Adaptation of Business Processes in SMEs: An Interpretive Study

Small and medium enterprises contribute significantly to an economy. With the growth of Internet and related communication technologies, many small and medium enterprises are trying to integrate their strategies and business processes with other firms in the supply chain. The goal of this dissertation is to study the adaptation of a small/medium enterprise to changes in the environment. Specifically, adaptation of internal business processes within the small/medium enterprise embedded in a manufacturing supply chain is studied. A case study method was used within a grounded theory framework so that the continuous interplay between data collection and analysis of each phase helps inductive theory discovery. The findings suggest that while the SME actively adapts their internal processes, it also seeks to minimize dependence on a few large customers by diversifying customer base. This process increases costs to the SME, thus this study explored why the SME strived for a diversified customer base. The SME, which is the subject study, used Long Term Agreements with its key partners. A Long Term Agreement creates a contractual obligation defining the expectations of the SME and the customer. The expectations allow the SME to develop a product and a process specific to the customer\u27s needs while securing future relationships with the customer. The SME reengineered manufacturing processes and designed information systems to support process adaptation. Each supply chain creates demands on the SME to deliver product through a seamless flow of inventory delivered as requested through the Long Term Agreement. The multiple demands from each supply chain along with the precision for delivery time have increased the necessity to develop a precise manufacturing process. This requires an information system to collect the data and define the business processes based on the complexity created in the multiple supply chains. Generalizing from the case study, it appears that small firms which are part of a supply chain adapt by using long term contracts with a smaller set of firms at the strategic level, by redesigning internal processes at business process level and by creating customized information systems at the IS level