Will Innovation management and re-engineering positively affect sustainability and performance? Research in energy companies

¿Influyen positivamente la gestión de la innovación y la reingeniería en la sostenibilidad y el rendimiento? Investigación en empresas energéticas

A gestão da inovação e a reengenharia influenciam positivamente a sustentabilidade e o desempenho? Pesquisa em empresas de energia

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In innovation management, it is important to manage inventions and changes, and to assimilate them and make them understandable to organizational structures. It can be very difficult to predict the success of an innovation. Many innovations are not implemented with the idea that because the success of innovations is unpredictable or future impacts cannot be seen. Although this is troubled, businesses should not give up innovation. Because the future of businesses depends on their good use of innovation skills and capacities (Top, 2008). The ability of a business to achieve competitiveness among its competitors depends on the differences and innovations it creates in product, service and process using knowledge and developing technology. Having acknowledged that innovation has a significant impact between technology and competitive advantage, businesses follow both technology and innovations by investing in innovation and competing businesses for remain at a competitive level. The importance of reengineering for innovation can be seen whether the sustainability of enterprises can be achieved. Innovation activities must be managed well and successfully carry out change within the organization in order to be successful. Because the most important factor in the survival of businesses is the ability to innovate. In this, the impact of reengineering on innovation activities within the organization is very important. The more innovations a business has, the more competitiveness it increases its capacity to be permanent. Dynamic environmental conditions created by rapid changes in economic, technological, social and organizational areas as a result of globalization; increase competitive conditions, increase market requirements changes, causes shortening of product life cycle, raising awareness due to offering consumers the right to choose, and thus threatening the existence of businesses to change forcing. In order to respond to these challenging reasons and to be permanent, by turning the situation into opportunity, a new approach to management and reengineering emerged in the 1990s (Mische, 2017). Re-designing of business processes is one of the most popular reengineering management approches that have attracted attention in recent years in the business world. Although compared with successful and unsuccessful examples in the literature related to reengineering, it turns into an important management weapon that promises success against competitors when applied correctly and carefully is able to. In interconnected processes that can convert to multiple outputs using one or more inputs, reengineering enables competitive, creative and lucrative businesses to occur (Riyanto, Primiana and Azis, 2018). Innovation is an important factor that affects the productivity of businesses. Giving importance to innovation activities enables businesses to produce at a lower cost compared to competitors. Businesses develop new production methods, reduce costs and increase productivity, thus providing an ununderestimated advantage over competitors (Can, 2012). Innovation is a sustainable tool of growth for businesses, as well as increasing customer needs, increased media support, increased employee loyalty to the business, and the natural result of all rising income and profit margins are also quite significant benefits (Tukker et al., 2017). Within this scope, the research examines the effects of ınnovation management —IM— and re-engineering —RE— on sustainability —S— and financial and growth performance —FGP—.

Reengineering is the redesign of processes in performance criteria such as service, speed, cost and quality in the rapidly renewed world as a result of the need for change (Shen and Chou, 2010). Companies that are challenged to compete have new start-up processes by changing everything to survive and solve their problems. This is where the reengineering comes across. It is very difficult to make changes in organizations. The change can always be met with resistance. Importance is given to the concepts of redesigning and structuring processes. Reengineering is a new design project that accepts the change process as the focal point (Hammer and Champy, 2009). That is, it is a holistic reconstruction of the organizational structure, all processes and all information flow systems in order to achieve radical developments in terms of quality, cost and speed (Michela, Carlotta and Andrea, 2012). Therefore, when under the influence of a good innovation management, change may increase the probability of success in engineering. Thus, the performance of strategic and added value business processes, structures, systems and policies in the organization will increase in the performance of radical and rapid redesign takes place (Doumeingts and Browne, 2016). Reengineering is needed in order to ensure sustainability. Because in order to achieve quality, innovation and service objectives, businesses need to analyze and redesign the flow processes (Altinkemer, Ozcelik and Ozdemir, 2011). However, the contribution of management in the implementation of reengineering can be realized by ensuring the participation of employees together. The fact that the reengineering is in accordance with the business culture and adopted by the employees is the most fundamental element that brings the good. Therefore, innovation management needs to be successfully carried out within the organization, as well as flexible to enable faster adaptation in changing and developing market conditions. They should be. In order to ensure sustainability and to be successful in performance criteria, the product and service range is renewed in accordance with the demands and expectations in the market and with creativity. This, need to be reinstalled. At the same time, companies reaching the organizational structure that will provide high level quality and customer satisfaction will have achieved permanent success (Jovanoski, Malinovski and Arsenovski, 2017). The hypotheses examined and tested within this scope are:

H3: Innovation management has the positive effect on re-engineering.

H6: In the relationship between innovation management and sustainability, there is mediation variable impact of re-engineering.

H7: In the relationship between innovation management and financial and growth performance, there is mediation variable impact of re-engineering.

Sustainability is one of the most spoken and written concepts in recent years (Robertson, 2017). Social development, economic development and environmental protection themes are examined together with the concept of sustainability (Dresner, 2008). In order to be successful in sustainability, it is necessary to be innovative and creative by adapting to change. Because in order to be successful against competitors, organizations must be able to respond to customer requests and needs (Lubin and Esty, 2010). Sustainability is of great importance for implementing decision units as it means continuity in economic terms (Solow, 2019). Sustainability to use any system or ecosystem with continuity without distortion, seamless, overloading the main resources and overuse without the consumption of the system (Schaltegger and Wagner, 2011). Therefore, resources need to be used very well in innovation management and reengineering. Otherwise, sustainability can be quite difficult to achieve. Resources must be evaluated continuously for the continuity of activities and a sustainable structure (Gibson, Hassan and Tansey, 2013). In addition, planning, organizing, execution and auditing within the framework of innovation and change taking into account the environmental, social and economic impacts of activities in achieving sustainability activities must be carried out (Linnenluecke and Griffiths, 2010). Until the 20th century, businesses use irresponsible resources and environmental impact can adversely affect the economic performance of businesses can be said not considered (Gibson, Hassan and Tansey, 2013). In recent years, many large-scale businesses, both in-house and outside the organization, have been seen to attach importance to sustainable activities (Clayton and Radcliffe, 2018). Businesses need to fulfill their responsibilities towards consumers and the environment, as well as sustainable human resources towards their employees in a sustainable manner (Garvare and Johansson, 2010). Because in order for innovation and change to be successful, human resources are needed. Performing sustainable models in innovative and creative management, performance-oriented organizations have now made sustainability a corporate understanding and incorporated into their vision (Clayton and Radcliffe, 2018). Within this scope, the impact of innovation management and reengineering on sustainability is examined. The hypotheses examined and tested within this scope are:

H1: Innovation management has the positive effect on sustainability.

H4: Re-engineering has the positive effect on sustainability.

Surveys were collected and analyzed from 680 white-collar employees working in energy companies. Since the scale created is also sent to foreign employees, the form has been prepared in both Turkish and English to increase the comprehensiveness of its articles. 723 returns were received from submitted surveys, but 680 scales were included in the study due to missing markings. This sample size of 680 units is a size that can be seen enough and therefore analyzes have been made. As a result of preliminary analysis, there was no question to be removed. IM factor 15, S factor 10, FGP factor 11 and RE factor 10, were measured with statements. The survey link was left active for 30 days without restrictions on the duration of the survey, and the participants were relieved in giving answers by providing anonymity. It is aimed to prevent Common Method Variance problem that may arise through these. IBM SPSS 25 program from calculating descriptive statistics in demographic dimensions and other factors dimensions of the study, LISREL package program for validating factor analysis and hypotheses SPSS PROCESS V3.4 plugin was used for testing all. In the measurement of the dimensions of the model consisting of four factors (IM, S, FGP, RE), a 5-point Likert Scale ranging from “Absolutely Disagree” to “Absolutely Agree” was made. Innovation Management scale, Küsbeci (2013) and Mazzarol, Reboud and Volery (2010) has been benefited from the work. The work of Akbaba (2016) was benefited on the scale of the reengineering. The work of Çankaya and Sezen (2015) was benefited on the Sustainability scale. Antoncic and Hisrich (2001) and Zahra, Neubaum and El–Hagrassey (2002) on the Financial and Growth Performance scale.

Based on literature review, data were analyzed to determine the relationship between statistical concepts due to a quantitative approach. They were used arguments to judge the impact on the dependent variable in a quantitative research test (Thomas, Nelson and Silverman, 2015).

Figure 1.
Figure 1. Research Model.
Source: author own elaboration.

The accuracy of the model given in Figure 1 between IM, S, FGP and RE is investigated. The created model is subjected to analysis. Direct effect of IM variable on S (H1), FGP (H2), and RE (H3), direct effect of RE variable on S (H4) and FGP (H5), and also on the relationship between IM and S (H6). The mediator effect on the relationship between FGP (H7) wasanalyzed. The IM variable was an argument for H1, H2, and H3 hypotheses, while it created the dependent variables S, FGP, and RE. Similarly, in H4 and H5 hypotheses, RE is independent, while S and FGP dependent variables are shown. H1-H5 hypotheses were reported by analysis by PROCESS V3.4 with simple linear regression with a dependent argument. The mediator effect analysis of RE for H6 and H7 hypotheses were also made and reported with PROCESS V3.4 plugin.

At the beginning of the study, it is necessary to reveal the extent to which the data supports the model. For this purpose, Validating Factor Analysis —CFA— in LISREL program, the results of the tests for the loads of expressions according to the factors and the significance level of 0.05 expressions for the factors in the meaningfulness level of expressions in Table 1 is given.

Factor analysis collects interrelated data under the same set or factor by looking at the correlation relations between the data and is examined in two groups: descriptive and verifiative. It’s called “factor.” The creation of these factors is the main function of factor analysis and the correlations between expressions/substances are applied in this factorization. Expressions that do not correlate with other expressions or correlate very high with one or more expressions are removed from the analysis (Sönmez Çakır, 2020). Before the data is subjected to factor analysis, it is necessary to determine whether the correlation matrix is a unit matrix and whether the data set is suitable for Factor analysis. To do this, it is necessary to first look at the Kaiser Meyer Olkin -KMO- value of the data and the Bartlett Test result. The KMO value above 0.60 and the Bartlett test result than 0.05 indicates that the data is suitable for factor analysis and the correlation matrix is not a unit matrix. During the analysis, KMO:0.0923 and Bartlett test result. It was found to be 0.000 and it was decided that the data was appropriate for factor analysis. CFA is one of the first factor structure stablished for the model is provided by the data, CFA was made and the results obtained are presented

Table 1. CFA results
Cfa results

.
Source: author own elaboration

Factor loads indicate to what extent expressions are associated with the factors. The factor loads of all expressions are above 0.60, and these values indicate that the factors and expressions are appropriate. In the meaningfulness test of the relations of the factors with expressions, all p value values were found to be 0.000. All expressions have an important relationship with the factors of 0.05 significance. Some descriptive statistics and reliability values of the factors that have been formed are given in Table 2. Conformity values obtained from the model generated as a result of the CFA (RMSEA: 0.056; NFI: 0.95; NNFI: 0.94; CFI: 0.95; GFI: 0.93; IFI: 0.91). RMSEA value is 0≤RMSEA <0.10; NFI value ≥0.90; NNFI value değ0.90; CFI value is 0 ≤CFI <0.10; GFI value is 0 ≤GFI <0.10; IFI value değ0.90 indicates that the model has good fit (Erkorkmaz et al., 2013; Sonmez Cakir and Adiguzel, 2020).

Table 2. Descriptive Statistics, Correlations and Reliability Statistics
Descriptive Statistics, Correlations and Reliability Statistics

Source: author own elaborationNote: *Bartlett test’ Sig<0.05; **Correlation is significant at the 0.01 level; the expressions in square brackets are the Cronbach Alpha values of the factors. .

In Table 2, descriptive statistical values for factors and KMO values are given as a single factor within each factor. The Bartlett test results for all factors are less than 0.05 and are shown with a single star value above this KMO value. The mean of the IM variable obtained by averaging IM expressions is 3.95 (0.85 standard deviation), the mean of the S variable is 4.09 (0.72 standard deviation), the mean of the FGP variable is 4.23 (0.64 standard deviation) and RE variables were calculated as 4.06 (0.67 standard deviation). The correlation of variables with each other was achieved significantly at 0.01 importance level for all variables. Double asterisks at the end of the correlation coefficients indicate that correlations are important at 0.01. The expressions in square brackets are the Cronbach Alpha values of the factors. Since all Cronbach Alpha values are above 0.85, the scale has sufficient reliability. Average Variance Extracted —AVE— values are a convergent validity value calculated from factor loads. The Composite Reliability —CR— value is also calculated from factor loads. AVE values must be 0.50, CR values above 0.70, while AVE values of the same factors must be smaller than their CR values. All AVE values calculated using factor loads are above 0.50, all CR values are above 0.70, and AVE values for all factors are less than their CR values. This four-dimensional structure has convergent validity and composite reliability values.

After these stages, the result is obtained that the data is suitable for the model. PROCESS V3.4 with SPSS was used to test hypotheses and the following results were obtained.

Table 3. H1-H5 hypothesis results
H1-H5 hypothesis results

Source: author own elaboration.

Simple linear regression was performed for H1- H5 hypotheses. The relations between them have already been revealed with the correlation process, but these coefficients do not give the direction of the relationship and model coefficients. For this reason, models are created with regression process. Table 3 provides dependent and arguments for each hypothesis, Standard Beta, Adjusted R Square, F value, and Sig. values calculated for the established model. R Square values indicate how much the argument describes the change in the dependent variable. F value values give results related to the significance of the model and Sig. Their values indicate whether the coefficients of the model are meaningful. Sig for all hypotheses. Both F value values indicate that models are meaningful and hypotheses are supported. H6 and H7 hypotheses claim the effect of mediation variable. The results obtained for H6 are given in Table 4.

Table 4. Mediator effect results for H6 hypothesis
Mediator effect results for H6 hypothesis

Source: author own elaboration.

A mediator test developed by Hayes (2009) and mediator effect analysis was performed in Table 4. In this test, there are no p value values in mediator effect analysis. The mediator effect is interpreted based on the BootLLCI and BootULCI values. If there is no zero value between BootLLCI and BootULCI values mentioned in a model, the mediator effect is mentioned in the relationship. There is no zero number between BootLLCI (0.2390) and BootULCI (0.3579) values under the “Completely standardized indirect effect(s) of IM on S” line in the table (one of the values must be positive to have a zero value in between). H6 was therefore accepted and RE was considered to be mediator variable in the relationship between IM and S. Also in the table “Outcome Variable: RE” is given the effect of the IM variable on RE. In this process, it can be seen again that the H3 hypothesis that IM is dependent on independent RE (p value: 0.000<0.05). In Table 4, “Outcome Variable: In the S” line, the model results were given if the IM and RE variables are independent, and the S variable is dependent, and the presence of the effect is accepted (p value: 0.000<0.05). The results obtained for H7 are given in Table 5.

Table 5. Mediator effect results for H7 hypothesis
Mediator effect results for H7 hypothesis

Source: author own elaboration

There is no zero number between BootLLCI (0.2288) and BootULCI (0.3447) values under the “Completely standardized indirect effect (s) of IM on S” line in the table. H7 was therefore accepted and RE was considered to be mediator variable in the relationship between IM and S. Also in the table “Outcome Variable: RE” is given the effect of the IM variable on RE. The results here are the same as the previous table. In Table 4, “Outcome Variable: In the “FGP” line, the model results were given if the IM and RE variables are independent, and the FGP variable is dependent, and the presence of the effect is accepted (p value: 0.000<0.05).

It can be noted that the vast majority of businesses make commercial innovations based on competition and realize at least one of the types of innovation. However, discussions continue on how innovations should be managed or managed. Because many companies that fail in innovation management are wiped out of the market where they are. For this reason, almost all businesses need to innovate and undertake a significant amount of innovation in the field of innovation. Businesses develop new organizations can lead to the emergence of other innovations as well as an innovative product and process that can uncover innovations can be said that they are trying to build the organizational structure. According to Damanpour, Walker and Avellaneda (2009), the effect of innovation type on performance was insufficient to explain these relationships. For this reason, Damanpour, Walker and Avellaneda (2009) examined the types of innovation as integrated and examined the performance effect as a whole, not as a single period. So the importance of managing innovation depends on how it positively affects performance. But one should not forget the impact of change in innovation management. American management expert Hammer introduced the concept of reengineering in 1990 for the first time. Hammer and Stanton (1995) are literally separated from the past of reengineering as one of the important milestone in the history of mankind in his books. If innovation and change are achieved, sustainability of the business can also be possible. The research results are also in this direction. It can be argued that innovation management and reengineering have a positive impact on sustainability and performance. From here, reengineering can be expressed as “reconstruction” and interpreted by many management scientists as a “white page” opening and starting everything again (Aktan, 2003). From this point of view, participation of human resources with high creativity and competent in terms of technical knowledge and skills should be ensured. However, new organization, or in other words, reorganization is a long process, and the loss of time in this process is one of the factors that badly affect the performance of businesses. For this reason, organizations that are conscious of acting planned and programmed are more successful than their competitors.

Factors such as the spread of companies around the world with globalization, developments in trade and technology, activities in production-service areas and becoming more conscious of consumers changing the structure of the market. Businesses develop a variety of methods for product or service to increase market share and superiority in an evolving competitive environment. Businesses need to find more innovative methods as well as traditional practices for competitive advantage. Due to many factors such as rapid response to market demands, quality of products and services, development of growth activities, producing products and services according to customers’ requests businesses need to pay attention to their implementation of innovation. The results of the research are in this direction. It can be explained that innovation management has a positive effect on sustainability in the event of successful success. Sustainability, which is one of the three objectives of businesses, is important for the ability to continue its activities. In order to ensure that innovative and creative activities must be managed correctly. However, it also has a positive effect on performance. Success in innovation management can increase revenues both financially and provide growth. Firms must keep their organization and capital structures strong in order to survive in an increasingly competitive environment. Successes created by innovative activities developed in firms can not be long lasting if they can be easily imitated by competing companies. For this purpose, reengineering needs to be carried out regularly in a dynamic structure. The results of the research explain that reengineering has a positive impact on both independent and mediation effect. Innovation in a competitive environment is a continuing activity. For this reason, sustainability can not be achieved through a single innovation implemented. Also, innovation in the product or service must be in integrity with all the activities of the enterprise. The success of firms by competing with competitors in the market depends on the acquisition of strategic methods. Within the scope of reengineering systems such as production, management, marketing, finance, accounting, computing and R&D to enable businesses to realize their goals and objectives and increase their profitability need to think about it. The importance of these functions in the success of strategic objectives is accepted by everyone, but they are not able to develop continuously with the same management idea as the business of reengineering must ensure the change in all functions without disturbing the structure. In the event that reengineering can be successfully realized, both contribute to the success of innovation management, ensuring sustainability and growth and financial performance are positive is affected in the direction. At the same time, in innovation management, businesses must adapt to technological changes in order to ensure the continuity of their competitive attitudes. For this reason, it should be adopted that raising the quality of working individuals will be reflected in business quality. From top management in enterprises to staff working at the lowest level, they need to adopt the understanding that the next process is customer and customer satisfaction is important above all. Increasing skills, knowledge, skills and experience levels in human resources for the success of the business, providing the tools and equipment needed in the processes without delay is important to provide.