Design thinking has been largely acknowledged as a technical advancement in business circles in terms of technology, innovation, creativity, and flexibility. Design techniques are becoming more and more popular among organizational executives as a cure-all for uncertainty and upheaval, so it is important to take environmental dynamism into account. However, with few exceptions, design thinking studies are most entrenched in considering various organization factors rather than environmental and control systems. The purpose of the present article is to shed insights into the relationship between design thinking and management control systems under the condition of a dynamic setting.Moreover, the article also presents design thinking as a strategic innovation concept that links to and works to achieve sustainable competitive advantage. Further, we develop the framework that hypothesized design thinking relationship to diagnostic and interactive control systems (ICSs) in the domain of environmental dynamism and competitive advantage. A survey was conducted on research and development intensive firms varying from manufacturing to service. The results of this article revealed that design thinking is strongly linked with ICSs and sustainable competitive advantage. The present article suggests an imperative way toward integration of the concept of design thinking in businesses while considering environmental factors, given the growing scholarly interest in both design thinking and management control systems. The article also offers fruitful research directions and analyzes the ramifications of such directions for theory and practice.
Trang 1Design Thinking Framework Toward Management Control System in Environmental Dynamism: An
Innovation Perspective Pratima Verma, Vimal Kumar , Tugrul Daim , Senior Member, IEEE, and Nagendra Kumar Sharma
Abstract—Design thinking has been largely acknowledged as a
technical advancement in business circles in terms of technology,
innovation, creativity, and flexibility Design techniques are
becom-ing more and more popular among organizational executives as a
cure-all for uncertainty and upheaval, so it is important to take
environmental dynamism into account However, with few
excep-tions, design thinking studies are most entrenched in considering
various organization factors rather than environmental and control
systems The purpose of the present article is to shed insights
into the relationship between design thinking and management
control systems under the condition of a dynamic setting Moreover,
the article also presents design thinking as a strategic innovation
concept that links to and works to achieve sustainable competitive
advantage Further, we develop the framework that hypothesized
design thinking relationship to diagnostic and interactive control
systems (ICSs) in the domain of environmental dynamism and
competitive advantage A survey was conducted on research and
development intensive firms varying from manufacturing to
ser-vice The results of this article revealed that design thinking is
strongly linked with ICSs and sustainable competitive advantage.
The present article suggests an imperative way toward integration
of the concept of design thinking in businesses while considering
environmental factors, given the growing scholarly interest in both
design thinking and management control systems The article also
offers fruitful research directions and analyzes the ramifications of
such directions for theory and practice.
Index Terms—Competitive advantage, design, design thinking,
environmental dynamism, innovation, management control
system.
I INTRODUCTION
IN SEVERAL professions, “Design Thinking” is affiliated
as an enticing novel paradigm for addressing issues, most
Manuscript received 10 October 2022; revised 28 December 2022; accepted
18 January 2023 Date of publication 13 February 2023; date of current version
16 February 2024 Review of this manuscript was arranged by Department Editor
J Luo (Corresponding author: Tugrul Daim.)
Pratima Verma is with the Department of Strategic Management,
In-dian Institute of Management Kozhikode, Kozhikode 673570, India (e-mail:
way2pratima@gmail.com).
Vimal Kumar is with the Department of Information Management, Chaoyang
University of Technology, Taichung 41349, Taiwan (e-mail: vimaljss91@
gmail.com).
Tugrul Daim is with the Portland State University, Portland, OR 97201 USA,
and also with the Chaoyang University of Technology, Taichung 41349, Taiwan
(e-mail: tugrul.u.daim@pdx.edu).
Nagendra Kumar Sharma is with the Department of Management Studies,
Graphic Era (Deemed to be University), Dehradun 248002, India (e-mail:
nagendrasharmag@gmail.com).
Color versions of one or more figures in this article are available at
https://doi.org/10.1109/TEM.2023.3238665.
Digital Object Identifier 10.1109/TEM.2023.3238665
significant Information Technology (IT) [11],[18],[135]and Business[88] The business has entered a new period of intense competition (hypercompetition) with strong and ruthless rivalry
[34] Human-centered innovation is achieved through design thinking, which also maintains technological and economic viability, and market leadership [4],[86],[103],[108],[113] Design thinking is now acknowledged to be a mode of thinking that results in evolution, innovation [36], and transformation
[132], as well as new ways of pursuing and running a business
[121] Its theory aids in exploring the creative design process and
it is also associated with psychology[30] This idea was first de-veloped in engineering to help engineering construction become more embedded, but business managers are now embracing it as
a sympathetic method to comprehend the competitive landscape
[69] In the view of Zapata-Roldan and Sheikh[132],[36], and Robbins and Fu[108], design thinking is related to new product development that has become valuable to a firm’s strategy and product success Moreover, it is an organizational capability that, since it fosters cooperation and the growth of a more user-centered perspective, can help an organization increase its capacity for innovation[79],[36]
Existing research on design thinking has been found in several areas’ information management [8], knowledge management
[93],[113], technology management[87], project management
[123], and business management[88],[89]; and identified sev-eral antecedents, such as innovation [81], [127], innovation performance[45], design communication[136], strategy[108],
[132], competitive advantage[17],[77], new product develop-ment, social product development[41],[80], and customer needs
[66] However, recognizing the uncertainty and success level of the design thinking implementation phenomenon cannot be fully anticipated in advance, especially in a technological turbulence environment[81] In line with this, Hanvanich et al.[55]and Yuan et al.[131] also suggested that the degree of dynamism
of changes in the environment may influence a firm’s ability to adapt its resources to new requirements
Hence, the “environment perspective” is important for the current study because design thinking view as a dynamic ca-pability [80],[85] that is also context-dependent[74], [137] Environmental dynamism is described as the frequency, mag-nitude, and general conditions of change in the environment
[131] Environmental dynamism increases the relevance of ex-ternal knowledge[13] Additionally, it has been noted that firms are employing design approaches more frequently to improve their research and development (R&D) management innovation process as well as a potential panacea during times of uncer-tainty and disruption[108] Design capability and flexibility are valuable for innovation in conditions of market or technological
0018-9391 © 2023 IEEE Personal use is permitted, but republication/redistribution requires IEEE permission.
See https://www.ieee.org/publications/rights/index.html for more information.
Trang 2turbulence in the environment [81] These studies (e.g.,[13],
[81], and [108]) have drawn attention to environmental
dy-namism’s relevance for design thinking None of the studies
considered environmental dynamism with respect to design
thinking The information mentioned above leads to a research
gap regarding the consideration of environmental dynamism
On top of this, Nguyen et al.[96]pointed out the role of design
thinking analytical based system in improving the management
control system The article also considered a management
con-trol system based on the theoretical and conceptual clarifications
of environmental dynamism presented above In the recent past,
there is only one study that considered the management control
system with respect to design thinking analytical systems in
the baking industry[96] However, to date, understanding how
management control systems relate to design thinking and how
it affects design thinking is insufficient or unexplored in the
dynamic setting This not only leaves a research gap but also may
confuse managers into adopting design thinking according to the
environment To fill the above research gaps, the first goal of the
present article is to test the relationship between design thinking
and management control system Moreover, the second goal of
the article also explores the environmental dynamism role and its
influence on design thinking and management control system
The capability of design thinking creates a competitive
ad-vantage in a dynamic setting For decades, one of the most
highly lauded and debated subjects in business management has
been the creation of long-term competitive advantage Many
ways to achieve competitive advantage[109], which vary from
professional branding to planning distribution networks
Orga-nizations highly emphasize innovation because it is one of the
ways to achieve sustainable competitive advantage In line with
this, design thinking is one of the ways to pursue innovation
[86],[108],[113] Design thinking framework helps to create
social product development that offers a route to a competitive
edge[41] As per the insights from the resource-based view, if a
company has strategic flexibility, it can preserve its competitive
edge in a changing environment[65] The article also identified
the relationship between sustainable competitive advantage and
design thinking This article attempts to fill these gaps in prior
research in terms of environmental dynamism, management
control system, and competitive advantage by addressing the
following research questions:
RQ1: How design thinking is related to management control systems
and competitive advantage?
RQ2: How does environmental dynamism influence design thinking
and control systems relationships?
In environment dynamism consideration, the article is
particu-larly interested in the stability and uncertainty components of the
environment Organizations mainly focus on two management
control systems that are interactive control systems (ICSs) and
diagnostic control systems (DCSs), consequently, the article
considered the same We perform survey research with
R&D-intensive companies to address these research questions Data
were collected through the online survey of the senior executive
since the time was pandemic, and analyzed using the partial
least square (PLS) method The contributions of this article are
threefold First, this article contributes to the design thinking
literature by advancing current knowledge of control systems
It also provides empirical evidence in support of environment
dynamism’s effects on the relationship between the management
control system and design thinking Finally, building a com-petitive advantage can be accomplished by utilizing the design thinking phenomena Design thinking is often discussed in the literature in relation to engineering, sustainability research, and architectural perspectives; however, the current article will be engineering-management-focused, emphasizing design as a cre-ative and strategic activity with an emphasis on environmental dynamism
The rest of this article is divided into the following sections The relevant literature on design thinking and management control system, environmental dynamism, and competitive ad-vantage are presented in SectionII SectionIII illustrates the research methodology adopted for carrying out the analysis Sec-tionIVgives the study’s data analysis and results In SectionV, discussion, findings, and contributions to the study were reported followed by the conclusions with limitations and scope of the future opportunities in SectionVI
II THEORETICALBACKGROUND ANDHYPOTHESES
A Design Thinking and Management Control System: A Strategic and Innovation Perspective
Design thinking and creativity and innovation: Design
think-ing is a relatively new concept in comparison to creativity and innovation, but all these three concepts are inextricably linked
to each other Creativity is essential to human intelligence[54] Creativity and newness define the innovation process and are thus highly valued in industry and society[32],[61] Innovation
is the sense of an idea, activity, or object as being novel by
a person or other unit of adoption The innovation aims to create new products, services, and systems, new demands, and new markets[61] Moreover, innovation enables a business to adapt to changes in markets, technology, and competition[3]
In continuation to innovation and creativity, design thinking
is a way to connect it to human- or user-centered innovation, creative problem-solving, experimentation, and iteration[17] In the quest for innovation, design thinking prioritizes human and creative processes, and it has the ability to “release” the “creative confidence” required for the invention[101] Design thinking,
an approach to creativity and innovation based on designers’ activities, has gained acceptance in the innovation management debate[7] The human-centered innovation process emphasizes observation, cooperation, quick learning, idea visualization, rapid concept prototyping, and concurrent business analysis known as “design thinking,” which has an impact on both inno-vation and strategy[26],[104] Explicitly, from the innovation perspective, design thinking also connects with various levels
of innovation viz frugal innovation [127], open innovation
[18], accelerated innovation[81], and disruptive innovation[25] According to[66], traditional design thinking methods start with
an innovation challenge; consequently, it is also considered a methodology and a real-world problem-solving approach It is mainly associated with thinking, which can be seen as a mental model that is linked with value innovation and value generation
in an organization[17],[73],[121] Design thinking helps to improve the organization’s agility, which helps in rapid response, following continuous change and analyzing the environment
[27] It is also viewed from a different perspective as many authors considered it an innovative approach[26],[95],[104],
[124], as a methodology for solving problems[1],[14],[50],
[110], as skills and capabilities[24],[106], and as a strategy[37],
Trang 3[69],[77],[94],[116],[124] To bring greater value to the market
and accomplish business or mission-related goals, effectively
managed design or design management can offer a strategic
alternative[132] When design thinking is applied in a company,
it becomes a regular practice that businesses and workers adhere
to As a result, it is similar to routine coordination among staff
that is followed to solve problems, develop new products, and
enhance productivity Design approaches can help engineers,
sales staff, internal services, and management become effective
in their work[12]
Management control systems are a notable function within an
organization It is an intention to motivate managers by
control-ling and enabcontrol-ling devices[138], and by rewarding and promoting
people according to certain criteria to ensure that organizational
objectives are accomplished[33] The management control
sys-tem examines the configuration of controls in design thinking,
including rules, procedures, routines, methods, and practices
that provide information for decision-making[122] A collection
of formal and informal mechanisms that help the management
guide the organization toward its objectives can be referred to as
the control system[140].[138],[139]identified two main types
of control systems, i.e., diagnostic and interactive Diagnostic
controls are more “conventional” types of control that use a
lim-ited number of vital performance factors or KPIs that top
man-agement believes are essential for achieving the predetermined
targets Decision-makers and managers who employ ICSs, and
formal information tools, to talk about strategic uncertainty,
promote conversation, and regularly and directly participate in
the decision-making of subordinates [139],[138] There is a
strong relationship between the management control system
and strategy implementation [70], [72], [140], [141] As we
already mentioned design thinking is also viewed as a strategy
Design thinking has a strong relationship with strategic thinking
which is also a strategic phenomenon[100] Additionally, when
strategy and innovation are combined with design principles, the
success rate for innovation greatly increases Design thinking
has several applications and advantages that may be applied
to both strategies[132]and product development [36],[108]
The ICS will similarly establish tomorrow’s strategy with the
primary objective of promoting the development of learning
organizations and serving as a reminder to the management of
strategic uncertainty manifested as issues or opportunities[49]
In business, design thinking is also a method of turning strategy
into reality[59] It is essential for gaining a competitive
advan-tage since it directs the organization’s strategy toward goods that
are more valuable than competing options[69] Of its impact on
the perceived formalization of coordination procedures, the idea
of strategy and innovation is the common thread connecting
de-sign thinking and ICSs as a type of management control system
[94] For the design thinking process, the foremost requirement
is to genuinely engage employees or continuously employee
engagement[46], in a similar way interactive use of a control
system needs an involvement process[47],[142],[143] From
the above point of view, it makes sense that design thinking and
ICSs are strongly associated In the next section, we will discuss
the concept of environmental dynamism or environment and its
influence on the control system and design thinking
B Environmental Dynamism
Environmental dynamism is a popular concept in
organiza-tional theory and strategic management literature[92] Strategic
management research critically considered the environmental factor because an organization makes changes according to the external or internal environment/situation Environmental dynamism refers to the rate of change, frequency and amplitude
of change in the environment, and the level of instability of the environment in which organizations operate[131],[144] In other words, the degree of instability or turbulence in the market and industrial circumstances, as well as more general techno-logical, economic, social, and political influences, is referred
to as environmental dynamism As a result of environmental dynamism, there have been numerous changes in the technology, market, and legislation as well as other aspects of the envi-ronment[71],[134] Along with the concept of environmental dynamism, the concept of an uncertain world (VUCA, i.e., volatility, uncertainty, complexity, and ambiguity) is also re-lated to the external environment or condition[67] Historically, numerous scholars believe that a resource-based perspective is the primary source of competitive advantage [6],[99],[117], but with increasingly volatile environmental challenges, many scholars believe that “environmental dynamism” is a concept that cannot be neglected for strategy and competitive advantage ([76], [129]; and Yuan et al., 2020) Moreover, management control systems and design thinking both are strategic concepts and liable to achieve a competitive advantage[21],[29],[48],
[59],[69],[72],[77],[98], so the consideration of environmental dynamism is critically needed but it is still underrepresented
by the scholars Control is concerned with the procedures the organization uses to change to fit its environment[68],[145] Making sure that the organization is suited to its environment and is taking steps that will help it accomplish its goals is the process of doing this[146] This article also tries to explore the role of environmental dynamism in management control systems and design thinking
The interactive use of the control system is utilized to broaden opportunity-seeking and learning across the business, as well
as to encourage the creation of new ideas and activities[82]
It encourages coordination and communication between em-ployees and employers in the organization If an environment is stable (static environmental dynamism), then the organization is preferred to use a DCS where everything is predefined, rigid, and time-consuming reporting structure but when uncertainties arise then the organization utilizes an ICS to smooth the functioning
of the organization[140] Both types of control systems may or may not facilitate the innovativeness to achieve a competitive advantage which is depending on the environmental dynamism level The level of environmental dynamism decides to follow the organization’s routine and coordination According to Yuan
et al.[131], the more dynamic the environment, the more likely
it is that the rigidities of existing business models will serve as warnings (information), compelling companies to use dynamic capabilities to reshape their outmoded, rigid business models to better fit their settings High environmental dynamism creates unpredictability, which has a direct impact on the organization’s internal context, possibly increasing levels of stress, anxiety, and risk[125] While low environmental dynamism means the organization follows static business models, more boundaries of communication, and inflexibility in routines and coordination
As environments get more dynamic, firms must increasingly rely on new external knowledge to promote innovation and enhance performance, while in more stable contexts, preexisting information and knowledge are less important for assimilating and understanding recently obtained external knowledge.[13]
Trang 4The level of innovation and its performance in an organization is
also affected by environmental dynamism[28],[56],[62],[94],
[118] When the environment gets more dynamic, particularly in
terms of competitiveness, consumer preferences, and regulatory
requirements, organizations focus on their dynamic capabilities
Companies that prioritize design as a strategic component are
considerably more likely to have implemented each form of
innovation [126] The depiction of concepts and the actual
execution of new products and services are two aspects of
how design thinking is used in company strategy and business
transformation[29] Strategic reasons for design thinking it has
a relationship with environmental dynamism The following
theories are put out in light of the aforementioned hypothesis
and explanation:
H1: Design thinking and diagnostic control system are favorably
linked to Static Environmental Dynamism.
H2: Design thinking and interactive control system are favorably
linked to Dynamic Environmental Dynamism.
C Competitive Advantage (CA)
Creating long-term competitive advantage has been one of
the most frequently lauded and debated themes in business
management[97] Porter[147]defined sustainable competitive
advantage as “a condition where a firm’s competitive advantage
survives erosion by the actions of its competitors (p 20).”
Market-based model and resource-based theory model are the
two models that are grounded in economic theory and focus
on achieving competitive advantage A model of the market
is based on price and differentiation, while the resource-based
theory model focuses on the internal resources of the firms
[107] A strategy for maintaining an organization’s competitive
position over the long term that makes the most of available
capital-raising opportunities while also employing other
re-sources is known as a sustainable competitive advantage[148]
The industry has entered a new phase of intense competitiveness,
marked by aggressive rivalry Organizations want to follow
invention, creativity, innovation, and new ideas because of the
fierce competition and evolving technology In line with this, the
concept of innovativeness is significant for surviving a firm’s life
[149],[23], and it is important for organizational
sustainabil-ity[150] Additionally, firms also must constantly reconfigure
internal resources and skills to adopt corporate responsibility
for responding to a chaotic environment in order to develop or
retain a competitive advantage[34] As innovativeness, there are
several ways to gain competitive advantage for an organization
like IT capability related to agility and indirectly agility relates
to sustainable competitive advantage [109] Lean production
is also a way to achieve a sustainable completive advantage
through long-term flexibility[59]; environmental strategies[63];
superior customer responsiveness; strategic thinking[151], and
entrepreneurial orientation [51] To better serve their target
customers than their rivals, organizations constantly work to
hone a core set of competencies, including quality, customer
service, innovation, adaptability, and responsiveness[23] These
are traditional but extremely important to generate a competitive
advantage As technology evolves and changes the business
ecosystem, there are a few modern ways to gain or competitive
advantage Design thinking is also one method to achieve it but
it is underrepresented in the literature Businesses have always
used strategic thinking to gain a competitive edge for their
Fig 1 Theoretical framework.
organizations Design and design thinking have been recognized
as having significant benefits for business and management in the contemporary environment[89] The following theories are put out in light of the aforementioned hypothesis and explanation:
H3: Design thinking and competitive advantage are favorably linked regardless of Environmental Dynamism.
The theoretical framework is shown in Fig.1
III RESEARCHMETHODS
A Samples
The article uses a survey approach to collect data in the setting
of India The respondents that were targeted in the article were from manufacturing and service firms within the R&D-intensive firms A prerequisite for selecting firms based on the presence
of a dominant R&D department in this specific business The survey was pretested and tested as part of a two-phase data collection process In the first phase, we tested the statistical validity of the study’s measures in a pilot study with 30 senior managers The questionnaire was updated to better fit the study environment based on their feedback The final data analysis did not contain any of these 30 surveys Nonprobability sampling,
or convenience sampling, was used in the sampling process This article uses a five-point Likert scale for its measurement, ranging from strongly disagree (1) to strongly agree (5); and uses
a five-point Likert extent scale ranging from “to an extremely small extent (1)” “to a large extent (5).” Numerous different actors engaging in humanitarian efforts in nations throughout Asia make up the empirical context of this article The duration between the distribution of the surveys and their collection ranged from 1 to 10 days In this article, our primary target respondents were senior managers who have been with the same company for more than a year to guarantee a strong understand-ing of the organization, therefore helpunderstand-ing to improve data quality The information was gathered between the 4th of October, 2020 and the 31st of December, 2021 A total of 396 questionnaires were distributed, 336 questionnaires have been considered be-cause of considerable missing or incomplete values, and 60 surveys were rejected A total of 127 questionnaires (showing a
Trang 5TABLE I
M EASURES OF V ARIABLES
Fig 2 Research framework proposed for the article.
response rate of 38%) were valid and useable to conduct the final
analysis This sample size was evaluated, found to be suitable,
and taken into consideration for the gathering of data and the final
analysis The sample covered 36.2% of manufacturing firms and
41.7% of service firms, and 22.1% were categorized as others
Respondents had an average working experience in their current
industries was 5.24 years These results strengthen our trust in
the accuracy of the data by indicating that the respondents have
relevant experience and understanding of the study’s topics A
total of 36.2% of respondents were heads of the R&D, 25% were
managers at the R&D department, 18.8% of respondents were
leaders in the Product Development Team, and rest 20% of the
respondents were members of the key decision-makers groups
The responding firms had an average of 231 employees, and the
average age of the firms was 21 years An assessment of the
literature on design thinking, control systems, competitive
ad-vantage, and environmental dynamism led to the creation of the
survey instrument The questionnaire is entirely in English The
suggested framework of the research used in the present article
is shown in Fig.2 All the components (both the independent and
dependent variables), assessment scales, and their references are
listed in TableI
B Measurement Scale
1) Design Thinking: The scale of design thinking is not
mature enough for organizations There are only a few studies
exist that can accurately measure design thinking in terms of capabilities, practices, and mindset in organizations, such as Chesson[24],[152], and[153] This article measured design thinking as a way of individual mindset, risk, innovation, and business practice with ten items We adopted a few relevant variables from[152]and[153], and a few were developed based
on the relevant literature like [36],[103], Liu et al.[81], and
[154]that were considered design thinking
2) Management Control System: Although prior articles
have developed psychologically sound measurement scales for DCSs and ICSs in this article The management control system scales are fairly mature from two perspectives: one assessing the company’s routine and the other strategic direction of the organization In this article, it is measured by the routines of the organization like decision-making power, flexibility, innovation, tracking the progress of the organization, and monitoring results The measurement scale of DCSs and ICSs was inspired by various studies like Muller-Stewens et al.[94], Lopez-Valeiras
et al.[82], and Kober et al.[70]for this article
3) Environmental Dynamism and Competitive Advantage:
Environmental variables were used to calculate environmental dynamism, which took into account the influences of the in-dustrial environment, competitor actions, technology advance-ments, and customer expectations We divided environmental dynamism into static and dynamic components Competitive advantage may be assessed by comparing the company’s po-sition to that of a competitor We utilize and developed a few metrics to measure competitive advantage from Li and Liu[76], Wang[128], and Chang[22], respectively, in terms of financial and nonfinancial aspects, such as market share, quality, prof-itability, growth rate, and so on We developed the scale of en-vironmental dynamism from literature like[13],[55],[76], and
[131]
IV ANALYSIS OFDATA ANDRESULTS
Once the demographic and the scale of measurement section were completed, the present article continued with the analysis
of the data Further, the findings evaluate the diagnosis of the design thinking and its relation to other variables like envi-ronmental dynamism, management control system, competitive advantage, the measurement model, and the structural model
in the next subsections Investigating the connections between design thinking and management control systems and how envi-ronmental dynamic affects these connections is the goal of this article Additionally, the article also explores the relationship between design thinking and sustainable competitive advantage
Trang 6TABLE II
A SSESSMENT OF THE S CALE M EASUREMENT M ODEL W ITH I TS R ELIABILITY AND V ALIDITY V ALUES (N= 127)
The method for the article was PLS and structural equation
modeling (SEM), which was the requirement of the present
model and its characteristics of the variables The software
version of SmartPLS 3.3.3 was used The PLS-SEM strategy
was used by[2],[39], and[53]in their work This method has
the obvious benefits of convenience and adaptability
A Common Method Variance (CMV) and Nonresponse Bias
Before checking for a significant relationship in the structural
model, it was crucial toward ensuring that the measurement scale
model has sufficient validity levels and reliability levels We
looked into potential nonresponse bias in the comparison of early
and late responders using Armstrong and Overton’s[5]method
and found the absence of nonresponsive bias Furthermore,
the collection of responses from the same respondents at the
same time using the common method variance technique was
measured using Harman’s single-factor test [102] When all
indicators were inputted, no one component accounted for the threshold of 50% variance, showing that there was no significant common method bias
B Measurement Model Assessment
TableII’s summary of the data shows the mean and standard deviation (descriptive statistics) of various parameters of design thinking, environmental dynamism, management control sys-tem, and sustainable competitive advantage With the help of the SPSS application, confirmatory factor analysis was conducted Before the final analysis, the model fit needs to be checked The SRMR value = 0.07 (<0.08) shows the perfect model
fit [57]with having chi-square value of 808.656 To evaluate internal consistency, the reliability (α) test of all the
construc-tions (factors) was computed as it is regarded as one of the significant measures for the reliability of the scale For internal consistency, a “higher” figure ofα (>0.6) is considered suitable.
Trang 7Fig 3 Statistics of the measurement model Note:∗DT—design thinking; DCS—diagnostic control system; ICS—interactive control system; SCA—sustainable
competitive advantage; EDD—environmental dynamism (dynamic); and EDS—environmental dynamism (static).
The reliability values in TableIIare substantially greater than
the permitted ranges, pointing toward the values of measurement
for the items being reliable and consistent for the next phase of
analysis A number of measures, including loadings of the factor
analysis, alpha values (Cronbach’s alpha), composite
reliabil-ity (CR), variance inflation factor (VIF), and average variance
extracted (AVE), for the factors (constructs), were highlighted
using the PLS-Algorithm The model incorporates five factors or
constructs as design thinking (n= 6), environmental dynamism
for a dynamic environment (n= 4), environmental dynamism for
a static environment (n= 4), sustainable competitive advantage
(n = 7), ICS (n = 7), and DCS (n = 4) Every factor loading has
been taken into account as more than 0.5[155] Initially, design
thinking had ten items but four items were deleted because of
low factor loading in the first simulation from the measurement
model, and after that twenty-eight items were considered for
final analysis considering reliability and validity Additionally,
every loading value was higher than 0.70[52] and 0.70[39],
[53]except ICS2 (0.682), SCA3 (0.698), and SCA7 (0.695),
this is the favored value to calculate and take into account factor
loadings According to Hair et al.[53], the VIF values must not
be more than the five-cut-off point, which ensures that there is
no multicollinearity among the variables in the structural model
Scale validity was evaluated using additional AVE and CR
cal-culations TableIIdisplays statistics for descriptive analysis and
matching AVE values and CR values for entire constructions’
factors It indicates that design thinking (AVE is 0.708 and CR
is 0.935) has calculated a mean of 4.353 with an SD of 0.658,
environmental dynamism for the dynamic environment (AVE is
0.656 and CR is 0.884) has calculated a mean of 3.699 with SD
of 0.801, environmental dynamism for the static environment (AVE is 0.663 and CR is 0.887) has calculated a mean of 3.108 with SD of 0.786, sustainable competitive advantage (AVE is 0.560 and CR is 0.899) has scored a mean of 3.7869 with SD
of 0.668, ICS (AVE is 0.668 and CR is 0.933) has calculated a mean of 3.983 with SD of 0.680, and DCS (AVE is 0.834 and
CR is 0.953) has calculated a mean of 4.083 with SD of 0.816 All the variables AVE and CR have a limit (AVE> 0.5) and CR
> 0.7).
Additionally, it is known that for confirming the reliability
of the constructs calculated values of alpha (Cronbach’s alpha) and CR are the imperative steps Earlier studies[39],[40], and
[53]have shown that these numbers will not be recognized if they are lower than the threshold values of 0.7 These prior articles also suggest that the AVE value is considered above 0.5 The article finds in the analysis that all the AVE values range between 0.560 and 0.834 Hence, it shows to be valid for con-vergence[39] Fig.3displays the statistics of the measurement model
Six latent factors (constructs) from the proposed research model have thus been supported by the measurement model (DT, EDD, EDS, SCA, ICS, and DCS) R-squared values of DCS, EDD, EDS, ICS, and SCA are 0.448, 0.150, 0.031, 0.564, and 0.272, respectively, included are path coefficient values
as well as outer loadings (mentioned in Fig 3) Last, assess the discriminant validity of these five constructs’ correlations (as represented in TableIII) All of these items were therefore accepted and moved on to the bootstrap analysis stage To ensure
Trang 8TABLE III
D ISCRIMINANT V ALIDITY A NALYSIS F ROM CFA
that measures of the constructs created for the present article are
not strongly associated with one another, discriminant
valid-ity was conducted In realvalid-ity, convergent validvalid-ity coefficients
should be substantially larger than the discriminant validity
coefficients Last but not least, discriminant validity establishes
if the constructs in the article are substantially associated with
one another or not It contrasts the connection between a certain
construct and other constructs with the square root of AVE of
that construct Common wisdom holds that the square root of
AVE should be greater than the construct’s correlation with other
constructs (if not, the individual construct does not provide much
discrimination, i.e., unique explanatory power) In two different
techniques, we evaluated the constructs’ discriminant validity In
the beginning, factor-squared correlations were contrasted with
AVE values for every construct for each factor[42] The AVE
values calculated for every factor, as shown in TableII, are higher
than its squared correlations with other factors, supporting the
discriminant validity
C Assessment of Structural Model
R2and Q2values are used to first assess and apply the model
The authors’ determination of the structural model’s power
ex-planation is aided by the R-squared (R2) value Weak, moderate,
and large degrees of significance can be examined using the four
R2 thresholds of 0.25, 0.50, and 0.75[53],[57] The results of
the analysis (presented in Fig.3) are used to calculate the beta
values of all the routes leading from independent variables to
dependent variables These are design thinking to static
environ-mental dynamism (β = 0.175, p = 0.205), static environmental
dynamism to the DCS (β = −0.052, p = 0.503), design thinking
to dynamic environmental dynamism (β = 0.388, p = 0.001),
dynamic environmental dynamism to the ICS (β = 0.263, p =
0.001), design thinking to sustainable competitive advantage (β
= 0.521, p = 0.000) According to the results of PLS (presented
in Fig.3), R2values obtained for DCS, ED, ICS, and SCA are
0.446, 0.260, 0.560, and 0.345, respectively Thus, 44.8%, 15%,
3.1%, 56.4%, and 27.25%, respectively, explain the endogenous
construct with the criteria-based significant variance levels The
PLS-SEM model is assessed using the Q-squared (Q2) value
For a structural model’s prediction accuracy to be indicated,
positive Q2 values are required The model’s minor, medium,
and considerable predictive relevance are shown by values of
Q2that are above 0.00, 0.25, and 0.50, respectively[53],[57]
The PLS bootstrapping was considered and the output
indi-cates (presented in Fig.4), that Q2 values for DCS, dynamic
environmental dynamism, static environmental dynamism, ICS,
and sustainable competitive advantage were obtained at 0.359,
0.092, 0.009, 0.362, and 0.131 (>0), respectively, demonstrating
a decline in the theoretical performance construct’s predictive
TABLE IV
E FFECTS OF DT ON EDS AND DCS [T HIS T ABLE P RESENTS THE M EDIATING
I MPACT OF EDS ON THE A SSOCIATION B ETWEEN DT AND DCS (H1)]
TABLE V
E FFECTS OF DT ON EDD AND ICS [T HIS T ABLE P RESENTS THE M EDIATING
I MPACT OF EDD ON THE A SSOCIATION B ETWEEN DT AND ICS (H2)]
TABLE VI
P REDICTIVE R ELEVANCE OF THE M EASUREMENT M ODEL
value TableIVshows the effects of DT on EDS and DCS (the mediating impact of EDS on the association between DT and DCS for H1) and the effects of DT on EDD and ICS are shown
in TableV(the mediating impact of EDD on the association between DT and ICS for H2) Table VIdisplays the model’s predicted relevance
Measurement of the effects of design thinking and manage-ment control system is the goal of this article to achieve sustain-able competitive advantage to test three hypotheses Since these
Trang 9Fig 4 Structural model Note:∗DT—design thinking; DCS—diagnostic control system; ICS—interactive control system; SCA—sustainable competitive
advantage; EDD—environmental dynamism (dynamic); and EDS—environmental dynamism (static).
TABLE VII
R ESULTS OF H YPOTHESES
hypotheses were tested, the bootstrapping evaluation was carried
out to highlight the t-statistics which are presented in Fig.4
In the table-8 number of variables (estimates, t-value, standard
error, and p-value) are presented The cumulative factors of
sustainable competitive advantage are related to superior
effi-ciency, innovation, customer response, technology, and quality
The measurement model with all variables was analyzed with the
help of the Smart-PLS (version 3.3.3) application The reliability
and validity analysis results are shown in Table II To know
whether the independent variables in the model are independent
or not a multicollinearity test was performed The results based
on the multicollinearity test it was found that the VIF values
are under 5 which indicates it is normal The results of the
hypothesis in the article are presented in TableVII, showing
that there is a significant effect of independent variables on
dependent variables This is design thinking for sustainable
competitive advantage (t = 5.251, p = 0.000) Thus, the research
hypothesis (H3) is supported by the evidence and indicates the
significant factor that lent good support to this article This
hypothesis is supported due to its p-value which was significant
(<0.05 cut-off)[53], so H3 is supported by the evidence Here,
we considered five building blocks of sustainable competitive
advantage viz superior efficiency, innovation, customer re-sponse, technology, and quality
D Mediating Effect
As was previously noted, this article looked into both the direct and indirect effects of design thinking on DCSs and ICSs utilizing two separate methodologies As a result, the findings
of this article indicate that design thinking significantly and favorably influences DCSs (β = 0.663, t-values = 7.592, and p
< 0.000), but design thinking does not significantly contribute
to environmental dynamism (static) (β = 0.167, t-values = 1.270, and p = 0.205), and environmental dynamism (static) does not significantly contribute to DCSs (β = −0.052, t-values
= 0.670, and p = 0.503) The indirect effect of design thinking
on DCSs (β = −0.005, t-values = 0.594, and p = 0.553) means
no mediation but the direct effect is 0.000 Consequently, based
on Mehralian et al.[90], the link between design thinking and DCSs is not mediated by environmental dynamism (static), and the findings do not corroborate H1 about the mediating impact
Trang 10Additionally, the impact of design thinking on environmental
dynamism (dynamic) and the ICS was examined utilizing two
distinct methods, including direct and indirect impacts As a
result, the findings of this article indicate that design thinking
significantly and favorably influences environmental dynamism
(dynamic) (β = 0.382, t-values = 3.343, and p = 0.001),
en-vironmental dynamism (dynamic) has a significant and positive
contribution to ICS (β = 0.267, t-values = 3.348, and p = 0.001),
and design thinking significantly and positively contributes to
ICS (β = 0.605, t-values = 8.637, and p = 0.000) The indirect
effect of design thinking on the ICS (β = 0.104, t-values = 2.124,
and p= 0.034) means environmental dynamism (dynamic) has
a mediation impact on the relationship between design thinking
and the ICS, and the findings support H2 about the mediating
impact of Baron and Kenny[10]
V DISCUSSION, FINDINGS,ANDCONTRIBUTION TO THESTUDY
The primary goal of this article was to examine the connection
between design thinking and the management control system;
second, environmental dynamism influences the relationship
between design thinking and the management control system;
and third, design thinking is related to sustainable competitive
advantage The idea of design thinking is increasingly
perme-ating management and opening the door for design to solve
new issues within the company [29] Through the literature
survey, the article explores how design thinking is associated
with strategic and innovation concepts
The empirical results provide an intriguing picture of the
connection between design thinking and management control
systems, and competitive advantage TableVIIprovides a
sum-mary of the results based on the data and analysis In this
article, the management control systems are categorized into
two forms: ICSs and DCSs Every organization has its own
culture, structure, and even control system The management
control system is required for the organization to comprehend
how effectively it satisfies objectives pertaining to productivity,
profitability, or efficiency The article explores the relationship
between design thinking and ICS and DCS The results indicate
that an ICS is interrelated with design thinking in dynamic
environmental conditions This result is in line with the
re-search of[156]that pointed out design thinking research needs
integration with organizational environments or environmental
factors Additionally, the level of environmental dynamism
de-cides whether the organization uses ICSs or DCSs with design
thinking Due to this reason, environmental dynamism acts as
mediating role between design thinking and ICS This result
is in line with the research of [120] in which environmental
dynamism had moderating effect between innovation strategy
and firm performance Design thinking promotes flexibility
in the workplace and encourages responsiveness and
flexibil-ity to create value ([64], [83], [111]) Additionally, the three
fundamental components of design-thinking-flexible space,
teamwork, and the design-process-combine form a holistic
ap-proach to problem-solving[112] The interactive use of the
con-trol system is utilized to broaden opportunity-seeking and
learn-ing across the business, as well as to encourage the creation of
new ideas and activities[82] In a similar way, the management
control system in terms of interactive is also closely linked with
flexibility, teamwork, and decentralized decision-making power
and the DCS also relates to design thinking but in a static business
environment While low environmental dynamism means the
organization follows static business models, more boundaries of
communication, and inflexibility in routines and coordination
As per the literature survey, few studies support these rela-tionships also, but we fail to justify that statement empirically Consequently, the analysis shows that H1 is not supported this article
The third objective which is design thinking is also a way to achieve a competitive advantage Design thinking is a strategic concept or mental process that is liable to create innovativeness
in an organization ([26],[30],[73],[121]) Moreover, numerous studies pointed out that innovation is also a source of sustainable competitive advantage [23],[51] Based on the above expla-nation, this article got successfully justified the relationship between design thinking and competitive advantage empirically
as well as theoretically
A Contributions
The outcomes of the article are crucial for the managers and industry practitioners in the strategy domain specifically those who want to adopt the design thinking process in an organization
1) Contribution to the Theory: The article contributes to the
design thinking theory in several ways In the past, researchers have considered design thinking as an emerging tool or method that assists in a sustainable business model or competitive advan-tage[30],[88],[105] In this article, the combination of design thinking with management control systems and environmental dynamism in a new model to discover opportunities within this particular concept has a fourfold contribution to theories
It contributes to 1) design thinking can be seen as a strategic and innovative concept ([26];[157], and[106]); 2) the literature
on design thinking; 3) design thinking relates to management control system under the influence of environmental dynamism ([59],[72],[92]); and 4) design thinking source of sustainable competitive advantage
First, by unveiling the design thinking literature review in such a way that contributes to the innovation theory and strategic concept Indeed, the basis of the selection of the other variable was innovation and strategy Design thinking is primarily con-nected to a type of thinking, or mental model, that is concon-nected
to value innovation in a company[73],[121] Its process de-mands genuinely engaging employees or a continuous employee engagement and involvement process[47],[143] The article supports theoretically all of the above studies
Second, the article enriches the design thinking litera-ture through the consideration of two kinds of management control systems, i.e., DCSs and ICSs These control systems or coordination routines play a significant role when practicing the design thinking concept in the organization Although there are numerous organizational capabilities exist that support design thinking, but still none of the studies considered management control systems
Third, the article offers a design thinking framework that explains the influence and significance of environmental dy-namism on management control systems The “environment perspective” is important for the current article because design thinking view as a dynamic capability [80],[85] that is also context-dependent[74],[137] However, to date, understanding how management control systems relate to design thinking and how it affects design thinking is insufficient or unexplored in the dynamic setting This article tried to fill this gap through this contribution This model takes into account two perspectives on environmental dynamism: one when environmental dynamism