Business Process Re-Engineering and Profitability in the Nigerian Oil and Gas Industry: The Mediating Influence of Operational Performance
Keywords:
Business Process Re-engineering; CSFs; Profitability; Operational Performance, structural equation modeling.
Abstract
The aim of this study was to operationalize and test a conceptual model to measure the effect of
Business Process Re-engineering (BPR) implementation on profitability in the Nigerian oil and gas industry.
Based on a framework from Al-Mashari and Zairi, these objectives were achieved using the following
procedures: reliability and validity analysis, factor analyses (exploratory factor analysis-EFA and
confirmatory factor analysis-CFA) and Structural Equation Modelling (SEM). The model contrived therefore
confirmed the positive influence of BPR on profitability, as well as the mediating influence of operational
performance in the Nigerian Oil and Gas industry. Specifically, the structural model shows the positive effect
of organizational structure and IT Infrastructures on both profitability and operational performance.
However, SEM failed to establish the relationship between management competence and support and
profitability. The study is expected to enhance the adoption and successful implementation of BPR
programmes in the oil and gas industry.
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References
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Adeyemi, S. & Aremu, M. A. (2008). Impact assessment of Business Process Reengineering on Organizational
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Business Performance of Nigerian Oil and Gas Companies, International Journal of Services and
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Baumgartner, H. & Homburg, C. (1996). Applications of structural equation modeling in marketing and
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Chiplunkar, S. G., Deshmukh, H. & Chattopadhyay, R. (2003). Application of principles of event related open
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Davenport, T. H. (1993a). Need radical innovation and continuous improvement? Integrate process
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a Resource-Based View? Toward a Theory of Competitive Heterogeneity, Strategic Management
Hsu, M. K. (2010). Structural Equation Modeling with IBM SPSS Amos: A methodology for predicting
behavioral intentions in the services sector, IBM Software Business Analytics, IBM Corporation: NY
10589.
Ho, R. (2000). Handbook of Univariate & Multivariate Data Analysis & Interpretation: SPSS Approach.
Rockhampton: Central Queensland University.
Iles, V. & Sutherland, K. (2001). Managing Change in the NHS: Organisational change- a review for Health care
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Delivery and Organisation.
Khodakaram, S., Mohammad, A. A. & Ahmad, G. (2010). Interpretive Structural Modeling of Critical Success
Factors in Banking Process Re-engineering, International Review of Business Research Papers, 6(2),
95-103.
Khong, K. W. & Richardson, S. (2003). Business process re-engineering in Malaysian banks and finance
companies, Managing Service Quality, 13(1), 54-71.
Maldonado, M. (2009). Factors impacting the Success of ERP Implementations in Small and Medium
Enterprises: An empirical assessment from Latin America. ESADE PhD in Management Sciences
Program.
Mustapha, A. M., Fakokunde, T. O. & Awolusi, O. D. (2014). The Quick Service Restaurant Business in Nigeria:
Exploring the Emerging Opportunity for Entrepreneurial Development and Growth, Global Journal of
Commerce and Management Perspective, 3(3), 8-14.
Ovenden, T. (1994). Business process re-engineering: definitely worth considering, The TQM Magazine, 6(3),
56-61.
Ozcelik, Y. (2010). Do business process reengineering projects payoff? Evidence from the United States,
International Journal of Project Management, 28(3), 7–13.
Panneerselvam, R. (2010). Research Methodology, New Delhi.
Porter, M. E. (1980). Competitive strategy: technique for analyzing industries and competitors. New York:
Free Press.
Ranganathan, C. & Dhaliwal, J. S. (2001). A survey of business process reengineering practices in Singapore,
Information and Management, 39(2), 125-34.
Richard, C. E. (1992). American Industry: Structure, Conduct, Performance, Prentice Hall, 7th E, 3-36.
Ringim, K. J., Razalli, M. R. & Hasnan, N. (2011). Effect of Business Process Reengineering factors on
organizational performance of Nigerian banks: Information Technology capability as the moderating
factor, International Journal of Business and Social Science, 2(13), 198-201.
Rumelt, R. P. (1991). How much does industry matter? Strategic Management Journal, 12(3), 167–185
Salaheldin, I. S. (2009). Critical success factors for TQM implementation and their impact on performance
of SMEs, International Journal of Productivity and Performance Management, 58(3), 215-237.
Schumacker, R. & Lomax, R. (1996). A Beginner Guide to Structural Equation Modelling. Mahwah, New Jersey:
Lawrence Erlbaum Association.
Smith, M. (2003). Business process design: correlates of success and failure, The Quality Management Journal,
10(2), 38-49.
Tilley, S. (1996). Perspectives on legacy system reengineering, Mellon: Reengineering centre, software
Engineering Institute, Carnegie Mellon University.
Business Process Management Journal, 14(4), 497-511.
Adeyemi, S. & Aremu, M. A. (2008). Impact assessment of Business Process Reengineering on Organizational
performance, European Journal of Social Sciences, 7(1), 115-125.
Ahmed, H., Francis, A. & Zairi, M. (2007). Business process reengineering: Critical success factors in higher
education, Business Process Management Journal, 13(3), 451-469.
Al-Mashari, M. (2003). Enterprise Resource Planning (ERP) systems: A research agenda, Industrial
Management & Data Systems, 103(1), 22-27.
Al-Mashari, M. & Zairi, M. (1999). BPR implementation process: an analysis of Key success and failure factors,
Business process Management Journal, 5(1), 87-112.
Al-Mashari, M., Irani, Z. & Zairi, M. (2001). Business Process Reengineering: a survey of international
experience, Business process Management Journal, 10(4), 437-455.
Anderson, J. & Gerbing, W. (1988). Structural equation modeling in Practice: A review and recommended two
stage approach. Psychological Bulletin, 27(1), 5-24.
Ascari, A., Rock, M. & Dutta, S. (1995). Reengineering and organisational change: lessons from a comparative
analysis of company experience, European Management Journal, 13(1), 1-30.
Asika, N. & Awolusi, O. D. (2013). Modeling Critical Success Factors of Business Process Re-engineering and
Business Performance of Nigerian Oil and Gas Companies, International Journal of Services and
Operations Management, 15(1), 28–43.
Asikhia, U. O. & Awolusi, O. D. (2015). Assessment of Critical Success Factors of Business Process Reengineering in the Nigerian Oil and Gas Industry, South African Journal of Business Management,
46(2), 1-14.
Asteriou, D. & Hall, S. G. (2007). Applied Econometrics: A Modern approach. (Revised Edition), NY: Palmgrave
Macmillan.
Awolusi, O. D. (2013a). Assessment of Critical Success Factors of Business Process Re-engineering in Nigerian
Oil and Gas Industry, Unpublished PhD Thesis, Ilishan-Remo: Babcock University.
Awolusi, O. D. (2013b). Effects of motivation on employee job commitment in the Nigerian banking industry:
an empirical analysis, International Journal of Business and Innovation Research, 1(3), 1–17.
Awolusi, O. D. (2013c). The effects of total quality management on customer service management in the
Nigerian banking industry: an empirical analysis, International Journal of Management and Network
Economics, 3(1), 57–77.
Baumgartner, H. & Homburg, C. (1996). Applications of structural equation modeling in marketing and
consumer research: A review. International Journal of Research in Marketing, 1(13), 139-161.
Bhatt, G. D. (2000). Exploring the relationship between information technology, infrastructure and business
process re-engineering, Business Process Management, 6(2), 139-63.
Bontis, N. (1998). Intellectual capital: an exploratory study that develops measures and models, Management
Decision, 36(2), 63-7.
Brouthers, K. D. & Hennart, J. (2007). Boundaries of the Firm: Insights from International Entry Mode
Research, Journal of Management, 33(3), 395-425.
Brown, T. A. (2006). Confirmatory Factor Analysis for Applied Research, New York, NY: Guilford Press.
Byrne, B. (2001). Structural equation modeling with AMOS. New Jersey: Lawrence Erlbaum Associate
Cabin, R. & Grant, R. M. (1996). Restructuring among the world’s largest oil majors, British Journal of
Management, 4(3), 212-235.
Chiplunkar, S. G., Deshmukh, H. & Chattopadhyay, R. (2003). Application of principles of event related open
systems to business process reengineering, Computers & Industrial Engineering, 45(3), 347-374.
Davenport, T. H. (1993a). Need radical innovation and continuous improvement? Integrate process
reengineering and TQM, Planning Review, 21(3), 6-12.
Davenport, T. H. (1993b). Process Innovation: Reengineering Work through Information Technology, Harvard
Business School Press, Boston, MA.
Dunning, J. H. (1993). Multinational enterprises and the global economy. Wokingham, UK: Addison-Wesley.
Fields, Z. & Atiku, S. O. (2015). Testing and operationalizing a model to measure Creativity at Tertiary
Educational Level, International Journal of Educational Sciences, 9(3), 283-296.
Hall, G., Rosenthal, J. & Wade, J. (1993). How to make reengineering really work, Harvard Business Review,
71(6), 119-31.
Hammer, M. (1990). Reengineering work: don't automate, obliterate, Harvard Business Review, 68(4), 104-12.
Hammer, M. & Champy, J. (1993). Reengineering the corporation: a manifesto for business revolution, Harper
Business, New York, NY.
Hair, J., Anderson, R., Tatham, R. & Black, W. (1995). Multivariate Data Analysis with Readings, Englewood
Cliffs: Prentice-Hall International.
Hancock, G. R. & Mueller, R. 0. (2001). Rethinking construct reliability within latent variable systems. In R.
Cudeck, S., du Toit. & Srbom D. (Eds.), Structural Equation Modeling: Present and Future –Festschrift
in honor of Karl Jreskog (pp. 195-216). Lincolnwood, IL: Scientific Software International, Inc.
Hoopes, D. G., Madsen, T. L. & Walker, G. (2003). Guest Editors’ Introduction to the Special Issue: Why is there
a Resource-Based View? Toward a Theory of Competitive Heterogeneity, Strategic Management
Hsu, M. K. (2010). Structural Equation Modeling with IBM SPSS Amos: A methodology for predicting
behavioral intentions in the services sector, IBM Software Business Analytics, IBM Corporation: NY
10589.
Ho, R. (2000). Handbook of Univariate & Multivariate Data Analysis & Interpretation: SPSS Approach.
Rockhampton: Central Queensland University.
Iles, V. & Sutherland, K. (2001). Managing Change in the NHS: Organisational change- a review for Health care
Managers, Professionals and Researchers, London: National Coordinating Centre for NHS Service
Delivery and Organisation.
Khodakaram, S., Mohammad, A. A. & Ahmad, G. (2010). Interpretive Structural Modeling of Critical Success
Factors in Banking Process Re-engineering, International Review of Business Research Papers, 6(2),
95-103.
Khong, K. W. & Richardson, S. (2003). Business process re-engineering in Malaysian banks and finance
companies, Managing Service Quality, 13(1), 54-71.
Maldonado, M. (2009). Factors impacting the Success of ERP Implementations in Small and Medium
Enterprises: An empirical assessment from Latin America. ESADE PhD in Management Sciences
Program.
Mustapha, A. M., Fakokunde, T. O. & Awolusi, O. D. (2014). The Quick Service Restaurant Business in Nigeria:
Exploring the Emerging Opportunity for Entrepreneurial Development and Growth, Global Journal of
Commerce and Management Perspective, 3(3), 8-14.
Ovenden, T. (1994). Business process re-engineering: definitely worth considering, The TQM Magazine, 6(3),
56-61.
Ozcelik, Y. (2010). Do business process reengineering projects payoff? Evidence from the United States,
International Journal of Project Management, 28(3), 7–13.
Panneerselvam, R. (2010). Research Methodology, New Delhi.
Porter, M. E. (1980). Competitive strategy: technique for analyzing industries and competitors. New York:
Free Press.
Ranganathan, C. & Dhaliwal, J. S. (2001). A survey of business process reengineering practices in Singapore,
Information and Management, 39(2), 125-34.
Richard, C. E. (1992). American Industry: Structure, Conduct, Performance, Prentice Hall, 7th E, 3-36.
Ringim, K. J., Razalli, M. R. & Hasnan, N. (2011). Effect of Business Process Reengineering factors on
organizational performance of Nigerian banks: Information Technology capability as the moderating
factor, International Journal of Business and Social Science, 2(13), 198-201.
Rumelt, R. P. (1991). How much does industry matter? Strategic Management Journal, 12(3), 167–185
Salaheldin, I. S. (2009). Critical success factors for TQM implementation and their impact on performance
of SMEs, International Journal of Productivity and Performance Management, 58(3), 215-237.
Schumacker, R. & Lomax, R. (1996). A Beginner Guide to Structural Equation Modelling. Mahwah, New Jersey:
Lawrence Erlbaum Association.
Smith, M. (2003). Business process design: correlates of success and failure, The Quality Management Journal,
10(2), 38-49.
Tilley, S. (1996). Perspectives on legacy system reengineering, Mellon: Reengineering centre, software
Engineering Institute, Carnegie Mellon University.
Published
2019-10-31
How to Cite
Olawumi Dele Awolusi, & Olusegun Sulaiman Atiku. (2019). Business Process Re-Engineering and Profitability in the Nigerian Oil and Gas Industry: The Mediating Influence of Operational Performance. Information Management and Business Review, 11(3(I), 13-26. https://doi.org/10.22610/imbr.v11i3(I).2943
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Section
Research Paper
Copyright (c) 2019 Olawumi Dele Awolusi, Olusegun Sulaiman Atiku
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