadequate resources and skills: in essence, the evidence from large companies was used as a mediating, and often misleading, influence upon the understanding of the system held by managers within smaller firms. Anthony et al. also found that in addition to recognizing benefits such as reduction in process variability, increase in profitability and reduction in operating costs, there was a perception of significant impediments. These included a lack of resources such as time, finance and skills (see also Wessel and Burcher, 2004), multiple roles for individuals (see also Antony et al., 2005) and a lack of training and development. McAdam and Hazlett (2010) suggest that a number of these factors may relate to the complex language and statistical tools in the Six Sigma repertoire, including, for example, the analysis of process variation, Tageuchi methods and failure mode and effect analysis.

In adopting a wider definition of Lean Six Sigma, Wessel and Burcher (2004) studied 47 German SMEs in terms of their readiness for Lean Six Sigma application. They identified a number of key issues that needed to be addressed when applying and effectively using Lean Six Sigma. These included limited resources, skill shortages and the lack of singular roles (‘multi-hat’). However, their underlying assumption was that a large company interpretation of Lean Six Sigma can be scaled down to suit the more limited capability of smaller firms, rather than recognizing that they operate within a separate and specific context (Cope, 2005; Perren and Ram, 2004).

Thomas et al.’s (2009) study of Six Sigma reflects the first category of the Six Sigma–SME literature in that they adopt a statistical process control and apply it to a specific operational quality problem. In this context, Six Sigma was applied in a project manner using the traditional DMAIC approach, involving a number of complex statistical tools such as Design of Experiments. The key goal was to reduce defects per unit; while this was achieved, there was no evidence to show that Six Sigma was more widely adopted within the firm. Moreover, the statistical analysis was beyond the capability of employees, so it was only useful in solving specific long-run problems with high-cost implications, using external expertise to augment existing in-house skills. Kumar and Antony’s (2008) SME case analysis study found that a more broadly based hybrid Lean Six Sigma approach was more useful than a more explicitly statistically driven methodology. Consistent with Antony et al.’s (2005) review of Six Sigma in UK manufacturing SMEs, it is suggested that there is a need for more in-depth research in this area beyond descriptive and single case analysis, which probes context beyond that of scalar versions of large firm applications.

Six Sigma theoretical developments for SMEs and research questions

The theoretical discussion of Six Sigma in this wider context is limited to representations of specific features using an eclectic range of theories (Linderman et al., 2003; Llorens-Montes and Molina, 2006). There is no coherent or overarching body of theory which has emerged to underpin or drive Six Sigma and Lean Six Sigma developments in practice (Gowen et al., 2008; Schroeder et al., 2008). Linderman et al. (2003, 2006) suggest that a goal theoretic approach to Six Sigma – that is, a focus on goal-setting achievability and challenging target setting to enable its overall benefits, goals and purpose to be explored within a wider management context – is appropriate. However, the goal theoretic approach does not adequately explain the dynamics involved in adopting and legitimizing Six Sigma within organizations. Paralleling this approach, Buch and Tolentino (2006) use the theory of work motivation to study the effect of Six Sigma-based rewards on employee motivation in participating in Six Sigma projects. While this theory is useful, it is localized in that it does not address the knowledge acquisition aspects of Six Sigma and its synergies with other change management approaches (Zahra and George, 2002).

Gowen et al. (2008) and Llorens-Montes and Molina (2006) examine the theoretical conceptions of Six Sigma from an economic perspective, focusing on the effect of technology intensity on its adoption. Using a resource-based view and dynamic capabilities analysis, they explore the acquisition of Six Sigma competencies for the sustainable and competitive use of resources. However, these theoretical approaches are not sufficiently overarching to address the goal theoretic, motivation and behavioural theories of Six Sigma other than leading to agency theory, which emphasizes the role of agents (i.e. ‘Black Belts’) pursuing organizational goals (Llorens-Montes and Molina, 2006). Basu and Wright (2003) and McAdam and Hazlett (2010) address the theoretical dichotomies within Six Sigma as a prelude to developing overarching theories. A central feature of such dichotomies is the difference between ‘organic’ and ‘mechanistic’ theories (Moore and Brown, 2006; Spencer, 1994). In this classification, both Moore and Brown (2006) and Spencer (1994) distinguish the two types across several key dimensions (as used in this article). For example, in relation to the definition of quality, the mechanistic model advocates conformance to standards, while the organic model suggests customer satisfaction. For employees, a mechanistic approach suggests a passive or ’follow orders’ approach, whereas an organic approach advocates self-regulation and a more empowered approach. In terms of philosophy towards change, a mechanistic approach suggests stability, whereas an organic approach argues for change and learning. While the two types often overlap, they are useful polarizations when used in conjunction with other analysis methods (Moore and Brown, 2006).

Benner and Tushman (2002) regard the process-based characteristics of Six Sigma as having mechanistic process-based components in conjunction with Total Quality Management (TQM), international standards (ISO) and other business improvement methodologies. Mechanistic theory supports the application of approaches to Six Sigma, which has specified goals and targets (Choo et al., 2007; Linderman et al., 2003). Spencer (1994) shows that organic theory is phenomenological in perspective and supports enquiry into meaning, subjectivity and learning experience within change management programmes. Thus, this approach to Six Sigma supports organizational learning concepts in addition to economic-based theories, as used by Llorens-Montes and Molina (2006). However, while the mechanistic and organic conceptions of Six Sigma are useful in highlighting polarities, they do not show the complexity and dynamics associated with Six Sigma development and absorption in smaller firms.

In attempting to develop a theoretical conception of how organizations adopt, incorporate and exploit new knowledge, Cohen and Levinthal (1990) and Zahra and George (2002) have outlined the concept of absorptive capacity as a specific dynamic capability that enables both resource-based view and organizational learning theories and constructs to be represented within the multidimensional construct of absorptive capacity, as shown in Figure 1.

Much of the supporting empirical work around absorptive capacity grounds the concept in the small firm context and avoids quasi-large organization assumptions. In seeking to review and advance the limited, but diverse, theoretical developments of Six Sigma and Lean Six Sigma in this context, an overarching absorptive capacity framework is proposed within which existing theoretical developments and understanding can be situated and linked, or at least juxtaposed. Cohen and Levinthal (1990) indicate that this approach has been developed from the limitations of the resource-based view and dynamic capabilities theories in relation to the ‘greater approximation’ of management practices associated with Six Sigma and organizational change (Llorens-Montes and Molina, 2006), while at the same time offering a framework within which organizational change can be situated (Jones, 2006; Daghfous, 2004). Thus, this framework has the potential to explore and analyse the application of Six Sigma, and subsequently Lean Six Sigma, within SMEs.

Daghfous (2004) and Zahra and George (2002) define the four dimensions of absorptive capacity as acquisition, assimilation, transformation and exploitation, which can be adopted from a process perspective, as shown by Easterby-Smith et al. (2008). Within each of these dimensions, there are underlying routines which are dynamic, interrelated and dependent on the context in which absorptive capacity is applied (Todorova and Durisin, 2007; Zahra and George, 2002). Absorptive capacity suggests that these underlying and dynamic organizational routines, which are informal and tacit in nature, enable new knowledge such as Six Sigma or Lean Six Sigma, to be adopted, developed and produce benefits (Easterby-Smith et al., 2008). Gowen et al. (2008) suggest that a dynamic capability representation of Six Sigma can provide a framework for understanding both its technical (process capability, stability, process optimization) and human (leadership, culture change, teamwork) aspects.

Drawing upon Figure 1, and the work of Cohen and Levinthal (1990), Daghfous (2004) and Zahra and George (2002), Table 1 has been constructed to demonstrate how absorptive capacity can be viewed as a dynamic capability, with the four key dimensions and corresponding elements for each dimensions. These dimensions and elements enable specific enquiry-based questions to be posed (i.e. RQ1 to RQ4 and associated sub-questions) in relation to treating Six Sigma as new knowledge to be effectively absorbed within the firm.

Table 1.

SME-based Six Sigma Enquiry Questions for each Dimension of Absorptive Capacity.

Absorptive capacity dimension	Dimension elements^a	Corresponding research questions and Six Sigma issues for application and development of Six Sigma in SMEs
Acquisition: This is the ability to recognize, value and acquire Six Sigma	• Prior investments • Prior knowledge • Intensity • Speed • Direction	RQ1: How do SMEs recognize, value and acquire Six Sigma knowledge? Related issues: • Is Six Sigma something new? • How was Six Sigma identified as necessary? • Who decided to adopt Six Sigma?
Assimilation: The dimension of absorptive capacity relates to an organization’s ability to understand and learn from acquiring Six Sigma	• Understanding • Learning	RQ2: What approaches have SMEs taken to developing understanding and learning about Six Sigma within the organization? Related issues: • Who are the key individuals within Six Sigma? • What are their roles in relation to develop understanding of Six Sigma? • What types of team were identified to apply Six Sigma projects? • What types of learning approaches were used to develop understanding of Six Sigma? • How is understanding of Six Sigma disseminated throughout the organization?
Transformation: The dimension of absorptive capacity relates to an organization’s ability to develop and refine the routines that help combine existing knowledge with newly acquired and assimilated knowledge (i.e. Six Sigma)	• Internalization • Conversion	RQ3: In what manner is Six Sigma knowledge used to change organizational routines? Related issues: • How does Six Sigma relate to existing change programmes and approaches? • What technological change approaches and knowledge were reinterpreted and complemented by Six Sigma? • What conflicts does the new Six Sigma knowledge create? • What people factors can assist or hinder in Six Sigma-based organizational transformation? • What are the key performance indicators for Six Sigma-led transformation?
Exploitation: The dimension relates to organizational ability to apply Six Sigma knowledge commercially to achieve organizational objectives	• Use • Implementation	RQ4: What business benefits that have resulted from the adoption and application of Six Sigma? Related issues: • What are the people and/or emancipatory benefits of applying Six Sigma? • How can Six Sigma lead to the achievement of goals and objectives? • What new opportunities have arisen and been realized from Six Sigma?

As per Daghfous (2004) and Zahra and George (2002).

It has been argued (e.g. Nabhani and Shokri, 2009; Thomas et al., 2009) that some SMEs that initially adopt and apply Six Sigma subsequently question its efficacy as the sole approach to business improvement, and thus subsequently apply Lean Six Sigma. To probe this issue, a fifth research question is developed:

RQ5: Why, and at what stage of the Six Sigma implementation process, do SMEs decide to augment their approach in the form of Lean Six Sigma?

A final research question seeks a level of abstraction by probing the underlying dynamic routines by which SMEs decide to acquire, assimilate and transform or use new knowledge within an analytical framework. Zahra and George (2002) and Todorova and Durisin (2007) suggest that these underlying routines are often informal (i.e. lacking formal structure), tacit in nature, recursive (i.e. multiple iterations before a decision is reached), and ultimately coalesce or are bundled into the four key dimensions of absorptive capacity, which leads to the final research question:

RQ6: What are the underlying routines involved throughout the acquisition, assimilation and transformation or use of the new knowledge, and how are they situated within an analytical framework?

Method

Procedure

Perren and Ram’s (2004) case study research into small businesses indicates the need for paradigmatic placing. Thus, this current study adopts the suggested ‘subjective’ and ‘multiple stories milieu’. The article adopts a phenomenological enquiry (Cope, 2005) approach, where Six Sigma is analysed as a multi-construct, complex and dynamic sense-making process. This inductive approach uses the initial research questions and leads to the formation of propositions, as suggested by Yin (2009). These then form the basis of a further research agenda, rather than hypotheses which can be tested (Miles and Huberman, 1994; Yin, 2009). The nature and content of the research questions lend themselves to the adoption of a multiple case study approach as a suitable method of enquiry. Eighteen case organizations are discussed (Table 2).

Table 2.

Case Organisation Descriptions.

Case	Sector/products	No. of employees	Historical business improvement approach^a	Market and business environment
1	Transit vehicles	240	Organic	Growth; strong established markets; opportunities for growth and cost reduction pressure from new entrants
2	Building fabrication products	48	Mechanistic	Growth; cost reduction pressure from Asian markets
3	Armoured cover products	210	Organic	Growth; cost reduction pressure and new product opportunities
4	Printing products	60	Mixed	Growth; cost reduction pressure
5	Software products and services	160	Mechanistic	Growth; cost reduction pressure from public sector reform
6	Ceramic products	245	Organic	Export growth; alliances
7	Petroleum devices	94	Mixed	Growth; cost reduction and improved quality pressures
8	Auto seating systems	155	Organic	Export growth; cost reduction and improved quality pressures
9	Construction products	95	Mechanistic	Growth; need to build innovation capability and reduce cost
10	Glass products	104	Mixed	Export growth; reduced cost and improved quality pressures
11	Furniture production	130	Organic	Export growth; cost reduction and improved quality pressures
12	Furniture products (bespoke)	87	Mixed	Export growth; cost reduction and improved quality pressures
13	Refrigerated food products	240	Mechanistic	Growth; improved quality pressures
14	Healthcare packaging	247	Organic	Growth; improved quality pressures
15	Educational products	45	Organic	Growth; reduced cost and improved quality pressures
16	Leather tanning products	12	Mixed	Growth; reduced cost and improved quality pressures
17	Die-cast products	155	Mixed	Growth; need to increase range of customers and reduce costs
18	Auto parts	125	Organic	Growth; improved quality pressures

Based on Spencer’s (1994) ‘mechanistic’ and ‘organic’ taxonomy).

Sample

Initially, 30 SMEs were identified as fulfilling the basic selection criteria of having advanced on the quality journey and had attempted to apply Six Sigma knowledge (based on government agency – the government-funded Local Enterprise Agency – recommendations and individual research team knowledge). In addition, the SMEs had attempted to apply Lean Six Sigma after the application of Six Sigma. These purposive selection criteria reflects the literature-based premise that Six Sigma applications in SMEs may lead to the subsequent adoption of Lean Six Sigma in an attempt to overcome problems with Six Sigma application (Thomas et al., 2009). The quality criteria also required the firms to have used a range of business improvement methods progressively over at least a three-year period. Previous research (see for example, Antony, 2008; Antony et al., 2005) has shown that SMEs most likely to have effectively applied Six Sigma were those that had used advanced approaches to quality management. A preliminary study involving initial interviews with the business improvement manager (or equivalent job title), to determine alignment with the selection criteria, reduced the original 30 potential cases to 18.

The research instruments included semi-structured interviews and focus groups. Using the research questions and sub-questions in Table 1 as the backdrop, the managing directors (or equivalent) in each organization were interviewed on three separate occasions. In addition, company documentation and archive data (including national quality award applications) were analysed. Subsequently three focus groups, facilitated by one of the authors, were held with a mixed group of management and employees from each company (an average of six per group, with each lasting about two hours) to further probe and triangulate the emergent interview and document analysis findings. In addition, there were follow-up telephone and email exchanges with individual focus group members relating mainly to their individual experience, including, for example, their previous large company knowledge of Six Sigma.

Data analysis

An adapted version of Radnor and Boaden’s (2004) method for analysing qualitative multiple case research data was used in this study. First, topics and categories were constructed from the interview transcripts, document analysis and focus group notes; second, findings were coded within tables and subsequently interpreted using the literature. Finally, repeat interviews were used to add more depth, resolve anomalies and add new findings in a cyclical manner.

The cases came from the service and manufacturing sectors rather than one specific cluster. Yin (2009) has suggested that this approach is likely to give richer findings and avoid sectoral limitations. To moderate potential life cycle effects, the cases were selected as coming from a similar stage in the growth cycle model, namely stage four, where the organization is seen as reaching a relatively stable position and having sufficient resources and structure to overcome market turbulence, as defined by Churchill and Lewis (1983) and as segmented by the government agency.

Ultimately it is difficult to generalize interpretive research studies beyond the context of the study (Miles and Huberman, 1994); however, the development of the analytical model (Figure 2) clarifies a framework for wider application, as suggested by Yin (2009).

Figure 2.

Model of Six Sigma Adoption using an Absorptive Capacity Perspective.

Results and discussion

Given the qualitative and integrated nature of the research, and as suggested by Yin (2009), the results and discussion section are combined. The structure is based on the four dimensions of absorptive capacity using the summary matrix-based analysis findings of Table 3, the classification evidence of Table 4 and the classification of Figures 3 to 8. Throughout this section, the presence of underlying routines relating to the new knowledge and its representation in an analytical framework (Figure 2) are identified and discussed in relation to RQ5 and RQ6. The evidence is substantiated further by specific case examples and quotes where appropriate, and the development of summary propositions.

Table 3.

Case Analysis Summary Matrix.

	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18
Reason:
Imposed by large company		√	√		√		√			√				√	√		√
Failure of existing methods	√			√		√		√				√
Environmental scanning	√					√	√	√	√		√	√	√			√		√
Government		√										√
Definition:
General	√	√	√			√	√	√	√		√	√		√	√	√	√	√
Statistical			√	√	√							√	√	√
Application:
Six Sigma high	√		√			√	√	√	√			√		√	√		√	√
Six Sigma low		√									√		√
Discrete application	√		√	√	√					√	√	√	√
Six Sigma operations
Six Sigma service
Decision-maker:
Managing director		√	√	√			√	√	√	√	√	√	√	√	√	√	√	√
Management Team	√				√	√		√	√		√	√		√	√		√	√
Employees			√
Expectations:
Competition	√	√			√	√		√			√			√			√	√
Quality						√	√	√	√	√			√	√	√	√	√	√
Cost	√	√	√	√		√	√			√	√	√	√	√	√	√	√	√
Cycle time	√				√		√	√	√	√				√	√	√		√
Market share			√		√
Profit		√						√	√			√						√
Approach:
Belt training (Black minimum)	√		√			√	√	√	√	√		√		√	√		√	√
DMAIC	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√
Project	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√
Integration	H	H	H	L	L	L	L	H	L	L	H	L	H	H	L	H	L	L
Problems:
Resources	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√
Education/skills	√			√					√			√	√
Involvement		√	√	√	√	√			√	√		√	√	√	√	√	√	√
Large company-think		√		√					√					√	√	√	√
Clash			√			√	√			√				√	√		√
Process definition	H	H	H	L	L	H	H	H	L	H	H	H	L	H	L	H	L	L
Positive factors:
Culture	√		√	√	√	√	√	√	√	√		√		√	√
Communications		√	√			√	√	√		√	√	√				√
Links	Org	Mec	Org		Mec	Org		Org	Mec		Org		Mec	Org	Org			Org
Realised benefits (Six Sigma and Lean Six Sigma):
People	H	H	H	H	H	H	L	H	H	L	L	H	L	H	H	H	L	H
Cost reduction	H	H	H	H	L	H	H	H	L	H	L	H	H	H	H	H	H	H
Quality	H	H	H	L	L	H	H	H	H	H	H	L	H	H	H	L	H	H
Cycle time	L	H	H	L	L	H	H	H	L	H	H	H	L	L	L	H	L	L
Market share	L	L	H	L	L	H	H	L	L	L	L	L	L	H	L	L	L	H
Flexibility	L	L	L	L	H	L	L	L	H	L	L	H	L	H	L	L	L	L
Lean Six Sigma additions:
Involvement	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√
Easier to apply	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√
Value streaming	√	√	√			√	√	√		√	√	√		√		√
Contextual	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√	√

H = High, L =Low, Org = Organic, Mec = Mechanistic.

Source: Miles and Huberman (1994).

Table 4.

Common Approaches from the Case Evidence for each Case Class.

Case no.	Assimilation stage
1, 3, 8, 14	• Evidence of systematic and critical reviews linked to improvement plans by operations, teams, strategy teams and joint operations–strategy improvement teams• Examples of Six Sigma applied to both operations (e.g. process output variations) and combined strategy and operations problems (e.g. Sigma style leadership driving with General Electric influence);• Demonstration of Six Sigma being applied both at statistical level (e.g. process output variability and control chart analysis) and as a wider change philosophy (influenced by General Electric)• Reliance on the belt training system with little modification or adaptation in relation to SME resources• Common problems identified include lack of employee training and skills; lack of being part of the business operation; overly rigid approach and too resource-intensive• Adoption and use of Lean Six Sigma driven by the review process and focusing on the perceived limitations of Six Sigma• Emphasis on Lean Six Sigma teams with improved levels of empowerment and sign-off, and ability to devise localized training programmes linked to action learning• Less rigid belt training system and incorporation of learning approaches using quality circles, communities of practice and action learning based on lean Six Sigma improvement teams (both operational and strategic)
2, 5, 11, 13, 16	• Evidence of reviews which focused on improving existing Six Sigma method; lack of critique of underlying assumptions with a focus on improved application (e.g. improved training, clearer role definitions and best practice comparisons)• An overly operational focus with an emphasis on statistical techniques to analyse operations-based long-run process output data (e.g. scrap rates, shift pattern variations, materials grading and testing)• Integration restricted to operations problems with lack of process efficiency and redesign considerations• Lack of a strategic Six Sigma conception resulted in low business integration (e.g. perception of Six Sigma as a more specialist operations approach for solving long-run process parameter variability (e.g. tolerance levels, machine settings, temperature)• Common problems identified were mainly application-based (e.g. need to deploy the belt training more quickly; increased employee understanding of Six Sigma methods; formation of a central resource of expertise (usually one key individual); application to a wider range of operational processes; improved data collection at process level

Case no.

Assimilation stage

1, 3, 8, 14

• Evidence of systematic and critical reviews linked to improvement plans by operations, teams, strategy teams and joint operations–strategy improvement teams• Examples of Six Sigma applied to both operations (e.g. process output variations) and combined strategy and operations problems (e.g. Sigma style leadership driving with General Electric influence);• Demonstration of Six Sigma being applied both at statistical level (e.g. process output variability and control chart analysis) and as a wider change philosophy (influenced by General Electric)• Reliance on the belt training system with little modification or adaptation in relation to SME resources• Common problems identified include lack of employee training and skills; lack of being part of the business operation; overly rigid approach and too resource-intensive• Adoption and use of Lean Six Sigma driven by the review process and focusing on the perceived limitations of Six Sigma• Emphasis on Lean Six Sigma teams with improved levels of empowerment and sign-off, and ability to devise localized training programmes linked to action learning• Less rigid belt training system and incorporation of learning approaches using quality circles, communities of practice and action learning based on lean Six Sigma improvement teams (both operational and strategic)

2, 5, 11, 13, 16

• Evidence of reviews which focused on improving existing Six Sigma method; lack of critique of underlying assumptions with a focus on improved application (e.g. improved training, clearer role definitions and best practice comparisons)• An overly operational focus with an emphasis on statistical techniques to analyse operations-based long-run process output data (e.g. scrap rates, shift pattern variations, materials grading and testing)• Integration restricted to operations problems with lack of process efficiency and redesign considerations• Lack of a strategic Six Sigma conception resulted in low business integration (e.g. perception of Six Sigma as a more specialist operations approach for solving long-run process parameter variability (e.g. tolerance levels, machine settings, temperature)• Common problems identified were mainly application-based (e.g. need to deploy the belt training more quickly; increased employee understanding of Six Sigma methods; formation of a central resource of expertise (usually one key individual); application to a wider range of operational processes; improved data collection at process level

Acquisition of Six Sigma

In general, the reasons for deciding to implement Six Sigma fell into two broad categories, as outlined in Table 3. Cases 2, 3, 5, 7, 10, 14, 15 and 17 had Six Sigma imposed upon them by significant customers: that is, customers that accounted for more than 30 percent of their sales. For example, Case 2 had developed a long-term partnership with a key customer for software products and support, and hence had a developing relationship with this company which required alignment of business improvement approaches. In all of these cases there was a degree of imposition where the key customer organizations compelled the case SMEs to adopt Six Sigma in order to align their supply chain activities. Yu and Zaheer (2010) and McAdam and Hazlett (2010) suggest that acquiring business improvement methods such as Six Sigma for such reasons can cause problems later in the implementation process, particularly at the assimilation and transformation stages, where increased commitment and resources are needed.

From an analytical perspective, as shown in Figure 2 (point 1), and from the interview data and analysis, the interchange between the multiple sources of knowledge of Six Sigma and the SME is seen as consisting of a series of dynamic underlying routines referred to as ‘external knowledge sourcing routines’ (Zahra and George, 2002). Consistent with Todorova and Durisin (2007) and Zahra and George (2002), Figure 2 also shows that the acquisition and assimilation constructs have some degree of overlap, while the transformation/use construct is relatively separate and invoked through trigger routines. For this first group of cases the knowledge sources were not benign: that is, they were not passive reservoirs of knowledge to tap into and evaluate; rather, they were active promotional sources of Six Sigma knowledge. Hence, for this group of firms, the routines included imposition and acceptance, insofar as Six Sigma was viewed as a necessity for doing business, and large company scaling where large firm practices were seen as appropriate for SMEs, albeit in a scaled down manner.

Cases 1, 4, 6, 7, 8, 9, 12, 13, 16, and 18 decided to acquire Six Sigma based on various forms of environmental scanning. For example, Case 1 was part of a regional benchmarking group that participated in export trade missions. Its interest in Six Sigma arose from benchmarking its implementation in a similar company that made mass transit vehicle parts. Case 4’s involvement came through professional print organizations whose publications gave examples of Six Sigma implementation. In relation to Case 6, Six Sigma was seen as helping to capitalize on a new technology which had emerged within the ceramics market. In all of these cases, consistent with the studies by Black and Revere (2006) and Nonthaleerak and Hendry (2008), there was a commensurate disillusionment with existing business improvement methods to meet business challenges. For example, Case 7 (petroleum devices) and Case 8 (vehicle seats) both had extensive TQM programmes linked to the European Foundation for Quality Management (EFQM) Business Excellence Model (EFQM, 2010), with employee involvement at all levels. However, they found it difficult to identify measureable causal improvements of key bottom-line indices, reflecting Kumar and Antony’s (2008) survey of SME quality management practices.

Cases 9 and 14 had established their business improvement efforts on ISO 9000:2000 with its revised emphasis on continuous improvement. Yet, their efforts suffered from excessive bureaucracy and inflexibility which van der Wiele and Brown (1998) identify as problematic for SME ISO applications. So, in the first instance, these cases were attracted by the rhetoric of Six Sigma with its emphasis on clearly identifiable savings and bottom-line improvement measures, as suggested by Yu and Zaheer (2010) and Black and Revere (2006), and exemplified in the following quote:

Each step [DMAIC] contains a set of concrete deliverables. The benefits are measurable and significant. (Managing director, Case 13)

It is also noteworthy that only two of the cases (2, 18) cited government agency encouragement and/or support in the form of grants to the managing directors as a partial reason for adopting Six Sigma. This finding contrasts with previous studies, which found that SMEs received substantial government grants to adopt ISO 9000:2000 (Bendell and Boulter, 2004). However, there is little evidence in the literature that Six Sigma, or indeed Lean Six Sigma, are prioritized for government support within SMEs, despite growing interest in the area (Antony et al., 2005; Nonthaleerak and Hendry, 2008). Cases 2 and 18 were encouraged to adopt Six Sigma through their government-funded development programme, where their client executive (government liaison personnel) had personal knowledge of Six Sigma from previous employment in a large organization. Based on the analytical model of Figure 2 (point 2), the multiple sources of knowledge for the second group of cases were seen as more benign, and so less advocative. Hence, the external knowledge sourcing routines included: value appraisal (evaluating likely potential benefits from Six Sigma knowledge); and in-company newness reflection (a historical reflection on the relative newness and efficacy of Six Sigma based on the SME’s historical development, as suggested by Galende, 2006).

As shown in Table 3, the three main benefits that the case organizations envisaged at the acquisition stage, when deciding to adopt Six Sigma, were more measurable benefits, improved quality, cycle time and cost and, to a lesser extent, increased market share. The increased focus on bottom-line measurability was perceived initially as the main element of newness within Six Sigma; such benefits reflect current findings from the literature on large organizations (Buch and Tolentino, 2006; Gowen et al., 2008) and the current, albeit limited, SME literature (Kumar and Antony, 2008; Thomas et al., 2009). Cases 3 and 5 planned for market growth through Six Sigma, which they were compelled to adapt by larger companies which suggested incentives of increased sales measurements and targets. Six Sigma’s inherent claim of focusing on and reducing process variability measures was seen as part of the improved quality benefit for those cases which specifically defined Six Sigma in statistical terms (i.e. Cases 3, 4, 5, 10, 11, 12, and 13). Thus, as shown in Figure 2 (point 3) there was evidence of a routine labelled measurability focus, where the SMEs viewed Six Sigma as offering newness in relation to other business improvement methods. Overall, these findings suggest the development of the following premise:

P1: SMEs which have existing business improvement programmes use a series of underlying knowledge sourcing routines to acquire Six Sigma to augment their existing improvement efforts by providing more measurable business benefits.

As shown in Table 3, these cases also defined Six Sigma during the acquisition stage in a dual manner (as found by Schroeder et al., 2008), including it as a measurable change management programme. The exceptions were Case 4, where Six Sigma was adopted initially in a discrete or single focus application to the software sales transactions to reduce cycle time and increase accuracy, and Case 13, where Six Sigma was adopted with a discrete focus on food safety in the production process (temperature and contamination control). However, Figure 3 shows that the majority of the cases had applied Six Sigma to a significant extent and to the main part of their businesses. The findings showed that rather than adopting a strict definition of Six Sigma, there was evidence of underlying routine-labelled evolving definitions where the SMEs continually questioned and adjusted their comprehension and definition of Six Sigma, consistent with Zahra and George’s (2002) view of absorptive capacity as a dynamic capability.

Figure 3.

Six Sigma – Application Level versus Scope.

In terms of who decided to adopt Six Sigma at the acquisition stage, Table 3 shows that in all but two of the cases, it was either the managing director (or equivalent title) or the senior management team who decided to promote the adoption process. This is consistent with the findings of Linderman et al. (2006) and Yu and Zaheer (2010). In these cases it was difficult even with repeat interviews to separate out responsibility, as the decision-making process usually evolved at meetings between the management team and the managing director over a period of between three and six months. This timeframe was used to reflect, consult and garner support, usually in the form of financial investment, in a dynamic and iterative manner. This reflected the top-down nature of Six Sigma in small organizations coupled with the moderating effect of a wider management team (Thomas et al., 2009), commensurate with the need for management commitment to acquire and implement the programme (Nonthaleerak and Hendry, 2008). For example, Case 1 not only invested in Six Sigma training, but also in converting their manufacturing machines to produce process output in terms of control charts, ultimately reinforcing their commitment to applying Six Sigma by using scarce resources. Unusually in Cases 3 and 15, employees championed Six Sigma rather than management; it emerged that these employees had previous experience of Six Sigma in large organizations. Moreover, in both cases, the employees were involved in professional bodies (manufacturing and service management associations) which supported Six Sigma.

Further analysis demonstrated that in addition to the underlying routines interfacing with the knowledge sources, there was an identifiable set of routines (labelled internal acquisition routines in Figure 2) which coalesced into the acquisition construct. These routines were found to be recursive in nature, so top-down versus consensus: that is, there is considerable debate within the management team regarding the final acquisition decision: strategic. There was also prolonged questioning of whether Six Sigma was needed at this stage of firm development, resource evaluation of the resources needed, and rudimentary scenario planning, acknowledging the benefits of Six Sigma. Thus when deconstructed, the decision to acquire Six Sigma, even in a top-down environment, is much less certain and more prolonged than that found within larger organizations (e.g. Gowen et al., 2008). In summary, these findings support the following premise:

P2: Given the top-down nature and high investment levels needed, decisions to adopt Six Sigma within SMEs are mainly taken at managing director and management team level. However, within these groups, decisions are usually taken over a prolonged period of consideration, involving recursive underlying decision routines that seek consensus rather than imposition.

Assimilation

Initially, all of the case firms attempted to assimilate Six Sigma by focusing on involvement and training (Antony et al., 2005; Nonthaleerak and Hendry, 2008), reflecting the traditional implementation approach taken to business improvement initiatives (Chen et al., 2010; van der Wiele and Brown, 1998). The interviews and focus groups revealed that the management teams tended to consider Six Sigma as following quality principles, while at the same time advocating acceptance based on its newness, particularly in relation to measurement. This is highlighted in the following quote:

The use of Six sigma is an example of new alternatives [to TQM] … Six Sigma should not be seen as a substitute for TQM, but rather it supports the principles and aims of TQM. (Managing director, Case 7)

Further probing in the focus groups revealed that Six Sigma was perceived as new at the acquisition stage in terms of a measurability focus. Nevertheless, when incorporated at the assimilation stage, there was a need for some degree of congruence with existing methods such as TQM and the EFQM Excellence Model, in order to achieve legitimacy. These findings, reflecting those of Lindeman et al. (2007), ultimately affected the incorporation of Six Sigma into business processes within the SMEs. Table 3 and Figures 4 and 5 demonstrate the level of integration achieved in relation to the Six Sigma application level and the degree of training received. Levels of integration were found to be high for those SMEs which had avoided parallelism or lack of business focus in Six Sigma implementation structures, and, conversely, low for those who had failed to use it in a business-focused manner. For example, Case 8 had achieved a high degree of integration due to applying Six Sigma at both strategic and operational levels through improvement projects linked to the Balanced Scorecard for each of their auto-production lines. Thus, the Six Sigma success measures were synonymous with those of the business strategy. When interpreted using the analytical framework of Figure 2 (point 1), these findings show the presence of two dynamic underlying routines: path dependency analysis, incorporating comparison of the new with the old for reassurance and continuance (Galende, 2006); and parallelism–integration analysis, with its continuous search for minimal resource use and the avoidance of parallel activities which do not contribute to business goals (Schroeder et al., 2008).

Figure 4.

Six Sigma – Integration versus Application Level.

Figure 5.

Six Sigma – Integration versus Training and Learning.

The interviews revealed that the level of training was split into those that primarily relied on the belt training system, and those that adopted belt training plus additional learning approaches. As demonstrated in Figure 5, Cases 6, 7, 9, 10, 12, 15, 17 and 18 relied almost entirely on the belt training system, as advocated by the majority of Six Sigma trainers and consultants. However, the repeat interview and focus group analysis showed that solely relying on this approach led to a learning-by-rote mentality, coupled with Six Sigma being viewed as an entity in itself or reified, and having a parallel existence. For example, Case 9 was able to demonstrate that a systematic and measured belt training approach was in place, aided by proficient consultant trainers. Yet the accumulation of a bank of trained individuals was not effectively linked to business goals and objectives; this resulted in a ‘them and us’ situation, which was exacerbated by the distinctive agent-based language of the belt system (e.g. black belt, master agent). This effect was found to be further compounded in the SMEs due to a lack of resources, and led to Six Sigma diverting efforts from the business goals as found by Schroeder et al. (2003) in relation to parallelism. Moreover, a lack of skills in the SMEs led to an increased reliance on consultants with consumption of scarce resources (see also Achanga et al., 2006; Bennett and Smith, 2004). For example, Case 10 had assumed that Six Sigma could be rapidly applied in a mechanistic manner using the belt system, and so they employed certified consultant trainers in a top-down cascade training approach which was not sufficiently linked to business improvement outputs. However, the records revealed that the consultants had mainly large company experience in Six Sigma, and the employees (mainly multiskilled and manual) struggled with the complexity of the statistical training and its immediate relevance to their jobs, and so failed to progress on the tiered training route. As one interviewee reflected:

Avoid the overly mechanistic approach of the Six Sigma statistical sledgehammer … a more flexible approach is needed, with more appropriate training. (Managing director, Case 10)

The findings showed that three particular assimilation routines were prevalent in these cases (Figure 2, point 2), reflecting Spencer’s (1994) and Moore and Brown’s (2006) mechanistic view of organizations. These note the top-down instruction leading to reinforcement of the original acquisition decision, mechanistic rule deployment with communication of the key rules of perceived success in a step-by-step manner, and overcoming resistance and treating all challenges as unwarranted resistance.

After initially relying on the belt system, a number of other cases (1, 3, 8 and 14) applied Six Sigma in a broader manner, augmenting the training with learning approaches (Figure 5). The focus groups revealed that the main learning approach taken by these cases, which led to increased integration (Figure 4), was that of action learning (as found by Box, 2006; Buch and Tolentino, 2006; Jeffrey, 2005). Here, rather than building a pool of trained Six Sigma personnel, employees were trained on live projects in a ‘just-in-time’ manner and gradually built confidence in the approach by experiential learning and critical reflection in the form of multifunction reviews. Hence, the establishment of a separate or parallel Six Sigma entity was avoided. Moreover, this approach avoided dedicating employees full-time to Six Sigma activities, which suited the organic multi-role approach within SMEs (Achanga et al., 2006; Wessel and Burcher, 2004). For example, Case 1 moved from awareness sessions to a cellular approach, where a number of firms engaged in forming a specific vehicle part took responsibility for adapting Six Sigma and called in outside expertise such as Black Belts and Master Black Belts when required. The analysis of these cases (Figure 2, point 3) showed the presence of three underlying routines. First, that of involvement assessment, building on Jeffrey’s (2005) view that increased involvement is likely to increase effective implementation and effectiveness. Second, that of critical reflection and avoiding taken-for-granted behaviours, encouraging fundamental critique and action learning. Third, that of learning at the point of need, and so increasing integration with the business. Based on these findings, the following premise is suggested:

P3: Efforts to assimilate or integrate Six Sigma within SMEs which use underlying routines to explore learning approaches, such as critical reflection and action learning rather than solely relying on the belt training system, may be more effective in assimilating the new knowledge.

All of the cases had viewed Six Sigma initially as the focal point of their business improvement efforts. However, as difficulties with training, understanding and involvement increased, disillusionment quickly developed with Six Sigma’s rhetoric as the sole approach. Table 3 and Figure 6 highlight the stage at which each firm realized the need to apply Lean Six Sigma to augment the original Six Sigma approach.

Figure 6.

Six Sigma – Acquisition versus Lean Adoption stage.

As shown in Figure 6, Cases 1, 3, 5, 8, 12, 13, 14, 15, 17 and 18 grasped the limitations of applying Six Sigma within the assimilation phase, i.e. early in the overall application process. These cases, including those who used the additional learning approaches (i.e. 1, 3, 8 and 14), were characterized by having more formal systematic review mechanisms built into the assimilation phase. For example, Case 8 used the small business version of the Business Excellence Model to self-assess their approach to business improvement at all levels, resulting in a number of Six Sigma limitations being identified:

There was a knock-on effect between improvements in one area and resulting disconnects in other areas. (Managing director, Case 8)

Figure 6 also shows that Cases 2, 4, 6, 7, 9, 10, 11 and 16 did not meaningfully appraise the limitations during the assimilation phase, so it was not until the transformation phase that problems with Six sigma were fully recognized. The interview data revealed that these firms were characterized mainly by a belief in the rhetoric of Six Sigma that was unjustified by the reality of the situation. This lack of early recognition, due to the absence of assimilation routines (Figure 2, point 2) and formal review and evaluation challenges, led to a prolonged misuse of scarce resources and diversions from the main business focus. For example, Case 2 (Figure 6) had Six Sigma imposed upon it as a panacea by a large customer, and did not want to admit that they were failing to apply the approach to avoid the imposition of contract penalties. Alternatively, senior management in Case 11 (Figure 6) had opted to adopt and apply Six Sigma, but struggled to admit that their decision to invest solely in it had inherent flaws.

The interviews and focus groups revealed that the firms which recognized problems during the assimilation phase focused on Lean Six Sigma, not as an alternative to Six Sigma, but rather as a complementary approach (Achanga et al., 2006: Thomas et al., 2009). Figure 7 shows that those organizations which had adopted a more organic approach to TQM included those which had adopted dynamic action learning-based routines (Figure 2, point 3), rather than simply using the belt training approach in a ‘one size fits all’ approach.

Figure 7.

Mechanistic and Organic Classification.

These organizations also conducted a more fundamental enquiry into both the efficacy and implementation of Six Sigma. The interviews in Case 1 showed that effective evaluations and self-assessment using the EFQM Excellence Model in the assimilation phase resulted in an effective Lean Six Sigma approach at the transformation stage. As shown in Figure 2 (point 3), these firms were able to effectively use routines which encouraged critical reflection and challenge, as opposed to advocating one ‘right way’. Consistent with the literature (see for example, Antony et al., 2005; Thomas et al., 2009) and as revealed in all of the cases, the need to employ methods in addition to that of Six Sigma, led to the incorporation of Lean Six Sigma. This was perceived as helpful in addressing problems with lack of involvement, high investment, application, lack of skill sets and business process shaping within the cases. Based on the discussion, the following proposition is suggested:

P4: SMEs applying Six Sigma that have underlying critically reflective review routines (Figure 2) and fundamental explicit review mechanisms built in at the early stages, or assimilation phase, are more likely to adopt Lean Six Sigma earlier (i.e. at the assimilation rather than transformation stages) to address deficiencies and to avoid misuse of scarce resources.

Transformation and utilization

Absorptive capacity theory suggests that the move from potential (PACAP) to realized absorptive capacity (RACAP) (Figure 1) requires that new knowledge acquired and assimilated within the organization should be applied to the organizational processes, routines and practices used to produce a product or service i.e. the transformation phase (Easterby-Smith et al., 2008). The realization of the output benefits (e.g. increased profit, higher quality, less scrap and wastage) is the utilization phase (Zahra and George, 2002). Todorova and Durisin (2007) suggest that these phases are difficult to separate in organizational applications, and should be viewed as a seamless whole to avoid an artificial separation between the transformation phase and the measured benefits that arise from this transformation. This approach is taken in this article leading to a combined discussion.

All of the SMEs used the DMAIC formula on a project-by-project basis (Table 3), consistent with most studies of Six Sigma in both large and small organizations (Antony et al., 2005). A number of problems, coded into three main categories (Table 3), arose at this stage, especially for those firms which had not combined Lean Six Sigma with their Six Sigma programmes during the assimilation phase (2, 4, 6, 7, 9, 10, 11, and 16; see Figure 6). The first issue was lack of business process definition (i.e. relying more on a functional structure rather than a process basis with clearly mapped processes). Figure 6 shows that Cases 1, 2, 3, 6, 8, 11, 14, and 16, which included firms that adopted learning approaches, all had a high level of process definition and integration. Six Sigma theory and practice in large organizations assumes that clearly defined lateral processes exist in addition to the normal functional hierarchies, and that such processes are the vehicles for Six Sigma transformation and utilization (Yu and Zaheer, 2010). However, as shown by Bennett and Smith (2004), and consistent with the current study, SMEs are more likely to have more flexible and integrated structures, as in the example of Case 2, a small family business with one dominant figure (owner/manager) and a lack of process definition. Second, although the DMAIC formula is a useful guide, it was overly formulaic for the rapidly changing situation within the firms. The focus groups revealed that this approach also relied on quantitative performance measures being available, but many of the firms did not have such a level of measurement definition. Case 10, in particular, found that Six Sigma highlighted the need for such measures, but data-gathering mechanisms were required prior to obtaining the necessary process measures. Finally, effective Six Sigma project management using the DMAIC approach assumes that skilled belt holders (e.g. Black Belt and Master Black Belts) are available to lead these projects. However, as is exemplified in the following quotes:

It is unlikely that we could fully implement Six Sigma at this stage due to the cost and time required for training. (Managing director, Case 2)

The hourly paid employees were trained but only had a 30 percent adoption rate … the basic computer skills were missing. (Managing director, Case 1)

In general, the findings showed that most of the case firms had neither sufficient resources nor skilled employees to fulfil these roles (Kumar and Antony, 2008; Marinez-Costa and Jimenez-Jimenez, 2009). So for example, in Case 7, although there were a number of professional engineers, the struggle to free up sufficient resources and skill sets to meet the full Six Sigma requirements led to conflict with business needs. Ultimately, these limitations were reflected in lower achievements and measurable business improvements from Six Sigma. When the interviewees were asked to rate outcome measures on a scale of low to high, most rated improvements in the low or medium categories for the key measures of quality, cost and cycle time (Table 3) compared with their original expectation at the acquisition phase. The focus groups acted as a check on these ratings. An interviewee reflected the frustration of combining Lean Six Sigma and Six Sigma at later phases by commenting that his organization had ‘learned the hard way’ (Managing director, Case 9).

The findings showed the presence of two interacting sets of dynamic routines, namely trigger routines and challenge routines (Figures 1, 2). Trigger routines (Zahra and George, 2002), forced the firms to move beyond potential absorptive capacity and to realize the benefits. These routines were questioning in nature, reflecting a business need critique. As such, the business needs demanded a contribution from Six Sigma plus a potential benefit analysis, incorporating a time plan for realizing the business benefits, and sustained belief with a renewal of senior management commitment. Ultimately, the negative findings from these routines provoked a more formal response which, in turn, led to a series of challenge routines, albeit at this late stage. These routines incorporated a benefit analysis to demonstrate that Six Sigma was not producing the claimed benefits: application and efficacy questioning, and sustained feedback with grounded and repeated feedback of the actual findings of Six Sigma effectiveness. These proved to be largely negative for this group of cases.

In contrast, although those cases which had combined Lean Six Sigma and Six Sigma in the assimilation phase (Figure 6) were suffering from these effects, they did so to a lesser extent. In relation to process definition problems, the Lean Six Sigma approach led to simple value streaming maps which were readily definable, using simplified approaches that involved a range of employees. Consistent with Kumar and Antony (2009), Case 14 found that value streaming was a much faster and more intuitive approach for employees at all levels (especially as their healthcare products employees were mainly manual workers). Problems associated with the rigidity of the DMAIC formula were alleviated by introducing a series of Lean tools and techniques for each stage of the formula. These techniques were drawn upon at all stages of the DMAIC approach, were simple to apply and encouraged involvement (Buch and Tolentino, 2006; Thomas et al., 2009). In Case 3, the Lean Six Sigma teams formed around key product lines (key customer-based), so they were more involved and could readily grasp and apply the tools and techniques, in contrast with the more statistical based Six Sigma approaches:

Six Sigma is very data driven … Lean is much more practical and although you need to measure … it is less focused on microscopic data gathering. (Managing director, Case 3)

These cases also used the trigger routines shown in Figure 2. However, they were using them in relation to Lean Six Sigma, and hence the ensuing challenge did not precipitate a crisis of confidence in the method. Rather, they helped to identify areas for further improvement, as the crisis of confidence in relation to Six Sigma had come earlier at the assimilation stage.

Figure 8 and Table 4 summarize the findings from the multiple case analysis by showing two categories of Six Sigma development across the four absorptive capacity phases.

Figure 8.

Model of Six Sigma adoption using an Absorptive Capacity perspective.

Table 4 is based mainly on repeat interviews and focus groups probing the two categories at the assimilation phase. The first category includes Cases 1, 3, 8 and 14, which made the most progress by using Lean Six Sigma during the assimilation phase by deploying dynamic learning routines in addition to the belt training system during the assimilation, transformation and utilization phases. The second category, which includes Cases 5, 12, 13, 15, 17 and 18, applied Lean Six Sigma within the assimilation phase, but mainly relied on the belt training system. Based on the discussion, the following proposition is suggested:

P5: SMEs which use underlying routines to challenge decisions and recognize Six Sigma limitations at the assimilation phase and apply Lean Six Sigma, are more likely to overcome the associated limitations of lack of process definition, measurement and skill sets than those at the transformation and utilization phases, and to achieve measurable business benefits.

Conclusions and recommendations

The use of absorptive capacity theory for structuring the research and deepening the enquiry in a critical manner has proved useful by conceptualizing Six Sigma programmes as new knowledge being incorporated within an SME. The analytical framework developed from the results and analysis, and based on the absorptive capacity as shown in Figure 2, leads to the conclusion that the application of Six Sigma and Lean Six Sigma in SMEs is influenced by a series of recursive or iterative routines. These routines are largely informal: that is, not formally mapped and identified within the SME. Moreover, the findings show that these routines coalesce to form the key constructs of knowledge sources, acquisition, assimilation and transformation or use of Six Sigma and Lean Six Sigma knowledge in such firms.

The identification of these routines and their points of influence in a path manner help to develop or exert a reflexive influence on absorptive capacity theory and its key dimensions. Hence, an analytical framework was established (Figure 2) to investigate the use of new knowledge in SMEs beyond that of Six Sigma in relation to possible further research regarding absorptive capacity. Any studies in this area would need to identify the underlying routines in a path manner for the phenomena being studied in a given context, rather than overly generalizing the framework shown in Figure 2, which is based on the case firm experiences within this study.

The five structured propositions and multiple case analysis have been used to summarize the conclusions at key points of the study and act as a catalyst for further analysis, rather than being viewed as definitive statements (Yin, 2009). Based on P1 and the related underlying routines, from a deconstructed perspective, there were two sets of underlying routines in the acquisition process. There were also a series of external knowledge-sourcing routines relating to Six Sigma. It is concluded that two broad sets of knowledge sources interfaced with these routines: passive reservoirs of Six Sigma knowledge (e.g. explanatory documents and texts), and active advocates of Six Sigma (e.g. successful companies and consultants). The ensuing internal acquisition decision routines showed that rather than a top-down edict to acquire Six Sigma knowledge, there was a more time-consuming complex set of dynamic decision-making routines involving strategic fit, resource planning and some elements of scenario planning. However, these routines remained recursive, informal and tacit (Easterby-Smith et al., 2008; Zahra and George, 2002), and ultimately coalesced into the acquisition construct. In general, it was found that the firms appeared to interpret the rhetoric of Six Sigma as offering a pathway beyond quality management: that is, as a justifiable next step on the quality journey (Kumar and Antony, 2008; van der Wiele and Brown, 1998). The main ‘newness element’ of Six Sigma was at the acquisition stage, where it was thought that it could produce measurable bottom-line business benefits to augment existing improvement efforts (Kumar and Antony, 2008). However, many firms struggled with the level of quantifiable measurement required within the Six Sigma approach at the transformation and utilization stages.

In relation to acquisition, and as summarized in P2, the internal acquisition decision routine outcomes showed that the firms had to commit to significant investment in Six Sigma at the early acquisition stage, even though they had limited resources (Achanga et al., 2006; Bendell and Boulter, 2004). This commitment ultimately diverted scarce resources from other business-related projects, and awareness of this tended to be subsumed within the drive for implementation. Furthermore, the level of resources required a top-down management decision-making process for acquiring and implementing Six Sigma, which contrasted with the existing empowered relationships (Buch and Tolentino, 2006). More effective use of these routines by a subset of the case firms ultimately led to a challenge to Six Sigma efficacy and application in the acquisition stage, and thus saved further resource expenditure.

In addition, the assimilation and transformation stages were found to consist of a series of underlying routines, and divided the group of firms in relation to critically evaluating progression with Six Sigma implementation. One group relied heavily on consultants and outside trainers who had experience of large organizations and Six Sigma, but in general had little experience of application of Six Sigma in SMEs. Hence, they advocated the belt training system and scalar approaches of large organizational applications which involved considerable statistical training, cost and parallelism: that is, non-integration with the business needs and use of scarce resources (Antony et al., 2005; Schroeder et al., 2008; Wessel and Burcher, 2004), where Six Sigma became an entity in itself or reified, rather than being focused on business needs.

Case firms which recognized the limitations of Six Sigma relatively early, at the start of the assimilation stage, made more effective use of the underlying routines in a critically reflective manner. They were able to use learning approaches including both experiential and action learning, which alleviated the unquestioning learning-by-rote approach. This group also used challenge routines (Figure 2) to question the fit, integration and contribution of Six Sigma to the business, which resulted in a recursive regression to the knowledge source and acquisition stages to probe the use of Lean Six Sigma as an alternative approach. So, consistent with the summary proposition of P4, and use of the underlying assimilation and challenge routines, those firms able to critically evaluate both the effectiveness and efficacy of Six Sigma in a systematic manner, recognized the need for Lean Six Sigma to complement their Six Sigma efforts (Chen et al., 2010). Solely attempting to improve the effectiveness of the implementation led to increased resistance and questioning the efficacy of Six Sigma. Based on the findings and analysis, and as summarized in P5, it is argued that those firms which have applied Six Sigma in a critically reflective manner by effectively utilizing the routines shown in Figure 8, and recognizing the need for a Lean Six Sigma approach early or at the acquisition stage, are more likely to realize at least some of their initial expectations from Six Sigma. This is in comparison to those firms which did not realize this until the transformation/use stage, in terms of measurable outcomes relating to improved quality, shorter cycle times and reduced costs.

Consistent with Yin (2009) and Miles and Huberman (1994), it is suggested that the underlying routines propositions could be further probed, using a wider range of case evidence, and developed into testable hypotheses, constructs and measurement scales in a theory-testing approach using both case studies and a cross-sectional survey analysis of SMEs.

Footnotes

Funding

This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

Author biographies

Rodney McAdam is Head of the School of Marketing, Entrepreneurship and Strategy, University of Ulster Business School. He is also a Fellow of the Chartered Management Institute and Institute for Small Business and Entrepreneurship. Rodney has received the Distinguished Research Fellowship Award from the University of Ulster for his contribution to management and organizational research over the past 10 years. He has a large number of publications in the area of knowledge, innovation, quality management and business improvement in SMEs.

Jiju Antony is Director of the Centre for Research in Six Sigma and Process Excellence at the Strathclyde Institute for Operations Management, University of Strathclyde. His research interests comprise Six Sigma for SMEs, continuous improvement in the public sector, design of experiments and Taguchi methods, statistical process control for healthcare, process optimization, quality management tools and techniques. He has carried out extensive research in the field of quality management, including a number of projects in global blue chip companies.

Maneesh Kumar is a lecturer in operations and supply chain management at the Business School, Edinburgh Napier University. He has published extensively in the area of Six Sigma, especially in the area of SMEs. He is also involved in delivering Lean Six Sigma training up to Black Belt level and several one-day workshops on quality management application in different types and sizes of industries. He received the best paper award at the 13th International Conference on Productivity and Quality Improvement in Finland (June 2008), and second best paper award at the World Conference on Quality Improvement in Minneapolis (May 2009).

Shirley A Hazlett is a lecturer in the School of Management, Queen’s University Belfast. She has published extensively in the areas of innovation management, operations, knowledge management and change. Her work covers both the public and private sectors. Previously she has worked in universities in Southern Ireland including Cork University, and supervises a number of PhD students in the area of organizational change in SMEs.

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