Generative Mechanisms of the Adoption of Logistics Innovation: The Case of On‐site Shops in Construction Supply Chains

• Published date: 01 June 2015
• Author: Jan Holmström,Mikael Öhman,Kari Tanskanen
• DOI: http://doi.org/10.1111/jbl.12089
• Date: 01 June 2015

Generative Mechanisms of the Adoption of Logistics Innovation:

The Case of On-site Shops in Construction Supply Chains

Kari Tanskanen, Jan Holmstr€

om, and Mikael

€

Ohman

Aalto University School of Science

Empirical studies of logistics innovations have focused on the innovation process, bypassing much the innovative artifact or solution design

itself. Focusing on the artifact and solution design in a case study, we contribute to the emerging theory of logistics innovations through

articulating the generative mechanisms of the adoption of logistics innovation, that is, the mechanisms through which the design of the solution

enables its adoption. We study On-site Shop, a rare example from the construction industry of a logistics innovation that has successfully

migrated from a limited number of pilots to common practice. The case study is based on insights from participation in the design of the solu-

tion, and on 55 interviews conducted in a relationship triad consisting of three groups: (1) construction site users, (2) the solution designers,

and (3) the suppliers. We propose that standard and efficient solution set-up is the key enabler of logistics innovation’s adoption at temporary

construction sites. Communication and operating rules facilitate adoption in the triad, whereas internal and external integration further advance

adoption by creating links between the innovative logistics solution and other activities. Finally, trilateral collaboration and congruent technolog-

ical frames in the relationship triad sustain adoption over time.

Keywords: construction supply chains; logistics innovation; adoption; case study; design theory

INTRODUCTION

In this article, we investigate the generative mechanisms for the

adoption of On-site Shop, a logistics innovation developed and

adopted by Skanska Oy as a part of its lean construction and

logistics development program. The purpose of this investigation

was to complement the emerging theory of logistics innovations

by providing insights and developing propositions about how

design affects the adoption and evolution of an innovative logis-

tics solution. We study the adoption of logistics innovation in

the construction industry context because it is a setting where

innovative operations management solutions have been particu-

larly challenging to introduce (Dubois and Gadde 2002; Hayes

et al. 2005). The On-site Shop had been implemented at approxi-

mately 200 construction sites in Finland, Sweden, and Norway

by the end of 2013 and is thus a rare example from the construc-

tion industry of a logistics innovation that has successfully

migrated from a limited number of pilots to common practice.

The salience of the adoption and long-term viability of the inno-

vation is that it effectively supports both process and project

management. The On-site Shop streamlines the processes for

procuring goods according to demand at a construction site and

replenishing the site by the supplier, taking into account various

aspects of project management in terms of coordinating ramp-up

and ramp-down for each construction site.

While recent studies (e.g., Chapman et al. 2003; Bello et al.

2004; Panayides and So 2005; Flint et al. 2008; Su et al. 2008,

2011; Wagner 2008, 2013; Grawe 2009; Wallenburg 2009; Lee

et al. 2011; Mota Pedrosa 2012; Wagner and Sutter 2012) tell us

much of the early phases of logistics innovations, we do not yet

understand what drives the adoption and sustains the viability of

logistics innovations. Expanding the understanding of the adop-

tion of logistics innovation is important, as an innovation differs

from an invention in that it provides economic value and is dif-

fused to other parties beyond the discoverers (Garcia and Calan-

tone 2002; Rogers 2010).

Grawe (2009) synthesizes the results of logistics innovation

studies in a systematic review and proposes future research

examining the adoption and evolution of novel logistics services

and processes. Mirroring the situation in management informa-

tion systems research in the early 2000s (Orlikowski and Lacono

2001), the design of innovative logistics solutions has not been

studied, as researchers have instead focused on the innovation

process. This finding indicates an opportunity for complementary

research through investigating the artifact, or solution design

itself (Gregor and Jones 2007) for a better understanding of how

design characteristics affects the adoption and evolution of an

innovative solution. Through the study of both successful and

unsuccessful solution designs, the academic field will be able to

gain a step-by-step understanding of how logistics innovations

can be designed for adoption in specific problem contexts. This

study begins to fill this gap by studying in detail a successful

logistics innovation in the construction industry.

We address, on the basis of 55 interviews and direct observa-

tions among three actor groups—users, solution designers, and

suppliers—the following research question: What generative

mechanisms enable the successful, widespread adoption of a

logistics innovation in the construction industry? Taking a design

perspective (van Aken 2004; Holmstr€

om et al. 2009) of logistics

innovation, we develop a design theory of On-site Shops. Design

theory describes a design such as a small item-logistics solution

and explains how and why the design works in a particular prob-

lem context (Holmstr€

om et al. 2014). Design theory emphasizes

the identification of generative mechanisms to explain how the

design of a logistics innovation affects its adoption and sustained

use. We were involved from the beginning of the innovation pro-

cess in developing the solution design of On-site Shop and later

in investigating the mechanisms, explaining how and why the

Corresponding author:

Kari Tanskanen, Department of Industrial Engineering and Manage-

ment, Aalto University School of Science, PB 15500, 00076 Aalto,

Espoo, Finland; E-mail: kari.tanskanen@aalto.fi

Journal of Business Logistics, 2015, 36(2): 139–159 doi: 10.1111/jbl.12089

© Council of Supply Chain Management Professionals

logistics innovation produces the observed outcomes. The

research into developing the solution design has been previously

reported in Tanskanen et al. (2009), describing the problem in

context and the design of the logistics innovation. In this paper,

we report observations on the outcomes of the innovation for the

different types of actors involved and investigate the generative

mechanisms of the solution design that affect the outcomes of its

adoption.

The paper is structured as follows. The next section is a critical

review of prior research related to logistics innovation, articulating

the need for a perspective of design for understanding the adop-

tion of innovative logistics solutions in different problem settings.

In the sections that follow, we present the research design and

methodology used in this study. In the case study, we examine

the problem and scope of On-site Shop and describe the form and

function of the solution design. The empirical investigation of

outcomes constitutes the core of the paper and details the different

outcomes of adopting On-site Shop and the implications of these

outcomes for each of the actor groups involved. The theoretical

analysis uses generative mechanisms to explain adoption and

develops testable propositions for these explanations.

LITERATURE REVIEW

Logistics innovation has been defined as any logistics-related ser-

vice that is regarded as new and helpful to a particular focal

audience (Flint et al. 2005). For the purposes of this paper, the

focus is on innovations that change how logistics activities are

carried out. This type of logistics innovation changes operational

processes and how logistical work is performed (Pisano 1996;

Hammer 2004). An operational innovation may evolve into ser-

vice innovation when the process change is perceived as helpful

across organizational boundaries (Gallouj and Weinstein 1997)

and sometimes even into business model and management inno-

vations, profoundly changing the organizations involved (Birkin-

shaw et al. 2008).

In the literature review that follows, we show how the current

literature on logistics innovation focuses on the process of inno-

vation and the conditions for innovation. However, to understand

the adoption of logistics innovations, the innovation itself is also

important. The study of logistics innovation adoption requires a

complementary perspective of design that focuses on the solution

and how it is used in sufficient detail to explain its success or

failure in different contexts.

An emerging theory of logistics innovations

Logistics innovations have gained increasing attention among

researchers over the last decade, which has substantially

increased our understanding of the antecedents and process of

logistics innovation, especially in logistics service provider (LSP)

firms. Chapman et al. (2003) find that knowledge, technology,

and relationship networks are the antecedents of innovation in

logistics services. Flint et al. (2005) further explain the process

of being innovative, identifying several phases: (1) Setting the

stage activities, involving creating an environment conductive to

being an innovative organization and the acquisition of resources,

(2) Customer glue gathering activities, developing close relation-

ships with customers and searching for opportunities for logistics

innovations, (3) Negotiating, clarifying, and reflecting activities

concerns internal and external dissemination in the form of com-

municating with and interpreting the needs of the customer, and

(4) Interorganizational learning refers to the new insights and

understandings that emerge from the joint innovation process.

Flint et al.’s (2005) logistics innovation process has been

refined and tested in subsequent studies (Flint et al. 2008; Su

et al. 2011), from which a theory of logistics innovation has

begun to emerge. In addition, several studies have focused more

explicitly on innovation in LSP firms. Panayides and So (2005)

identify a positive relationship between logistics innovation and

the LSP’s effectiveness. Wagner (2008) studies innovation in the

German transportation industry and finds that internal and exter-

nal search and development, investments in infrastructure and

capital goods, and the acquisition of knowledge, training, and

education are connected to logistics innovations.

Wallenburg (2009) reveals that proactive improvement by

LSPs is positively related to customer loyalty. Furthermore, Mota

Pedrosa (2012) shows that reactive and proactive customer inte-

gration are critical for LSPs to be able to successfully anticipate

customers’expressed and latent needs during the innovation

development process. Wagner and Sutter (2012), in turn, identify

several contingent factors that influence provider-customer inno-

vation in third-party logistics projects: a high level of integration

with customers; establishing links to customers insisting on new

services; complementary relationship-specific investments; and

agreements on benefit sharing.

Grawe (2009) synthesizes the results of logistics innovation

studies into a set of testable propositions concerning organiza-

tional and environmental factors that affect logistics innovation;

the impact of logistics innovation on a firm’s competitive advan-

tage; and finally the relationship between a firm’s competitive

advantage and the diffusion of logistics innovation. He also con-

cludes that while the antecedents and outcomes of logistics inno-

vation have been identified in leading logistics journals, very

little is known about the adoption and evolution of logistics

services and processes over time (Grawe 2009).

The role of design and context in the adoption of logistics

innovations

The emerging theory of logistics innovation does not study the

innovation itself but rather treats the design of a logistics innova-

tion in abstract terms. In the case study of Su et al. (2011) on

logistics innovation in the setting of a large hospital, as well as

in the multiple case studies of Mota Pedrosa (2012) and Wagner

and Sutter (2012) investigating the role of customers, logistics

innovation is operationalized as a process (Flint et al. 2008).

Innovative solutions are introduced in abstract terms, but the way

they are adopted is not described in detail, limiting our under-

standing of how the design of the innovation itself might affect

its adoption in different problem contexts.

The current logistics innovations literature has not yet

addressed how context affects the adoption of logistics innova-

tions. Nevertheless, literature shows that many logistics innova-

tions are widely adopted in one setting but do not proceed

140 K. Tanskanen et al.