International Journal of Information Management 36 (2016) 496–499
Contents lists available at ScienceDirect
International Journal of Information Management
journal homepage: www.elsevier.com/locate/ijinfomgt
Case report
The role of institutional entrepreneurship in building digital
ecosystem: A case study of Red Collar Group (RCG)
Haibo Hu a,∗ , Tao Huang a , Qingfeng Zeng b , Song Zhang c
a
b
c
School of Business Administration at the Jiangxi University of Finance and Economics, China
School of Information Management and Engineering at Shanghai University of Finance and Economics, China
School of Business at Qingdao University, China
a r t i c l e
i n f o
Keywords:
Institutional entrepreneurship
Organizational transformation
Digital ecosystem
Personalized customization
a b s t r a c t
Institutional entrepreneurship has increasingly played a critical role in successfully achieving organizational transformation, especially one that involves building a digitally enabled ecosystem. However,
despite fruitful research on institutional entrepreneurship, it is still not clearly understood how one might
successfully achieve organizational transformation. Thus, our study aims to disambiguate this black box
by examining the case study of Red Collar Group (RCG), a market leader in making custom made suits.
The findings of this case highlight the significant role played by institutional entrepreneurship in achieving organizational transformation. It highlights that institutional entrepreneurship is evident in different
modes of action in the transformational process of building the digital ecosystem.
© 2015 Elsevier Ltd. All rights reserved.
1. Introduction
This case analysis considers the role of institutional
entrepreneurship (Shepherd and Patzelt, 2011) in implementing
organizational transformation. The main purpose of our study
is to shed light into the evolution process of a digital ecosystem
(Tan et al., 2015). In an ecosystem, companies co-evolve capabilities around a new innovation: they work cooperatively and
competitively to support new products, satisfy customer needs,
and eventually incorporate the next round of innovations (Moore,
1993). We posit that an ecosystem gradually moves from a random
collection of elements to a more structured community.
We define institutional entrepreneurship as offering one possible solution to the apparent contradiction between the observed
tendency for organizations in a given field to converge around
a dominant set of norms and practices and the continual emergence of new norms and practices within fields. Institutional
entrepreneurship includes processes at individual, organizational,
and societal levels (Tracey et al., 2011).
As the business environments in China become increasingly
complex and turbulent, research on institutional entrepreneurship
is particularly pertinent and valuable in this context (Huang et al.,
2012). Against such a backdrop, we conducted a qualitative study
∗ Corresponding author.
E-mail address: 13133817079@163.com (H. Hu).
http://dx.doi.org/10.1016/j.ijinfomgt.2015.12.004
0268-4012/© 2015 Elsevier Ltd. All rights reserved.
of Red Collar Group (RCG), China to investigate the process of building a digital ecosystem. Following a case study approach (Pan and
Tan, 2011), our study reveals that institutional entrepreneurship
helps to enhance the firm’s ability to deal with various problems
encountered in the transformation. We examine the firm’s transformation from its traditional approach of making customized
suits to deploying latest technologies including customer data
analytics and computer-aided design (CAD). The evolution of a
digital-enabled business ecosystem includes birth, expansion, and
leadership stages (Moore, 1993).
2. Case background
Red Collar Group, established in 1995, specializes in manufacturing personalized-customized high-grade suits series, including
suits, trousers, shirts, and coats. In the process of rapid development, RCG faced a myriad of complex challenges which are
commonly faced by peer manufacturers. For example, some of
the challenges included large inventories, increasing production
costs and thinning profit margins. Against this backdrop, since
2003, RCG embarked on a major revamp aimed at building a
new digitally enabled business process, replacing most of its old
manual operations. In 2013, RCG established its online portal for
customized apparel and named it Red Collar Made To Measure
(RCMTM).
The RCMTM platform was designed to remove intermediaries or
brokers thereby helping its customers to save money and engage
H. Hu et al. / International Journal of Information Management 36 (2016) 496–499
with RCG directly. This is also known as Customer to Manufactory (C2M) platform in that it serves as the online system linking C
and M with digitally intelligent global supply chain. With RCMTM,
customers worldwide are able to upload their personal measurements and place orders online. Customers would be able to receive
their customized suits within 7 days as compared to 21 days previously when they had to work through a local tailor shop as an
intermediary broker. In other words, C2M, as a digital platform, provides one-stop direct service from M to C, and engages customers
with one-stop online support from C to M, as explained by CIO of
RCG.
3. The digital transformational journey at RCG
We will examine how RCG successfully achieved organizational
transformation in building a C2M business model, enabled by
advanced digital technologies in the subsections that follow. We
will describe the process of organizational transformation as it
evolved in three stages (birth, expansion, and leadership).
3.1. Birth stage (2003–2007)
During the birth stage, entrepreneurs focus on defining what
customers want, that is, the value of a proposed new product or
service and the best form for delivering it (Moore, 1993). In 2003,
there were major struggles in China’s traditional garment industry
due to the Internet bubble burst in the early 2000. As a result, many
manufacturers suffered from high inventory and were in the danger
of going bankrupt. In a bid to stay afloat, RCG repurposed itself into
a personalized-customized model as opposed to the mass production model which was common back then. “It was by no means easy
as it required very different set of skills as each order was highly
customized. The change in business model required RCG to undergo
a complete revamp of its entire manufacturing process and develop
into a more efficient group enabled by digital technologies including Computer Aided Design (CAD), Radio-Frequency Identification
(RFID) and e-commerce platform thus forming a complete digital
ecosystem”, as recounted by Mr. Li, the executive vice president of
RCG.
Initially, few employees understood the need for and the scale
of reform proposed by Mr. Zhang, the chairman of RCG. They were
of the opinion that RCG was already a modern factory and did not
see the need for a major revamp. Some even resisted to the proposed change worrying about their own job security. To overcome
the resistance, RCG management had to inculcate entrepreneurial
spirit among the factory workers who were used to working in a
mass production set-up and not comfortable with individualizedcustomized approach to making suits. The management started
to promote and develop a digital culture, allowing employees to
learn and adapt to the new enterprise culture, identity, and values.
On the factory floor, RCG introduced changes gradually, commencing from one team and finally spreading them to the entire
plant. Initially, the only information technology system that RCG
had was an enterprise resource planning system. In fact, there were
only a few employees in the IT department. Most of them could
only perform basic maintenance work and were not capable of
performing advanced levels of IT work or whatsoever.
By 2005, RCG continued with its digitalization process by establishing a new business strategy of MTM (Made-to-Measure), which
is aimed at developing a high-end online personal tailor. After
implementing MTM and CAD systems (CAD-aided design), anyone
could design a personalized suit using design functionalities provided by MTM. With these systems in place, RCG began to progress
497
rapidly from a mass production to mass-customized production
mode.
3.2. Expansion stage (2008–2012)
As RCG continued to accumulate large amount of customer data
over the past five years, by 2008, it began to explore the idea that it
could benefit from data standardization and analytics. The IT team
began to explore data about its materials, measurement patterns
and production process. A group of master tailors took the lead to
explore business rules and developed critical know-how needed in
the data standardization process. This data standardization process
was further enhanced with help from specialized data experts to
perform data modeling which later formed the core of the intelligent system. As explained by Miss. Zhang, the R&D manager:
“In order to standardize the various types of data we have, we
invented a tailoring-specific 16-bit coding composed of customer’s critical data including body measurement as well as
special customized requirements. With this coding, our workers could read from an attached digital label and understand
the customer’s requirements of a particular suit. Each bundle of
clothing has a piece of RFID chip. Upon receiving the garments
through assembly line, workers would first scan the label using
the computer terminal installed at each worker’s workstation
to know what needs to be done with each order and get these
soon-to-be-sown clothing pieces, according to the information
embedded in the code assigned.”
By revamping the production processes and introducing digitalization, RCG successfully developed mass customization capability.
Customers could enter their body measurements through the
RCMTM platform, connect with RCG factory and place orders
directly. RCG’s customers could expect to receive their customized
suits within 7 working days, which would easily take 21 days previously.
In revamping the production process, according to Mr. Yan, the
supply chain general manager:
“The entire production process was reorganized into an assembly line with tasks decomposed into various sectors assisted
with sensor technology, such as RFID. The revamped production
process achieved a pipelined mode of production (i.e. manufacturing personalized suits) enabled by digital technologies
integrating traditional assembly lines and individually customized production.”
To tie in with the disruptive change of business and manufacturing model, RCG also had to rearrange its management functions
around customers’ requirements, making it a customer-centric
management model. As Miss. Sun, the director of human resources
described:
“As part of our transformation plans, we integrated and
eliminated redundant departments. In fact, more than 30
departments were reorganized into six centers: the supply
chain center, the production center, the customer service center, the financial center, the information center, and the human
resource center. After the transformation, RCG management
model looks more like a customer-centric, hub-and-spoke
model allowing easy accessibility point (functionality) to point
(functionality).”
By 2012, after more than ten years of organizational transformation and digitalization, RCG achieved more than 150%
year-on-year growth among production, sales and profit targets.
As the personalized-customization model and the RCMTM online
platform matured, a digitally enabled ecosystem was evolved and
triggered further innovation at RCG.
498
H. Hu et al. / International Journal of Information Management 36 (2016) 496–499
3.3. Leadership stage (2013–now)
Mass customization calls for flexibility and quick responsiveness. With data accuracy and standardization well integrated into
the routine, RCG has transformed itself to become a fully datadriven intelligent factory.
Just as Mr. Zhang, the chairman of RCG introduced: “By 2014,
we’d spent 11 years to transform the traditional large-scale mass
production model of B2B (business to business) to mass customization model of C2M (customer to manufactory), which involved
building a digital ecosystem that consists of an online marketing system, a support system and an intermediate system of large
customer-database which is stored via cloud facilities. In our digital
ecosystem, we also have in place supply chain systems, R&D design
systems, production logistics system, and customer service system.
This has to be done as the traditional mode of mass-production
operation could no longer meet the customization requirements of
our ever-demanding customers.”
When building a large customer database, the challenge lies in
standardizing massive technical data generated from thousands
of customer body measurements and special customized requirements. According to Miss. Liu, CAD technology manager, this has
yielded 9666 size patterns which formed the core clothing-material
molding system. After entering the body measurement data, CAD
will automatically match the most suitable molding and prepare
clothing materials accordingly, while kick-starting its manufacturing process along an assembly line.
Today, RCMTM has grown into a mega system that has 20 subsystems seamlessly integrated, supporting the entire operations.
RCG, as a leader in deploying advanced digital technologies in
the garment manufacturing industry, continued to introduce 3D
printing, big data and other new technologies into its C2M digital
ecosystem.
4. Lessons learned
Given the dynamic environment and complex business ecosystem, organizations are faced with challenges that prevent them
from sensing and responding to market changes. Our case study
demonstrated how institutional entrepreneurship played a crucial
role in organizational transformation, aimed at building a digitally
enabled business ecosystem. This case further indicated the role
played by institutional entrepreneurship in coordinating and unifying different stages of organizational transformation (see Table 1).
The lessons learned in our case study are discussed as follows.
Firstly, it is found that institutional entrepreneurship was evident in different stages during the Group’s transformation into a
digital ecosystem. For example, during the birth stage, few workers
understood the need for transformation proposed by the chairman
of RCG. At the individual level, it was challenging for the management team to overcome the philosophical differences among the
workers and between the management and the workers as, if not
handled well, it could have led to resistance to change and suffered
from unintended consequences. It took a lot of effort to persuade
and communicate with the workers as most of them were less
informed about the how technologies could improve their work
significantly. At the organizational level, RCG learned early on that
data standardization would be a key in digitalization and would
play a crucial part in upgrading the skills of its workers.
During the expansion stage, as market-demand for customization picked up, philosophical differences between the workers
and management team finally converged which enabled smoother
transformation to digitalization. Meanwhile, as data continued to
play a central role in RCMTM system, a digital ecosystem was
evolved over time.
During the leadership stage, RCG’s leadership achieved philosophical accordance after ten years of unrelenting efforts. At the
organizational level, RCG is committed to building an intelligent
business platform which allows RCG to seamlessly integrate both
domestic and foreign markets so as to better meet the customized
needs of customers.
Secondly, this case shows that the fundamental goal of organizational transformation lies in the construction of a digital ecosystem.
The construction process is a characteristic of continued evolution.
RCG adopted different production modes in the three different periods. During the birth stage, RCG adhered to the mode of MTM
which is a personalized, small batch customization. During the
expansion stage, with the innovation of production technology
and equipment, RCG started a new mode of RCMTM incorporating
accumulative capability of customer data. During the leadership
stage, RCG developed a new model of intelligent manufacturing —
C2M through the formation of KUTE Internet Platform, connecting customers, suppliers, factories, logistics and after-sales service,
integrating the supply and demand sides of the product along the
entire value chain.
Last but not least, this case informs us that the development of
a digital ecosystem is a process of co-evolution: the complex interplay between competitive and cooperative business strategies. The
three core business processes were well-coordinated and evident
in the study. According to the case firm, during the birth stage, RCG
focused on defining what customers wanted, building close relationship with employees, key lead customers, and suppliers. During
the expansion stage, RCG focused on introducing digital platform
aimed at integrating internal and external business processes. During the leadership stage, with its digital ecosystem maturing, RCG
innovated further by developing a business model of C2M.
5. Conclusion
Despite the significance of institutional entrepreneurship, the
process of developing digitally enabled ecosystem remains elusive to many firms. We hope that our findings from the case
study will provide some practical implications for organizations
to better manage organizational transformation, which is a critical step toward successfully building digitally enabled ecosystem.
We learned that it is especially significant for traditional manufacturing factories to transform from an old-fashion factory to a
digital-enabled modern factory. Future research should focus on
organizations from other industries to extend our understanding
of how organizational transformation could be achieved through
institutional entrepreneurship functionalities.
Table 1
The evolution process of the organizational transformation.
Level
Individual level
Organizational level
Societal level
Process
Birth
Expansion
Leadership
Philosophical difference
Standardization
Domestic market
Philosophical convergence
Digitization
Foreign market
Philosophical accordance
Platform
Domestic and foreign markets
Source: Based on the related literature and the case study.
H. Hu et al. / International Journal of Information Management 36 (2016) 496–499
Acknowledgements
This paper was supported in part by National Social Science
Foundation of China under Grants 15BGL033 and the National Natural Science Foundation of China 71102138.
References
Huang, P. Y., Pan, S. L., & Ouyang, T. H. (2012). The role of IT in achieving operational agility: A case study of Haier, China. International Journal of Information
Management, 32(3), 294–298.
Moore, J. F. (1993). Predators and prey: A new ecology of competition. Harvard
Business Review, 71(3), 75–83.
Pan, S. L., & Tan, B. C. C. (2011). Demystifying case research: A StructuredPragmatic-Situational (SPS) approach to conducting case research. Information
and Organization, 21, 161–176.
Shepherd, D. A., & Patzelt, H. (2011). The new field of sustainable entrepreneurship:
Studying entrepreneurial action linking “What Is to Be Sustained” With “What
Is to Be Developed”. Entrepreneurship Theory & Practice, 35(1), 137–163.
Tan, B., Pan, S. L., Lu, X., & Huang, L. (2015). The role of IS capabilities in the development of multi-sided platforms. The digital ecosystem strategy of Alibaba.com.
Journal of the Association for Information Systems, 16(4), 248–280.
499
Tracey, P., Phillips, N., & Jarvis, O. (2011). Bridging institutional entrepreneurship
and the creation of new organizational forms: A multilevel model. Organization
Science, 22(1), 60–80.
Haibo Hu is an associate professor of School of Business Administration at the Jiangxi
University of Finance and Economics, China. He received his master’s degree in Management in 2003 and Ph.D. degree in Industrial Economics in 2010 from Jiangxi
University of Finance and Economics. His research interests include institutional
entrepreneurship, strategic management, and enterprise innovation.
Tao Huang is a postgraduate student of School of Business Administration at the
Jiangxi University of Finance and Economics, China. His research interests include
organizational transformation, business ecosystem strategy, and enterprise innovation.
Qingfeng Zeng is an associate professor of School of Information Management and
Engineering at Shanghai University of Finance and Economics, China. He received
his Ph.D. degree in Management Information Systems in 2005 from Fudan University, China. His research interests include organizational transformation, E-business
strategy, and online brand management.
Song Zhang is a professor of School of Business at Qingdao University, China. She
received her Ph.D. degree in Management Information Systems in 2003 from Tongji
University, China. Her research interests include business analytics, multi-sided
platform business model, and user behavior in social media.