6. CONSTRUCTION OF THE EXTENDED VALUE FRAMEWORK
6.2 Extension of the theory frame
The aim of the research was to increase knowledge about the benefits and bottle- necks of VP as well as to construct a theoretical foundation for modelling VP busi- ness value. The analysis of the case study data was firstly based on the Phenom- ena model, which is a synthesis of Theory of Technical Systems (Hubka & Eder, 1988), and the Theory of Virtual Environments and Virtual Reality (Kalawsky, 1993). The analysis of the data revealed that these theories are not sufficient to explain all aspects of VP. Therefore, additional theories and models were sought from literature. In order to proceed from identified VP features and benefits to- wards value modelling of VP, the concept of value should first be defined. There- fore, relevant value theories and models, as well as value modelling methods and approaches were studied as a starting point for expanding the theory framework. Additionally, examples of value modelling of specific domains are also topics of
interest. In the previous chapter, it was concluded that there are four main dimen- sions and four sub-categories in the value of VP:
1. Virtual reality technology
2. Product design and development (object and process) 3. Social (individual and organisation)
4. Economics and management.
Thus elements that somehow contribute to constructing the value model must be identified. The following concept map in Figure 47 illustrates how the dimensions virtual prototyping and its different enabling elements can be linked to business value, and how value theories and models help structuring the knowledge.
Especially in the case of collaborative human-machine design and human fac- tors engineering, VP benefits from the better involvement of people who have valuable knowledge about many aspects during a product lifecycle. VP holds features (such as immersive and natural user interface) that become benefits (like improved communication) when combined with a good design methodology. These benefits enable value creation via better utilization of organizational re- sources which in the end can be captured, for instance, with better quality prod- ucts and increased profit. On the other side are the elements that are prerequisites for the beneficial use of VP, namely skilled and motivated people, well-defined and tailored processes and methods, applicable tools, as well as data, information and knowledge management systems.
Now when the elements and principal concepts of value model have been rec- ognized, the literature can be analysed in order to find and select appropriate theories and models that can explain the value of VP. In order to construct a co- herent value model, links between theories and concepts will be identified and established too. The concept map of Figure 47 below illustrates which theories were selected and the relationships between them. In other words, the concept map explains methodologically how the research proceeded toward the theory framework. The selected theories and links between them, as well as relations to case study data will be discussed in the next section.
VR/VE TECHNOLOGY DIMENSION PRODUCT DESIGN AND DEVELOPMENT DIMENSION SOCIAL DIMENSION ECONOMICS AND MANAGEMENT DIMENSION Individual dimension organisational dimension INTERMEDIARY VIRTUAL PROTOTYPING Activity system VALUE Expansive learning [Engeström, 1987] happens in Disposition Theory [Olesen, 1992] Domain Theory [Andreasen, 1980] Theory of technical systems [Hubka & Eder, 1988]
Design theory [Hubka & Eder, 1988] Theory of VE and VR
[Kalawsky, 1993]
Value creation and capture [Bowman & Ambrosini, 2000]
Resource based view [Wernerfelt, 1984]
Core competence [Prahalad & Hamel,
1990] Value network [Allee, 2008] Dynamic knowledge creation [Nonaka, 1994] Knowledge based theory [Sveiby, 2001] complements Ontological dimension Epistemological dimension knowledge Virtual Prototype Prototype Artefact, medium contradiction through has Socio-technical system model PHENOMENA MODEL User interface Metaphor Value in use [Grönroos, 2008] transformation VE side related to designing to has includes includes to caused by explains is competence factor described by extends of of notion of as part part labour as
source of value skills and knowledgecreate value belongs to requires is belongs to design side Value creation mechanisms Value creation mechanisms Design object dimension Design process dimension off-spring has in creates
Figure 47. Concept map of the key theories that enable an explanation of the empirical findings with scientific concepts within the four recognized value dimen- sions of VP. The map illustrates links between the key concepts and theories of literature. The black squares are the four main dimensions. The blue squares indicate the hypothetical “Phenomena model” as a preliminary theory frame, and the yellow square is the starting point for the theory frame extension. The green square is the resulting concept of the research.
Literature about VP value is scarce. However, instead of modelling the value of VP directly, several interesting papers about modelling general information technology (IT) business value were found. Approaches and models introduced in those pa- pers seem to offer opportunity to use analogy between general IT and specific VP. In this way the theory of “Resource-Based View to Firm” was recognized as a starting point from the literature review for value modelling. The theory of the Re- source-Based View (RBV) of the Firm (Wernerfelt, 1984), (Penrose, 1959) pro- vides a theory of effective management of the firm’s resources, productive oppor- tunities, and diversification strategy (Kor & Mahoney, 2004). In the RBV theory, a firm’s resource can be defined as tangible and intangible assets (such as brand names, knowledge of technology, skilled personnel, machinery, efficient proce- dures, etc.), and they mean anything which could be thought of as a strength or weakness of a given firm. The RBV theory looks at firms in terms of their portfolio of resources rather than in terms of their portfolio of products, and gives a different perspective on strategic options.
The resource-based view is interesting for this research because it explains how companies’ resources, such as VP, contribute both to internal business value and external customer value. Furthermore, Bowman and Ambrosini (2000) intro- duced an integrative model of value creation and value capture which combines several theories. They explain finely how resource investments create new use value when using labour wisely, and how this value can be captured as exchange value from the customers. In the case of VP, it is a resource investment which can create use value for a firm in form of better utilization of the firm’s resources, like employees’ knowledge and labour. Simultaneously VP can create surplus in the form of improved product quality for a customer and add exchange value (higher purchase price) of a product or increase profit with lower price thanks to de- creased product development and production cost. However, once the purchased resource enters into the production process, it is impossible to apportion elements of its purchase price to various products (Bowman & Ambrosini, 2000). VP can be seen as this kind of resource that has great use value, but whose price cannot be apportioned to products. The innovation value chain model of Roper et al. (2008) describes interestingly how companies source knowledge through recursive pro- cesses and transform this knowledge into new products and processes.
The RBV emphasizes heterogeneous firm resource as the basis for competitive advantage. When the valuable resource is rare, it confers a temporary competitive advantage (Melville et al., 2004). For instance, VP as a rare resource which not all firms can utilize could be a competitive advantage. Companies who understand how VP must be configured for their business have a rare resource which helps to beat competitors in the market place. Gregor et al. (2006) learned that organiza- tional transformation is seen as a component of the business value resulting from IT and also a driver of changes. Transformation includes aspects such as new business processes, new skills and new organizational structures. One asset of VP is facilitating more streamlined business processes and better collaboration within modified organizational structures. Melville et al. (2004) learned that IT is generally valuable because it offers a set of potential benefits from flexibility and
quality improvement to cost reduction and productivity enhancement. However, in order to gain those potential benefits, the great complexity of synergetic combina- tions of IT and other organizational resources must be understood. VP is also a resource that has a complex synergy with other resources, both technical (data, models, tools) and organizational (skills, structures, processes, management). In their model, Thatcher and Pingry (2007) explained IT investment factors that direc- tionally impact on business value. The model assumes that IT is a commodity available to all firms, which is not necessarily the case with VP. Therefore, it may increase competitiveness as a rare resource as well.
Labour can be even unproductive and value diminishing. This means waste in Lean thinking (see Womack and Jones, 2003) terminology. The waste can mani- fest itself, for instance, as producing scrap, unnecessary rework or repair work. From the viewpoint of this research, an interesting question is how generic and unproductive labour might be transformed into more differential labour, and how VP could serve as a means for that transformation. This would be an essential factor of VP value. Bowman and Ambrosini (2000) defined that inside differential labour category there exist an entrepreneurial role whose task is directing labour with use value inputs so as to create new use values. Salvatierra-Garrido and Pasquire (2011) studied the perspective of value for Lean construction business, emphasizing the global perspective and beyond waste reduction understanding better what really contributes to customer value. In that way, VP can serve as a holistic means for simultaneously reducing waste and increasing quality, i.e. meet- ing customer needs (both internal and external customers). On the other hand, the concept of value management, see Neap and Celik (1999), should be fit for mod- elling VP value, because firstly it does not aim just to cut costs, but also the better utilization of resources. Secondly, it aims to tackle value systems that are not hard systems but soft and complex, in the same way as business organisations and value networks.
The theory of the Resource-Based View of the Firm was taken as a foundation for further elaboration and construction of VP value framework. This means that VP is studied as a resource that combines the technology and social aspects within a business organisation and value network. These aspects will be elaborat- ed in the four main dimensions of technology, product design and development, and social value, as well as business and management value. The main theories and models that are discussed in these dimensions were introduced in the litera- ture and theory sections of this thesis.