Development of a multi-item Operational Excellence scale: Exploratory and confirmatory factor analysis

Abstract

PurposeConsidering the relevance of operational excellence as a business strategy, organizations are striving to improve themselves by adopting best practices and universally accepted principles through the process of continuous improvement, and these principles should be embedded in the culture of an organization. Organizations pursue to align themselves by continuously improving their processes by adopting scientifically proven techniques and cultural transformation throughout the organization. However, there is a lack of scientific instruments for the assessment of operational excellence. The objective of this study is to develop a scale for the assessment of practices of operational excellence principles in the organizations. Further reliability and validity of the developed scale are measured by testing the relationship between Human Resource Practices (HRP) and Operational Excellence (OE).Design/methodology/approachThis study comprises quantitative design through exploratory and confirmatory studies and also includes qualitative analysis to develop a scale for the assessment of Operational Excellence (OE). Interviews from industry experts have been conducted to identify the major components for which organizations are striving for OE. Previous literature and excellence models, especially principles of the Shingo Operational Excellence Model (SOEM), have been reviewed and considered to finalize the scale items. Data were collected in two stages from both Telecommunication subsectors (Cellular Mobile Operators and Fixed Local Loop Operators) of Pakistan through the cross-sectional survey. In the first stage, exploratory factor analysis (EFA) was performed on the sample of 611 respondents from both Cellular Mobile and Fixed Local Loop operators of Pakistan. In the second stage, confirmatory factor analysis (CFA) was performed on the sample of 423 respondents from the Fixed local loop operators. EFA was conducted by using SPSS version 23 to finalize the OE scale, and for confirmatory factor analysis, PLS-SEM using Smart PLS was used to confirm the reliability and validity of the OE Scale.FindingsThe results of EFA reveal that OE is a multidimensional construct with three dimensions and 23 items. The dimensions of the developed OE Scale explored in this study are cultural enablers (CE), continuous process improvement (CPI) and enterprise alignment (EA). The confirmatory factor analysis of OE confirmed the scale dimensionality, reliability and validity along with the hypothesis testing to measure the impact of antecedent variable HRP on OE.Research limitations/implicationsOrganizations pursue to improve and align their operational processes but usually unable to confirm the implementation of their desired objectives. Based on the developed OE scale, managers may assess the implementation of OE principles in their organizations. This research has been conducted in the telecommunication sector of Pakistan only, and the developed instrument needs to be further tested in other organizations.Practical implicationsThe instrument developed in this study will help both researchers and practitioners to assess the principles of operational excellence in their organizations and enable them to design the strategies for improving organizational performance.Social implicationsThe results of this study will create awareness about the principles of operational excellence. The developed OE instrument will assist in identifying the gaps in organizational norms and values from the perspective of paying respect to every individual inside and outside the organization. OE instrument will be further helpful in the identification and assurance of health, safety, protection of the environment and community issues.Originality/valueThis study provides a reliable and validated scale for the scientific area of operation management and helps managers with the assessment of operational excellence in their organizations. This newly developed scale is also valid to test and use in different studies and industries by researchers and practitioners.