Global Engineering Services: Shedding Light on Network Capabilities PDF

Journal of Operations Management 42-43 (2016) 80e94 Contents lists available at ScienceDirect Journal of Operations Management journal...

Journal of Operations Management 42-43 (2016) 80e94 Contents lists available at ScienceDirect Journal of Operations Management journal homepage: www.elsevier.com/locate/jom Global engineering services: Shedding light on network capabilities Yufeng Zhang a, *, Mike Gregory b, Andy Neely b a Birmingham Business School, University of Birmingham, University House, Edgbaston Park Road, Birmingham, B15 2TY, UK b Institute for Manufacturing, Department of Engineering, University of Cambridge, 17 Charles Babbage Road, Cambridge, CB3 0FS, UK a r t i c l e i n f o a b s t r a c t Article history: This paper addresses the operations challenges of effectively managing professional services on a global Available online 21 March 2016 scale. The specific context for the study is professional engineering services and particularly those that Accepted by Mikko Ketokivi are delivered globally e global engineering services (GES). Estimates suggest that the market for GES was around US$930 billion in 2012, rising to US$1.4 trillion by 2020 (ISG, 2013). Yet this influential sector receives scant attention in the operations management literature. The paper draws on six case studies to Keywords: Global engineering services (GES) explore the operations management challenges of delivering GES. In doing so the paper introduces the Network capabilities concept of network capabilities for GES, highlighting the centrality that: (i) network resources e Professional service operations accessing and deploying dispersed resources, (ii) network coordination e coordinating and integrating management (PSOM) network activities, and (iii) network learning e collective learning and knowledge management, all play in enabling the successful operational management of GES. © 2016 Elsevier B.V. All rights reserved. 1. Background and introduction archetypal change that many professional service firms are facing. In short, professional service firms are shifting from the traditional Professional services provide a significant research opportunity organisational model of a professional partnership to a more for the Operations Management (OM) community. They are a major knowledge-based, technology-enabled, globally-networked orga- plank in the modern economy and represent a “very different nisation (Roth and Menor, 2003; Brock et al., 2007; Chase and Apte, context for developing OM tools and techniques (Lewis and Brown 2007; Abdelzaher, 2012). One could argue that GES firms are at the 2012: p2)”. However there is a relative dearth of in-depth explo- forefront of this organisational transformation. They are pioneering ration of the specific operations challenges of professional services new forms of network based organisations as a result of the nature (Løwendahl, 2005; Heineke and Davis, 2007; Goodale et al., 2008; of the knowledge they deploy, the degree of jurisdictional control Lewis and Brown, 2012). That literature on professional service they exercise, and the global client relationships they seek operations management (PSOM) that does exist is largely limited to (Malhotra and Morris, 2009; Zhang et al., 2014). From a knowledge a few classic types of professional services such as legal services perspective, GES firms tend to adopt lateral team structures and (Lewis and Brown, 2012), healthcare services (Heineke, 1995) and reciprocal processes since they have a technical or syncretic social services (Harvey, 1992). There is an “urgent need to move knowledge base supported by multiple disciplines rather than a beyond [these classic types of professional services] in order to normative knowledge base. From a jurisdiction perspective, engi- compare them with other categories (Von Nordenflycht neering professions have weaker social closure and looser 2010:p171)”; and only by doing so, we will be in a position to geographic jurisdictional boundaries; therefore it is relatively easy possibly tease out effective organisational features for professional for GES firms to form a global network structure. From a client services in a particular operations context. perspective, GES require a high degree of face-to-face client inter- This research focuses on a new domain of professional services action in the production process, and thus a high degree of e global engineering services (GES). We have chosen to study the geographic dispersion of assets especially when their clients are operations management challenges of GES because they have both geographically dispersed. traditionally been under-studied and they epitomise a significant In parallel with other professional services firms, it is clear that network organisations play an increasingly important role in GES. Key driving forces include the expansion of large, multi-national * Corresponding author. engineering services firms, increasing geographic dispersion of E-mail address: [email protected] (Y. Zhang). engineering capabilities (including the human capabilities http://dx.doi.org/10.1016/j.jom.2016.03.006 0272-6963/© 2016 Elsevier B.V. All rights reserved.  Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 81 embedded in the work force), an emerging global race for talent need for collaboration among different types of engineering ser- (Lewin et al., 2009) and opportunities made available by the vices for effective value co-creation (Zhang and Gregory, 2011). For progress of information technology (Apte and Mason, 1995; Lannes, example, research services and design services in the aforemen- 2001; NAE, 2004; Zhang and Gregory, 2011). As a result of their tioned categories 1 and 4 often co-exist in the business portfolio of global network structures, GES firms face critical operations chal- a large engineering services firm. Nevertheless, the diversity of GES lenges in organising and coordinating dispersed engineering ac- allowed us to examine “how a distinctive group of firms becomes tivities across geographic and organisational boundaries. The optimally organised as contexts change” e a key opportunity for challenges are compounded by the fact that engineering capabil- future research in professional services identified by Zardkoohi ities are often complex, intangible, invisible and embedded in et al. (2011: p184). different operational areas (RAEng, 2010; Krull et al., 2012; Zhang From an evolutionary perspective, GES share a common ground and Gregory, 2013). These difficulties and challenges have been with the latest type of services operations- information services, recognised by scholars studying professional services from various since many engineering services firms “have expanded their service theoretical perspectives, e.g. aligning operational capabilities to offering by providing information that assists customers with decision different types of service operations (Coltman and Devinney, 2013), making” (Heineke and Davis, 2007: p367). Such expansion has recognising the unique requirement of organisational innovation resulted in workforces dispersed across geographic, organisational for services (Droege et al., 2009), understanding the performance and disciplinary boundaries; and thus driving the evolving orga- implications of managerial decisions in service operations nisation structure from the traditional partnership management (Heineke, 1995), and coping with coordination challenges in com- towards network forms of organisations (Greenwood et al., 2002; plex service operations (Harvey, 1992, 2011). Malhotra and Morris, 2009: Zhang et al., 2014). GES have to cope One of the key operations challenges facing network based with new challenges in organising and coordinating these professional service organisations, including GES firms, is how to increasingly dispersed, complex, diverse, dynamic service net- build effective network capabilities in a global context. Using works (Heineke and Davis, 2007). existing studies this paper sets out a theoretical foundation that is used to explore the question- “how do engineering services firms 2.2. The concept of capabilities develop network capabilities for effective value creation in global service operations”. Through six case analysis covering a range of Organisational capabilities are a key concept in the strategic GES firms we reach the conclusion that critical network capabilities management literature referring to the ability of a bundle of re- include: (i) network resources e accessing and deploying dispersed sources to perform some tasks or activities (Grant, 1991; Barney, resources, (ii) network coordination e coordinating and integrating 1999; Winter, 2003; Coltman and Devinney, 2013). OM scholars network activities, and (iii) network learning e collective learning have conceptualised capabilities as intended or actual operational and knowledge management. strengths contributing to an organisation's competitive perfor- mance (Hayes and Wheelwright, 1984; Slack and Lewis, 2002; Voss, 2. Theoretical foundation 2005). Capabilities leading to sustainable competitive advantage are critical to businesses, will directly contribute to customer value, 2.1. Global engineering services (GES) and are often embedded in different functional areas (Prahalad and Hamel, 1990; Javidan, 1998; Quinn, 1999). In a changing environ- We consider global engineering services (GES) as the application ment, an organisation will need dynamic capabilities to create, of engineering knowledge (including engineering technologies, integrate and reconfigure resources into new sources of competi- skills and expertise) possessed by an engineering services firm in tive advantage (Teece et al., 1997; Eisenhardt and Martin, 2000; effective problem-solving for the benefit of customers in a global Helfat and Peteraf, 2003; Anand et al., 2009; Cetindamar et al., context. These services are typically knowledge-intensive, asset- 2009). Capability building is not simply a matter of assembling a light, and customer/project-focused (Malhotra and Morris, 2009; bundle of resources, because capabilities involve complex patterns Zhang et al., 2014). of coordination (or routines), cooperation and integration between GES are one of the largest professional services industries in the people and other resources (Mills and Platts, 2003; Winter, 2003). world e ISG (2013) estimated the global spend on engineering services to be around US$930 billion in 2012, rising to 2.3. Network capabilities US$1.4 trillion by 2020. A report from the Centre on Globalisation, Governance and Competitiveness at Duke University (Fernandez- As previously discussed, GES firms face critical operations Stark et al., 2010) suggests global revenues from the combined challenges in organising and coordinating dispersed engineering construction and engineering industries were US$2.7 trillion in activities across geographic and organisational boundaries. The 2013. Viewing engineering services in a broader scene e as part of traditional literature on capabilities has been extended to encom- the professional services market e further emphasises their pass situations such as this through discussion of network capa- importance to the global economy. The UK provides an apposite bilities (Foss, 1999; Håkansson et al., 2009). Network organisations example e her professional and business services sectors are characterised by horizontal patterns of exchange, interdepen- (excluding financial services) are a global success story. The UK's dent flows of resources, and reciprocal lines of communication share of OECD exports is 12%, second only to the US at 17% in 2011 (Powell, 1990; Podolny and Page, 1998; Koka et al., 2006). In a (HM Government 2013). Engineering, the 2nd largest segment in network, transactions occur neither through discrete exchanges these sectors, contributed to 1.5% of UK total GVA and 1.6% of UK nor by administrative orders, but through the network of individual total employment in the same year (ONS, 2013). members engaged in reciprocal, preferential, and mutually sup- Within the K(knowledge intensity), L(low capital intensity), portive actions. From this point of view, network capabilities have P(professional workforce) and C(customisation) typology proposed been widely considered as the collective ability or learning of by von Nordenflycht (2010, 2011), GES were labelled in Category 1- network members to achieve some strategic objectives through technology developers (e.g. research labs) and Category 4-classic accessing and deploying dispersed resources (Karlsson, 2003; professional service firms (e.g. architecture). This on the one hand Hayes et al., 2005). indicates the diversity of GES; and on the other hand highlights the An important objective of this research was to address the 82 Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 growing need for an in-depth understanding of network capabil- tools (Powell et al., 2004), etc. But they hardly ever took network ities for PSOM. Traditional network theories explain why network capabilities as a main theoretical perspective in their investigations. actors with diverse motivations forge enduring relationships from These studies, although individually rooted in some specific economic (Grabher and Powell, 2004), sociological (Podolny and operations contexts, may help suggest basic elements to form an Page, 1998), or organisational perspectives (Powell, 1990; Snow analytical framework for network capabilities. In brief, existing et al., 1992), instead of providing an overall approach practically studies suggest three generic network capability areas: (1) useful for network design and operations. Strategic management accessing and deploying dispersed resources (network resources), theories recognise the concept of organisational or operational (2) integrating and coordinating network activities (network coor- capabilities as a helpful way of synergising resources and activities dination), and (3) collective learning and knowledge management to achieve competitive advantage (Prahalad and Hamel, 1990; (network learning). The first two capability areas confirm the un- Grant, 1991; Teece et al., 1997; Barney, 1999; Winter, 2003) e a derlying rationale of capability building in the resource-based view theme re-enforced in the operations strategy literature (Hayes and (Grant, 1991; Barney, 1999; Mills and Platts, 2003) by combining Wheelwright, 1984; Slack and Lewis, 2002; Peng et al., 2008). resources and coordination. The third area reflects the key advantage Extending these concepts to give them a clear focus on the of network organisations in collective learning (Powell, 1990; Foss, distinctive environment of PSOM will enrich our understanding 1999), and at the same time addresses the need for effective (Lewis and Brown, 2012; Zhang et al., 2014), and address the knowledge management in complex network operations (Dyer and concern that traditional theories generally failed to address directly Noveoka, 2000; Karlsson and Ske €ld, 2007; Zhang et al., 2014). the fundamental requirements of PSOM based on relationships, customer interactions, participation and value co-creation (Roth 2.4. Engineering network capabilities for effective value creation and Menor, 2003; Lovelock and Gummensson, 2004; Heineke and Davis, 2007; Karpen et al., 2012). Value creation in GES focuses on developing and deploying Although an analytical framework for network capabilities is engineering knowledge to provide solutions for and benefit of still missing in the OM literature, some relevant concepts have been customers. Zhang and Gregory (2011) suggested possible areas to explored in various subject areas, especially in the area of inter- develop engineering network capabilities for effective value crea- national production. For example, Shi and Gregory (1998) identified tion around three strategic orientations e efficiency, innovation five strategic capabilities that differentiate international and flexibility. Efficiency focused network capabilities allow engi- manufacturing networks from traditional factory focused neers to complete their tasks with fewer resources. Key issues manufacturing systems. They are the ability to capture required discussed in literature include accessing and sharing global re- manufacturing resources, the ability to achieve greater efficiency, sources (Dyer and Noveoka, 2000; Singh, 2008), international op- the ability to deploy and reconfigure resources swiftly, the ability to erations synergies (Birkinshaw and Hagstro € m, 2000), continuous capture and disseminate internally generated knowledge, and the improvement infrastructure (Anand et al., 2009), and network ability to support individual factories. By studying knowledge flows structure optimisation (Choi and Hong, 2002). Innovation focused within an international manufacturing network, Vereecke et al. network capabilities help GES firms to enhance their competitive- (2006) identified four types of network units with different roles ness through providing novel engineering solutions. Key issues and capabilities, i.e. isolated plants, receivers, hosting network include exploring and exploiting dispersed knowledge players, and active network players. The research discussed the (Kuemmerle, 1997; Freel and de Jong, 2009); encouraging creativity evolution and development of network capabilities in different and diversity (Hoegl and Parboteeah, 2007); cross-region learning contextual environments. Karlsson and Ske €ld (2007) con- (Tiwana and Bush, 2005); technology leadership and customer ceptualised emerging paradigms of production networks from the intimacy (Zander, 1999). Flexibility focused network capabilities aspects of horizontal and vertical technologies. Horizontal tech- attempt to create value through quick response and adaptation in nologies are related to product functions that represent product changing business environments. Key issues include local respon- performance characteristics; and vertical technologies are the siveness and flexible working approaches (Kotlarsky et al., 2014); “pure” technologies in different disciplinary areas. They contended resource mobility and virtual teams (Powell et al., 2004); informal/ that network capabilities for the future production systems should social networks (Hong et al., 2008); strategic outsourcing and risk be founded on specific skills to integrate and combine various management (Ellram et al., 2008; Hansen et al., 2013). vertical technologies into coherent horizontal technologies. At the Table 1 presents the conceptual framework as a synthesis of the same time, network dynamics could be interpreted through in- above discussions and provides a theoretical foundation for this teractions between network actors, resources and actions research. The framework guided our case studies and suggested (Karlsson, 2003). In addition to these continuous efforts of directions for data collection/analysis to identify critical network exploring potential capability elements in international production capabilities. In particular, a semi-structured interview protocol was networks, there are also studies considering knowledge reuse and developed around the three main network capability areas focusing integration as organisational capabilities in network operations on resources, coordination and learning, which also served as the (Grant, 1996; Tiwana and Bush, 2005; Singh, 2008). It has been main categories in the coding process. GES with various strategic believed that operations efficiency can be enhanced by knowledge orientations provided different operations contexts in which we reuse as replication (Teece, 1981; Dyer and Noveoka, 2000; Markus, were able to understand how these network capabilities were 2001). Majchrzak et al. (2004) suggested that knowledge reuse coherently developed for effective value creation. might also contribute to innovation by following a different pro- cedure from conceptualising the problem to searching and evalu- 3. Research approach ating available knowledge, and fully developing reused ideas. There are more explorations which might suggest some possible element We adopted a research approach based on the case study of network capabilities, for example in areas of industrial research method to empirically enrich and further develop the theoretical (Kuemmerle, 1997), new product development (Kusunoki et al., constructs of network capabilities for two main reasons. Firstly, 1998), knowledge off-shoring (Kotlarsky et al., 2014) and although network capabilities are not a totally new concept in the outsourcing (Youngdahl and Ramaswamy, 2008), supply chain OM literature, in response to reviewer we would like to clarify that management (Choi and Hong, 2002), virtual teams and the support prior studies do not seek to cover all important areas of network  Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 83 Table 1 Three main areas of network capabilities. Strategic orientations Network capability areas Network resources (Accessing and Network coordination (Coordinating and Network learning (Collective learning and deploying dispersed resources) integrating network activities) knowledge management) Efficiency-focused GES How do GES firms develop network capabilities to complete engineering tasks with fewer resources? Innovation-focused GES How do GES firms develop network capabilities to enhance competitiveness through providing novel engineering solutions? Flexibility-focused GES How do GES firms develop network capabilities to create value for customers through quick response and adaptation? capabilities. An overall understanding of essential elements of by Eisenhardt (1989: p541): network capabilities for PSOM is missing. It was difficult to develop “This tactic [of studying pairs of cases] forces researchers to look for structured hypotheses to formally test ambiguous and sometimes the subtle similarities and differences between cases. This juxta- unknown relationships in complex service settings. The case study position of seemingly similar cases by a researcher looking for approach was therefore appropriate to guide this research around differences can break simplistic frames. In the same way, the search the key theoretical elements suggested from literature and develop for similarity in a seemingly different pair also can lead to more novel insights (Voss et al., 2002; Yin, 2009). We could then possibly sophisticated understanding…” avoid a danger of forcing ourselves to provide a precise definition of something unclear or even still non-existent at the point of inves- tigation. In doing so, we could also benefit from the case-based We selected the two cases of each pair from different sectors theory building process (Eisenhardt, 1989) that was clear enough because they face different market demands and industrial norms to guide our intellectual exercises to sort out of valuable insights which would then lead to differences in the process of building from scraps of the mind. network capabilities (Zhang and Gregory, 2013). The similarity Secondly, this research required us to acquire a deep under- within each pair was established upon a comparable scale of op- standing of a vast amount of factors relevant to network capabilities erations as well as a common strategic orientation as suggested by for PSOM. Although the authors were trained as engineers and had Zhang and Gregory (2011). A case company's strategic orientation earlier industrial experiences in engineering and manufacturing was assessed by exploratory discussions with senior managers, and operations, it was still a challenging task for us to quickly appre- confirmed by our analysis of its internal documents consisting of hend complex network characters, behaviours and new trends of operations strategies with help of three sets of indicating keywords. developments in different industrial settings. The case study Keywords for efficiency include ‘efficient’, ‘operational excellence’, approach allowed us to integrate information from multiple sour- ‘cost reduction’ and ‘waste elimination’. Keywords for innovation ces and closely engage with the case companies, and thus gaining include ‘innovative’, ‘new technologies’, ‘novel concepts’ and ‘cre- an in-depth understanding about network capabilities and their ative solutions’. Keywords for flexibility include ‘flexible’, ‘quick linkages to a broad scope of influencing factors (Stuart et al., 2002; response’, ‘adaptive approaches’ and ‘tailored solutions’. Com- Yin, 2009). It was then possible for us to develop a rich vision of panies with a blurred strategic orientation were excluded. By different kinds of GES in a relatively short period of time and at the selecting these 3 pairs of cases, we also met Yin's (2009) call for same time maintain an open, but not empty mind to capture replication logic in case selection. Table 2 presents a brief overview important patterns from the case details (Siggelkow, 2007). of the cases. The unit of analysis was an engineering service network, which refers to a collection of dispersed engineering resources managed by a focal organisation to complete an engineering task or 3.1. Case selection and the unit of analysis to achieve a common goal in a collaborative manner. In situations where a company consisted of multiple business groups with very A multiple case study approach was adopted because it helped different operational contexts and capability requirements, the to eliminate potential biases, and produced more robust results to engineering service network for a business group was considered reveal the case companies' network capabilities (Meredith, 1998; as the unit of analysis rather than the parent company. Eisenhardt and Graebner, 2007). An initial list of engineering companies was drawn from the OSIRIS database which includes listed and major unlisted/delisted companies of the world, with 3.2. Data collection and data analysis sector index codes 5413 (for architectural, engineering, and related services) and 5414 (for specialized design services), and supple- Data collection and analysis were completed by the authors mentary sub-level codes. 50 companies were shortlisted with three with support from doctoral researchers and research fellows (see main selection criteria: (1) the companies should have engineering Appendix 1). This allowed the cases to be viewed from the different service operations on a global scale; (2) the companies should be perspectives of multiple observers, and increased the chances that perceived as leading players in their particular sectors by three the researchers viewed case evidence in different ways. For senior industrial fellows of the host organisation and at least one example, in an interview involving two researchers, one researcher external industrial expert; and (3) the host organisation has con- who was handling the interview questions had the perspective of tacts of the companies at a proper seniority level to possibly sup- personal interaction with the informant, while the other researcher port this research. We studied the websites and the recent annual who was taking notes had a more distant and observer's perspec- reports of the shortlisted companies and selected 30 of them who tive. There was also some practical concern of accessibility which considered global engineering networks as a high strategic priority. was eased by involving multiple researchers. In some cases only The companies were then contacted to request their participation; particular researchers could conduct interviews due to security and 20 companies expressed a strong interest to get involved. After concerns. The same semi-structured case study protocol was used exploratory discussions with these companies to gain a generic to maintain the consistency in data collection (see Appendix 2). The understanding of their engineering service networks, 6 of them lead author systematically trained all researchers when they first were carefully selected to provide 3 pairs of cases as recommended conducted an interview, including the purpose of this research, the 84 Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 Table 2 An overview of the cases. Strategic Case Sector People Revenues Customer focus and services Unit of analysis orientation (in (in 2013) 2013) Pair 1- cases A Railway 17,000 £1.7billion Helping customers to plan, design and enable capital programmes A network of a few core centres specialised for network engineering that resolve complex engineering challenges in different engineering areas efficiency B Automation 31,000 US$7.7 Providing automation engineering services for low-voltage electrical A network of five large scale engineering engineering billion protection, control and measurement products and systems centres to support operations in over 40 countries Pair 2- cases C Oil and Gas 28,000 £3.9 Providing engineering and asset support services in oil and gas, A network of eight main engineering hubs, for network engineering billion mining, clean energy, environment and infrastructure markets many collaborative centres, and an innovation engineering academy D Power 35,000 US$11.0 Providing power engineering services for a wide voltage range of A network of nine lead engineering centres, engineering billion power generation, transmission and distribution equipment/systems many support centres, and a global corporate research centre Pair 3- cases E Aerospace 12,000 £2.1 Providing engineering solutions for civil and military applications- A network of over 30 independent for network engineering billion one of the world's largest first tier aerospace services providers engineering centres worldwide flexibility F Power 20,000 US$8.4 Providing power system solutions, including plant electrification and A network of highly dispersed engineering system billion automation solutions, bulk power transmission solutions, and resources in over 100 countries solutions substations and network systems research design and important techniques in using the protocol. ‘complementary engineering resources’, and ‘resources co-loca- The researchers met regularly to review the case data with a view to tion’. A theme of ‘resource utilisation’ was then created to develop a improving the reliability of the data collection process. theoretical narrative based on these three groups of capability el- As mentioned above, case data were collected mainly through ements. Themes of ‘technology leadership’ and ‘resource mobility’ interviews although these were supplemented by secondary data, were identified by following the same data analysis process. Critical e.g. company websites, relevant literature, and company internal network capabilities around ‘Network Coordination’ and ‘Network documents. Secondary data were used for two main purposes. One Learning’ were identified by using the same method. This process was to fill in occasional gaps in developing case narratives based on consisted of constant comparisons between case data and theo- interviews; and the other was to serve as another data source for retical constructs. Experienced academics and industrial experts triangulation (Yin, 2009). Interviewees included managers of group reviewed the emerging analysis to enhance the validity of the and divisions as well as frontline managers and engineers. All case research (Yin, 2009). studies began with an exploratory meeting with senior managers. The meeting was to access the overall strategic orientation of the 4. Case analysis company's engineering service network and to develop a plan for interviews. The authors would then follow the interview plan and We began our case analysis by identify critical network capa- work with informants to understand network capabilities in their bilities in the companies. To do so we conducted a frequency engineering services. Additional informants would be nominated analysis of key concepts. Table 3 presents the resultant data creating a snow-ball sampling tactic. In total 64 informants from structured against the categories
network resources, network the case companies were interviewed, including 13 from Case A, 9 coordination and network learning. from Case B, 11 from Case C, 9 from Case D, 12 from Case E, and 10 from Case F. About 1/3 of them hold a senior position at the 4.1. Capabilities elements around network resources corporate or group level. In addition, we interviewed 12 experts who are familiar with engineering operations of the case com- Network resources were the most commonly cited theme panies. An interview would last for about 2 h on average by (receiving 36.3% of mentions). Within the category of accessing and following a list of interview questions (see Appendix 2). Interviews deploying resources, three major constructs were identified: (i) were recorded unless participants objected. The transcripts resource utilisation; (ii) technology leadership; and (iii) resource together with a note of the key points were produced and validated mobility. by interviewees via emails or telephone afterwards. Once tran- scripts had been produced we had 487 pages of text (about 190k  Resource utilisation (increasing the degree of resource uti- words). The volume of data for the different case companies varied lisation through consolidating and rationalising global engi- from 57 to 102 pages of text. neering resources) Data analysis began with an inductive process of categorisation guided by Table 1 (Christensen and Sundahl, 2001; Radnor, 2002). Resource consolidation and rationalisation help the companies Around the three main capability areas (i.e. Network Resources, to achieve the highest possible degree of resource utilisation. The Network Coordination and Network Learning), sub-categories were relevant concepts receive 15% frequency in our analysis. For created by searching the interview transcripts/notes, identifying example, operational excellence has the highest priority in Case A the keywords, grouping them into common themes, and updating to maintain and strengthen its global leading position. The com- the theoretical elements with emerging themes (mainly by the lead pany has a few core centres specialised in various areas of railway author). For example, under the main category of Network Re- engineering. These engineering resources support existing and sources, 48 open codes emerged by searching interview transcripts. potential projects across business areas, e.g. the company's com- A tentative set of 13 codes were identified by filtering out all the posite material engineering resources often support multiple rail- codes of a frequency count of less than 10. These 13 codes stand for way, aerospace and energy projects in parallel. Similarly, Case B's 64% of the total frequency. These tentative codes were later merged engineering resources have been consolidated into five large scale into 3 mutually exclusive and collectively exhaustive constructs engineering centres. These centres support production and markets around ‘resource consolidation and rationalisation’, in over 40 countries by following a common resource allocation  Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 85 Table 3 An overview of frequency analysis of key concepts. Main Categories Sub-categories Emerged concepts Frequency Percentage Network Resources (36.3% Resource Utilisation Resource consolidation 34 8.2% 15% mentions, 414 out of Network rationalisation 30 7.2% 1140 in total) Complementary resources 57 13.8% 14% Resource co-location around projects 26 6.3% 12% Resource co-location around customers 23 5.6% Technology Leadership Technology leadership of key engineering resources 42 10.1% 14% Leverage expertise 16 3.9% Global engineering leaders/experts 51 12.3% 12% Investing in frontier engineering technology areas 23 5.6% 6% Resource Mobility Resources relocation 28 6.8% 11% Network restructure 17 4.1% Resources dispersion 20 4.8% 9% Global presence 16 3.9% Resource assembling/packaging 31 7.5% 7% Network Coordination Process Commonality Common working approaches 56 14.8% 15% (33.2% mentions, 379 out Lean engineering 43 11.3% 11% of 1140 in total) Modular solutions 23 6.1% 10% Service commoditisation 15 4.0% Process Novelty Technology exploitation/transformation 41 10.8% 11% Value co-creation 21 5.5% 10% Customer intimacy 18 4.7% Guidance for innovation 28 7.4% 7% Process Adaptability Adaptive working approaches 52 13.7% 14% Simple/local decision making 45 11.9% 12% Product/technology transfer processes 22 5.8% 10% Knowledge transfer processes 15 4.0% Network Learning (30.4% Knowledge Reuse Good practice sharing 33 9.5% 15% mentions, 347 out of Reuse engineering solutions 20 5.8% 1140 in total) Reuse the knowledge of key individuals 37 10.7% 11% Global standards 32 9.2% 9% Knowledge Creation Eco-system for collaborative learning 41 11.8% 12% Innovative working culture 24 6.9% 11% Encourage diversity 15 4.3% Cross-disciplinary learning 32 9.2% 9% Digital Learning Digital engineering systems/tools 49 14.1% 14% Engineering knowledge network update 35 10.1% 10% Virtual reality simulation and system integration 29 8.4% 8% approach for efficiency improvement, especially in major engi- An engineer reporting directly to the project leader is responsible neering areas such as product design and re-engineering, engi- for communicating to all the partners and updating the dashboard neering sourcing and procurement, distribution and customer twice a day. The purpose of this co-location of engineering re- support. This has helped the company to penetrate into global sources and the workplace layout design is to improve communi- distribution channels through rationalised engineering offerings cation between engineers, which allows the engineering network and central coordination. The head of global engineering supply to operate seamlessly and efficiently to deliver the best solution to explained the rationale behind this e “We have about 50 customers meet customer requirements. The frequency received by concepts with a global contract. The number will be over 60 by the end of this relevant to resource co-location is 12%. year, and more in the future … The reason [for having more global contracts] is to reduce resource duplication and repetition. That was a  Technology leadership (maintaining technology leadership of serious problem because we had to manage a lot of individual con- key engineering resources) tracts [over 16,000 contracts at the time of interviewing]. Customers will benefit too …” Technology leadership of key engineering resources helps Alongside these concentrated engineering resources (either companies to enhance their competitiveness worldwide. The physically at a few locations or virtually around a small number of relevant concepts receive 10% frequency in our analysis. For customers), complementary resources to complete a complex en- example, Case C enjoys a good reputation for technical excellence gineering project are secured through collaboration with local and customer focused innovation. Its innovation capabilities are contractors/partners (the relevant concepts receive 14% frequency). highly trusted by customers around the world and respected by Trusted partners are often involved very early from the bidding and competitors. Its engineering resources are organised into engi- preparation stage of a project to make sure that an engineering neering centres (or hubs) to develop and maintain technology network as a whole has sufficient resources to complete the engi- leadership of key engineering resources. These leading engineering neering tasks and at the same time these resources can work resources are made available to the whole company via an inte- together efficiently throughout the project lifecycle. For example, in grated work share and technical performance management system a railway station renovation project in UK West Midlands, Case A's centred around eight regional hubs to support world-wide project engineers are co-located with employees from the rail infrastruc- execution (concepts relevant to leverage expertise receive 4% fre- ture provider and local construction contractors in the same quency). Driven by the long-term rise in energy demand and building nearby the project site. In the main engineering office, increasing environmental pressures, these key engineering re- engineers from all the partners have to walk through a project sources are shifting toward more frontier and deep-water de- dashboard to access their working areas or meeting rooms. This velopments to provide novel engineering solutions for customers in dashboard displays the real time progress of key engineering tasks. three main areas. First is to reach as much oil and gas as possible 86 Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 with new extracting technologies and more advanced production independent centres of excellence that are mainly responsible for facilities. In general, oil and gas resources are increasingly difficult local businesses, with the central corporate function reviewing to extract, and the projects have become larger and more complex. their performance quarterly and the technology committee over- The company has developed strong expertise and global experience seeing long term capability development. These resources are of delivering large and complex engineering projects in harsh lo- regularly switched between projects and business areas. Such cations. It can help customers to reach deeper into reservoirs and resource relocation (or rescheduling) takes place unnecessarily in a help them to recover oil and gas from hard-to-reach corners of the physical form because many engineering tasks can be completed reservoirs. Second is to find new ways of developing unexploited oil from a remote location. In occasions that physical relocation is and gas. A large portion of the world's proven energy reserves are in required, the company follows a principle of using local (or nearest) remote locations without cost-effective transport to market. Its engineers to work on a project. Thanks to the long planning lead engineers have to help customers to cope with technical challenges time of an engineering project, the company is able to provide in harsh locations including hostile climatic conditions, Arctic en- comprehensive training programmes for engineers when they need vironments, extreme temperatures, earthquake-prone regions, or new skills to complete the project work. high wave conditions. Third is to develop plants producing clean Engineering resources in Case F are also highly dispersed with energy. The company has strong nuclear engineering resources local markets to enhance customer relationship and provide more developed over 50 years and works at the forefront of new energy value adding services for them (concepts relevant to strategic re- technologies. A cross utilisation of such leading knowledge allows sources dispersion and global presence receive 9% frequency). The the company's oil and gas engineers to offer innovative solutions company disperse these resources strategically to complete some for producing clean, high performance fuels. specific engineering tasks for three main reasons. Firstly, power Similarly, Case D has successfully maintained its global leading systems are heavy, big and facility specific; and therefore are market position for decades through technology leadership and difficult to be shipped around the world. The company has to enhancing customer value. The company has recently been named deploy its engineering resources in a very flexible manner to sup- by MIT among top 50 innovators of the world. Its engineering re- port these products at where they are. Secondly, its engineers have sources have been structured into centres with leading and sup- to respond to customer requirements quickly and often in emer- porting roles. A lead centre often possesses strong expertise in gency to avoid disastrous consequences. Thirdly, its engineering some core technology areas and is responsible for further devel- solutions have to meet local government legislations and within oping engineering expertise and making it available world-wide. To many other operational constraints. The company must be able to maintain global leadership of these key engineering resources, a assemble a set of relevant engineering know-how very quickly and lead centre works closely with corporate research laboratories of adapt them to some particular local requirements (concepts rele- the parent company, leading universities and research organisa- vant to resource assembling and packaging receive 7% frequency). tions world-wide (investing in frontier engineering technology Although these reasons are self-explicit and apparent in many areas receives 6% frequency). A support centre's role is to support projects, its global engineering director reminded the authors that lead centres in creating engineering solutions and carry out some resource mobility decisions are not always straight forward- “Our design localisation or order-based modification work. Many sup- senior management team had different opinions on investment plans port centres are collocated with production/project sites to support in China … We finally decided to scale up the local engineering ca- existing businesses and quickly ramp up new services and solu- pabilities after long debates. But Chinese markets were slowing down tions. These centres operate closely with local markets for medium later. We are chained to these heavy investments … We of course can term innovation initiatives. use our engineering resources in China to support international Leading engineering expertise of these companies can be markets. The problem is that we want to maintain engineering ca- accessed from anywhere via global innovation programmes or pabilities in other countries too. We don't have enough work for them through engineering academies. A manager explained the reason [i.e. engineering centres in China], and the total cost [of using Chinese behind this- “Their [global leading experts'] importance is tremen- engineering resources to support international markets] is much dous. Their participation internally added confidence in our engi- higher than that people think…”. neering team, and externally secured critical deals. To say it without any exaggeration, many clients signed on the dotted line simply 4.2. Capability elements around network coordination because they saw some famous names in our team”. To develop and retain these experts, employees are motivated to engage with the Coordinating and integrating network activities were another case company and commit to its success through various shared core theme as we expected (receiving 33.2% of mentions). Under- ownership schemes (concepts relevant to development and lying the broad theme of network coordination, three sub-themes retaining global engineering leaders/experts receive 12% fre- emerged: (i) process commonality; (ii) process novelty; and (iii) quency). To address problems of skills shortage or aging engi- process adaptability. neering experts in some regions, the case company has developed strategic plans for attracting skilled engineers (particularly those  Process commonality (establishing common working ap- with experiences in successful delivering complex projects), proaches in main service categories) improving graduate and trainee recruitment, and educating schoolchildren about careers in engineering. Cases A and B align complex engineering services activities with common working approaches across regions and businesses (the  Resources mobility (mobilising engineering resources to cope relevant concepts receive 15% frequency). Such approaches enable with changing customer needs and uncertainties) engineers to provide optimal solutions to address some common problems collectively and disseminate these solutions throughout Resource relocation and restructure (the relevant concepts engineering networks in a view to avoiding duplication and waste receive 11% frequency) help companies to cope with changing elimination. Railway engineering projects in Case A often struggle customer needs and uncertainties. Case E's engineering resources with an ever increasing level of complexity and mounting costs as are dispersed with customer bases, technology centres, and pro- small issues evolved into bigger and more significant problems due duction facilities around the world. These resources form to the evolution of engineering design, customer changes or  Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 87 operational changes. The company has continuously invested in Coordination in Case D relies on a set of guidelines for reference developing common engineering processes based on the lean en- in key engineering areas, such as global engineering design and gineering concept (the relevant concepts receive 11% frequency), as business evolution management. This provides useful guidance for a senior manager said: “Railway construction costs have been the often fuzzy and risky process of innovation (concepts relevant doubled in the recent years. This gives us room for efficiency to innovation guidance receive 7% frequency). An engineering improvement. We have embraced LEAN because it helps us to simplify manager explained how innovation guidance works in his company complex operations- [in our businesses] simplicity equals success … It e “A very important part of my job is to bring new technologies into took us a lot of time and effort to establish the right LEAN processes e our different business areas. It is a complex and long process. My team the working process itself is a technology”. To develop and implement members come from different countries and most of them have a PhD these common processes, the company involves all the partners by degree, have to work together with front line operations for years to empowering them and getting them involved in the design and realise the potential of some new technologies …” Clearly defined delivery process. The aforementioned engineering project dash- criteria are used to evaluate an engineering project at a set of board adopted in this company has been virtually visualized by 3D critical stages, e.g. idea generation, business case development, computer models in many projects. The project leader who is in conceptual design, detailed design, trial production, launch to charge of the West Midlands railway station project also supervises market, etc. Projects failing to meet the evaluation objectives will overseas projects in Mideast on lean engineering. Well defined be reviewed in further details or terminated. By following these performance indicators focussing on operational efficiency along- guidelines, one engineering centre will lead a new product/service side safety in the workplace and on project sites have been used to development project and assign sub-tasks to support centres with measure the past performance and also provide information and appropriate capabilities. Eight business groups coordinate engi- context for forward plans, e.g. volume, secured workload, capacity neering activities. Each has a group manager responsible for busi- utilisation, etc. ness portfolio management, lifecycle management and value In a different context, engineering services in Case B are improvement; and a technology manager responsible for product/ increasingly commoditised and delivered in large volumes. Con- service development. Driven by increasing global competition, the cepts relevant to modularity and service commoditisation receive case company is experiencing a major strategic transformation for 10% frequency. Driven by competition pressures from low cost sustainable success with new markets and innovation. Existing countries, the case company is seeking greater efficiency through designs and engineering solutions are transformed, for example international operations synergies and joint problem solving. simplified or updated with new technologies, to maintain tech- Global business groups coordinated its engineering activities for nology leadership and at the same time to offer competitive prices efficiency improvement. These groups are fully responsible for for emerging markets. defining operations targets, monitoring costs and investment, coordinating production, developing business strategy, managing  Process adaptability (adopting adaptive processes through intellectual property, licensing agreement, and supply chain man- close engagement with customers) agement. Global engineering activities have been brought together with cross-company standards and common working procedures. Concepts relevant to adaptive working approaches receive 14% This allows engineers to share the same rigorous standards, frequency. Case E has to cope with changing customer needs and accountability and good engineering solutions worldwide. Com- uncertainties in the aerospace industry. The case company has moditised/modular solutions are developed and adopted across all developed a full range of adaptive and pro-active working ap- the business groups. A committee formed by high-level experts proaches for different kinds of business environments, e.g. on-site from the whole company takes the responsibility of identifying work, package work, integrated solutions, design and build, stra- engineering processes that should be developed as core and com- tegic relationships, dedicated and collocated teams, joint teams, or mon across main business groups. partnerships. These engineering processes are often based on close engagement and interaction with customers; supported by  Process novelty (generating novel engineering solutions rigorous risk management techniques, and facilitated by smart through value co-creation) modelling and simulation tools. Simple performance metrics are used to assess current operations and to predict future trends. Local Concepts relevant to technology exploitation and quickly decision-making is encouraged with some central influence to transforming new technologies into novel engineering solutions improve local responsiveness and agility (the relevant concepts receive 11% frequency. Innovation processes in Case C focus on receive 12% frequency). In a new engineering project, particularly at value co-creation with customers by enabling engineers to identify the early stages to develop conceptual solutions, multi-skilled en- the best way to maximise the value of their expertise to customers. gineers work closely with customers, often at customer bases, to The company helps customers to design, deliver and maintain their make sure that customer requirements are well understood and strategic and complex assets, and offer through-life asset support conceptual solutions are worked out quickly and effectively. An from feasibility planning to decommission. It has a strategic vision interviewee introduced the case company's ongoing trans- to inspire trust and loyalty in customers by continuously delivering formation towards quicker and simpler decision making from the innovative solutions and excellence through close collaboration perspective of engineering supply chains: “Safety and risks are and long-term relations. Value co-creation with customers be- important for us. Our old supplier selection approach was complex, comes a core value and provides a cultural context in which engi- sophisticated, robust, but slow. We had to say no to good opportunities neers work (the relevant concepts receive 10% frequency). Some when we were waiting for a decision to be made. We are now moving long-term customer relationships are on a global scale, e.g. the toward a ‘fit-for-purpose’ approach. It is quicker and simpler … We company signed a global offshore agreement with a key customer don't have to make any compromise in safety or risks because this [‘fit- in 2008. A series of large scale engineering projects have been for-purpose’] approach is supported by a large database and deep developed and implemented under this agreement and a lot of engineering knowledge. Computers will do complex analysis auto- them are original, revolutionary and first-of-a-kind work. This matically. ” provides an effective way for the customer to quickly benefit from In a different context, network coordination in Case F has to new technologies or novel concepts of operations. cope with an increasing demand for localisation and customisation 88 Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 driven by the rapid growth of emerging or new markets. Regular Manufacturing IT allows materials to move between workstations, technology and knowledge transfer becomes a normal part of day- factories and suppliers continuously and quickly. Industrial IT in- to-day operations within the company's engineering network (the creases the standardisation of products as basic building blocks for relevant concepts receive 10% frequency). Local business groups larger solutions. eBusiness solutions provide an efficient online coordinate engineering activities. Each group, often co-located with system for customers and suppliers. Commonality models and an engineering centre, has its own technology manager, quality modular engineering solutions allow its engineers to capture and manager, operations manager, marketing manager and business reuse high value engineering knowledge across the network by manager. These managers, most of whom are engineers, are effectively facilitating co-operation between engineers around the responsible for the business group's overall strategies. These en- world. Such proactive measures contributed to cost savings over gineering centres are responsible for local business development. US$80 million in 2013, about one third from operational excellence With a strong brand name and a wide range of global leading en- initiatives and two thirds from global engineering value chain gineering expertise, these centres can provide services for high optimisation. voltage power systems installed by different makers or even by its Network capabilities for knowledge reuse focus on various as- competitors with market prices. Group managers review the per- pects for different kinds of engineering activities although some formance of these local centres quarterly. Proposals from local generic documentation and project review tools have been centres will quickly go through an efficient review and decision commonly adopted by the companies. Research and technology making process based on a check list of key information. This allows focused engineering activities support knowledge reuse via engineers working closely with customers to improve local informal networking and social events. For example, dedicated responsiveness and operations flexibility. budgets for social events would be secured even in financial con- strained situations, and teams of engineers would travel to different 4.3. Capability elements around network learning countries and stay there for months (and sometimes for years) to apply research outputs in frontline operations. Design and devel- Another core theme for the companies was collective learning opment focused engineering activities tend to adopt knowledge and knowledge management (receiving 30.4% of mentions). Three based engineering tools, i.e. engineers can combine and choose sub-themes emerged underlying the broad theme of network from sub-packages or modules to resolve their problems rather learning: (i) knowledge reuse; (ii) knowledge creation; and (iii) than doing everything from the scratch. Engineering knowledge digital learning. has been reused in the sense of packaging these solutions and providing step-by-step guides to use them. Maintenance and sup-  Knowledge Reuse (establishing effective mechanisms for port focused activities rely on well-developed standards and knowledge reuse) continuous improvement platforms for knowledge reuse. In addi- tion to refining company-wide standards, the companies are active Effective mechanisms for good practice sharing and reuse sup- in influencing industrial/international standards. An extreme port network learning across regions and business areas and avoid example was that engineers sometimes had to support engineering repeating the similar work (the relevant concepts receive 15% fre- systems installed in decades ago when the technologies and de- quency). A chief engineer of Case A articulated the importance of mands were very different from the current operations context. knowledge reuse in his company e “The success of our company is Standards helped engineers to relearn critical engineering knowl- determined by how good we are in reusing high value engineering edge and bring their solutions update to date. knowledge within our company and with our clients. A simple way [to achieve this] is to have large groups of junior associates to support  Knowledge creation (providing an eco-system for knowledge senior engineers. Junior colleagues work with clients closely, and se- creation) nior engineers will get involved only at certain critical stages for example to sign a deal, to conceptualise a solution, or to close a project An eco-system for collaborative learning with a wide range of … Roughly speaking, the ratio [of the number of junior to senior en- partners speeds up the transformation from innovative ideas/ gineers in an engineering project] is about 10 to 1 in the UK, and 20 to technologies to marketable services/solutions (the relevant con- 1 or higher in India or China”. This allows the company to capture cepts receive 12% frequency). Based on long-term relationships the knowledge of key individuals and make such valuable knowl- with key partners, Case C has developed an eco-system for edge accessible to the whole company and to be reused by multiple knowledge creation and collaborative learning with customers, projects (the relevant concepts receive 11% frequency). To facilitate contractors and independent research organisations. This provides knowledge reuse, each senior engineer has an iPad linked to a cloud an innovative working culture by encouraging creativity and di- of engineering issues and enquiries. This allows engineers with versity, learning across disciplines and businesses, and allowing a relevant experiences to provide comments or suggestions on ur- certain degree of risk taking (the relevant concepts receive 11% gent matters at any time or place, e.g. in a taxi or when they are frequency). The director of engineering capabilities explained why waiting for a train. At the same time, the company encourages its an eco-system of knowledge creation is important e “We provide engineers to reuse existing solutions to avoid time wasted the best design in advanced engineering sectors. Both our engineers repeating the similar work. A common working language, a com- and our clients know this very well. We have developed close links with mon set of engineering tools, and controlled visibility of multi- best research centres of the world to maintain a pool of global leading discipline data are vital to continual efficiency improvement of technologies and expertise … This is why we can always provide engineering services. innovative solutions for our clients.” This collaborative learning Standards are another mechanism to support knowledge reuse system contributes to a boundary-less alliance to tackle some (receiving 9% frequency). Case B has a range of well-established complex engineering challenges. The company recently completed global engineering standards and the supporting knowledge a project involving three partners who have worked together for management systems to achieve world-class operational excel- over 30 years. This project became a benchmarking example for lence, including design for manufacturing and assembly (DFMA), collaborative innovation not only in the global oil and gas industry manufacturing IT, industrial IT and eBusiness solutions. DFMA but also for other industries. In 2013, the company launched a methods are embedded in engineering tools and techniques. restructuring programme to promote collaboration with customers  Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 89 by simplifying decision-making and working across the company to are seriously considering business module innovation in big-data deliver integrated services to customers, as a senior manager environment…” explained e “our focus on our customers and our people will continue However, there is also a more reserved view about technology or … Our goal is to be a trusted partner: the supplier of choice for our its impact on engineering services, as commented by an inter- customers; the employer of choice for our people…” viewee e “I don't understand why people get so excited about these Network learning in Case D has been based upon a global things [e.g. cloud services, big-data, new IT applications, devices, etc.]. platform of knowledge creation supported by sub-systems and We use these things all the time. They are nothing new to me. They are modules for enterprise resource planning (ERP), customer rela- there to support our engineers. It is capable people that create great tionship management, and virtual engineering offices to provide an solutions for our clients and underpin our success in the past and in the open working environment for engineers to work together from future … Don't get me wrong. I am not against new technologies. I use different time zones. The engineering platform has eight replica- these things myself [pointing to his latest model iPhone on desk]. What tion sites to improve the speed and effectiveness in supporting I want to say is that people are the most valuable asset in our globally dispersed engineering activities. Customers engage with businesses.” the company through a dedicated single interface connected to the platform. This helps to speed up the process of capturing customer 4.4. A summary of the key findings needs and generating novel solutions based on modules or sub- solutions available in the company's global engineering network. Table 4 presents key insights from case analysis with the In addition, network learning may not be limited within the eco- resource-coordination-learning model of network capabilities. It system of customers, suppliers and partners in the same industry, further develops the conceptual framework (Table 1) by identifying and find inspiration in some unlikely place. Concepts relevant to critical network capability elements and indicating how these ca- cross-disciplinary learning receive 9% frequency. An interviewee pabilities have been coherently developed for effective value cre- commented: “An entrainment company [SONY Entertainment] ation in different operations contexts. Managerial implications are caught our attention in an exercise to improve customer satisfaction also suggested for GES firms seeking to cope with operational and boost innovation. It's nothing to do with power or automation challenges and opportunities in complex global service networks. engineering at all. It's to do with service design. That is the kind of thinking we need to bring in our company to drive innovation and 5. Discussion customer satisfaction”. 5.1. What can PSOM learn from GES?  Digital learning (developing digital engineering learning sys- tems and remote working tools) We have identified critical network capabilities for GES. The implications for PSOM are two folds- (i) the network capability Digital learning systems and powerful remote working tools model provides a useful theoretical lens that can effectively explain allow engineers working together continuously around the clock the evolving organisational features of PSOM in the current oper- and follow the sun (the relevant concepts receive 14% frequency). ations contexts; and (ii) the case studies suggest important stra- Network learning in Cases E has been very well supported by in- tegic decision areas to address the key research issue of managing formation and telecommunication technologies (ICT). Such digital and supporting network groups to achieve organisational objec- systems enable the company to quickly restructure its engineering tives in PSOM (Heineke, 1995). network by acquiring external engineering knowledge and inte- Firstly, this paper provides an analytical framework for OM grating them into its global network. Acquired engineering centres, scholars to understand operational challenges of PSOM in trans- which usually possess unique knowledge or expertise, will join formation towards global service networks (Brock et al., 2007; Case E's engineering network as new centres of excellence after re- Malhotra and Morris, 2009). Originality in strategic operations organising (or relocating) their resources and connecting them into consists often in making clear what was not clear before or syn- the company-wide engineering knowledge management system. thesising novel practice/new developments in a useful way, rather The new centres operate autonomously with their knowledge than in inventing a non-existent theory or concept. From this point accessible to the other centres via the central engineering portal. of view, this paper contributes to the PSOM literature in general by Concepts relevant to updating engineering knowledge network identifying critical capability areas (i.e. resources, coordination and receive 10% frequency. learning) for service networks and indicating their linkage to high- Case F has its own intranet for data and engineering knowledge level strategic priorities (e.g. efficiency, innovation or flexibility). management. This provides an effective virtual learning environ- The theoretical model helps bring together fragmented research ment. Its engineers can directly acquire data from any centres efforts around network capabilities for PSOM. For example, around the world. At the same time, the company has an engi- Heineke (1995) noticed “network models” of physicians groups that neering solution configuration platform linking together internal provide flexible healthcare options for customers; Moore and and external partners around the world. The platform is supported Birkinshaw (1998) suggested centres of excellence as a “structured by a virtual reality simulation system (i.e. a power grid system) for approach” to knowledge management in the often loose and system integrators who are treated as internal units with direct informal organisations of global services firms; Goodale et al. access to its engineering knowledge network (the relevant con- (2008) reported “network alliances” as the organisation form that cepts receive 8% frequency). It helps to create and manage engi- facilitates both entrepreneurial individuals and collaborators in neering knowledge for maximum total value for customers along PSOM; and Wagner et al. (2014) suggested that “institutional the project lifecycle. A lead engineer explained how this platform mechanisms such as networks” are necessary to grant access to works: “[on this platform] we can easily specify customer needs and external learning in professional service firms. In doing so, the restructure our supply chains to deliver new services faster than our model leads to an overall understanding of network capabilities for competitors. We don't do everything by ourselves. We work with PSOM which can more clearly articulate this research direction of suppliers to enhance our engineering capabilities. We talked about YY increasing importance and establish a solid ground for further [an IT company specialised in plant design] earlier- we can easily developments (Kusunoki et al., 1998; Choi and Hong, 2002; integrate YY's latest plant designs into our solutions for clients … We Coltman and Devinney, 2013). 90 Y. Zhang et al. / Journal of Operations Management 42-43 (2016) 80e94 Table 4 The resource-coordination-learning model of network capabilities and insights from case analysis. Network capabilities Pair 1- Cases A & B for network Pair 2- Cases C & D for network Pair 3- Cases E & F for network efficiency innovation flexibility Network Resources Resource Utilisation Technology Leadership Resource Mobility (Accessing and  Consolidating and rationalising  Maintaining technology leadership of  Mobilising resources regularly to deploying dispersed engineering resources for maximum key engineering resources and meet changing customer needs resources) utilisation leveraging key expertise worldwide  Restructuring resources  Securing complementary  Developing and retaining global strategically to cope with engineering resources through engineering leaders/experts uncertain business environments network collaboration  Investing in frontier engineering  Assembling resources swiftly to  Co-locating engineering resources technologies provide a complete engineering (physically or virtually) for effective Implication: solution communication PM nurtures and supports local Implication: Implication: champions in various engineering areas A typical engineering centre in PM The traditional partnership management of a subsidiary. An engineering service attempts to serve local customers (PM) suffers from a high degree of network develops global engineering with its own resources. An resource duplication and thus a low leaders for the whole organisation. engineering service network provides degree of utilisation. An engineering customers with the best possible service network improves resource solution by accessing and deploying utilisation through economies of scale global engineering resources. and scope across locations/regions. Network Coordination Process Commonality Process Novelty Process Adaptability (Coordinating and  Establishing common working  Generating novel engineering  Adopting adaptive working integrating network approaches in main service solutions through value co-creation through close engagement with activities) categories with customers/partners customers  Providing commoditised engineering  Quickly adopting technologies to  Encouraging simple, local solutions for businesses around the develop and improve services decision making with light world  Providing useful process guidance for central influence  Improving clarity and visibility of engineering innovation  Establishing effective processes engineering processes by adopting Implication: for technology/knowledge lean approaches PM supports innovation through ad-hoc transfer and risk management Implication: initiatives. An engineering service Implication: PM promotes informal coordination, network provides a systematic structure International coordination in PM lacking of structured processes. An to support innovation. relies on a small number of senior engineering service network provides partners. An engineering service common working approaches across the network encourages autonomous world. decision making with effective central coordination in strategic areas. Network Learning Knowledge Reuse Knowledge Creation Digital Learning (Collective learning and  Identifying good engineering  Providing an eco-system for knowl-  Developing digital engineering knowledge practices/solutions and reusing them edge creation and collaborative learning systems and remote management) across different service areas learning working tools to support  Capturing the precious knowledge of  Promoting an innovative working engineers worldwide key individuals and making it culture by encouraging creativity/  Updating engineering knowledge available worldwide diversity and pursuing perfection networks through regular  Using global standards (developed by  Encouraging cross-disciplinary mergers and acquisitions the organisation) to facilitate learning to generate novel engineer-  Using virtual reality simulation to knowledge reuse ing solutions support system integration and Implication: Implication: maximise total value for PM relies on professional bodies/societies PM in general lacks a supportive customers for knowledge reuse and sharing. An environment for creating new knowledge Implication: engineering service network develops and novel solutions. An engineering PM sometimes holds a reserved view internal mechanisms/standards for service network provides a global system toward new technologies/tools. An knowledge reuse and sharing. for knowledge creation and improving engineering service network is keen