DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page I Dynamic Relationships Management Journal CONTENTS Volume 13, Number 2, November 2024 Editorial ‐ Fostering Camaraderie Through Shared Interests: Insights From a Euro 2024 Prediction Game Matej Černe, Simon Colnar, Tomaž Čater, Jure Andolšek, Dejan Uršič ................................................. 1 The Effect of Collectivism Cognitive Orientation on Centrality Bias and Counterproductive Knowledge Behavior: An Experimental Study Frida Fanani Rohma, Fitri Ahmad Kurniawan, Aliya Tiara Fatiha, Sayyidah Nafiatus Surur .................. 3 Government Policy, IT Infrastructure, Business Model Innovation, Digital Transformation, and Dynamic Capability: Catalysts for FIRM Performance Enhancement Binh Tan Mai, Phuong Van Nguyen, Ngan Thi Thanh Vo, Zafar U. Ahmed, Peter Stokes ...................... 17 A Systematic Literature Review on the Impact of Job Stress on Employee Performance with Special Reference to the Banking Sector Nikita Mukherjee, Syed Anis Haider, Satrajeet Choudhury .................................................................. 37 Organizational Climate and Employee Satisfaction Following the Reform of Social Services: Lessons from Slovenia Matej Babšek, Polonca Kovač, Nina Tomaževič .................................................................................... 55 Requirements Change Management: A Case Study of an Enterprise System Implementation Project Laura Fink, Ajda Fošner, Andrej Dobrovoljc, Tomaž Poznič................................................................... 71 7th International Conference on Management and Organization: Managing Paradoxes in and Across Organizations .............................................................................................................................................................. 91 Author Guidelines................................................................................................................................ 93 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page II Aims & Scope The Dynamic Relationships Management Journal is an international, double blind peer‐reviewed bi‐annual publication of academics’ and practitioners’ research analyses and perspectives on relationships management and organizational themes and topics. The focus of the journal is on management, organization, corporate governance and neighboring areas (including, but not limited to, organizational behavior, human resource management, sociology, organizational psychology, industrial economics etc.). Within these fields, the topical focus of the journal is above all on the establishment, development, main‐ tenance and improvement of dynamic relationships, connections, interactions, patterns of behavior, structures and networks in social entities like firms, non‐profit institutions and public administration units within and beyond individual entity bound‐ aries. Thus, the main emphasis is on formal and informal relationships, structures and processes within and across individual, group and organizational levels. DRMJ articles test, extend, or build theory and contribute to management and organizational practice using a variety of empirical methods (e.g., quantitative, qualitative, field, laboratory, meta‐analytic, and combination). Articles format should include, but are not restricted to, traditional academic research articles, case studies, literature reviews, method‐ ological advances, approaches to teaching, learning and management development, and interviews with prominent exec‐ utives and scholars. Material disclaimer Responsibility for (1) the accuracy of statements of fact, (2) the authenticity of scientific findings or observations, (3) expressions of scientific or other opinion and (4) any other material published in the journal rests solely with the author(s). The Journal, its owners, publishers, editors, reviewers and staff take no responsibility for these matters. Information for Readers Dynamic Relationships Management Journal (ISSN 2232‐5867 ‐ printed version & ISSN 2350‐367X ‐ on‐line version, available in (full text) at the DRMJ website) is published in 2 issues per year. For ordering the printed version, please contact the editor at matej.cerne@ef.uni‐lj.si. 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DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 1 EDITORIAL ‐ FOSTERING CAMARADERIE THROUGH SHARED INTERESTS: INSIGHTS FROM A EURO 2024 PREDICTION GAME Matej Černe, Simon Colnar, Tomaž Čater, Jure Andolšek, Dejan Uršič Amidst the structured rigidity of modern work environments, where tangible outcomes often over‐ shadow the subtle dynamics of human interaction, a seemingly trivial event—an office Euro 2024 pre‐ diction game—reveals weighty insights into the fab‐ ric of workplace relationships, and acts as an inspiration for this editorial. This game, more than just a playful diversion, serves as a prism through which we can view the essential roles of cama‐ raderie, networks, connections, and friendship in professional settings. Such shared experiences not only foster a sense of belonging but also illuminate key aspects of career development and organiza‐ tional behavior, for careers in academia and beyond. The intelligent career framework articulated by Arthur and Rousseau (1996) underscores the impor‐ tance of ‘knowing whom’—a component that em‐ phasizes building and nurturing professional networks. This element is particularly salient when considering the spontaneous interactions that arise during activities like a prediction game. Through these interactions, colleagues forge dynamic rela‐ tionships that can strengthen the social fabric of an organization, enhancing both individual and collec‐ tive capacities to navigate career landscapes and or‐ ganizational challenges. Drawing on social capital theory, we under‐ stand that networks of relationships are a form of valuable asset. These networks facilitate the flow of information, enhance coordination, and augment cooperation opportunities (Granovetter, 1973). The informal nature of a prediction game taps into these networks, activating what Granovetter describes as 'the strength of weak ties', where acquaintances provide access to resources and information beyond the reach of close‐knit groups. teractions are not merely transactional but deeply integrative (Bourdieu, 1986). These interactions cul‐ tivate a collective identity and mutual commitment that enhance job satisfaction and organizational loy‐ alty. Additionally, Coleman’s exploration of social capital highlights the importance of trust and nor‐ mative behaviors that emerge from these interac‐ tions, fostering a supportive community that enhances collaborative efforts and workplace effi‐ ciency (Coleman, 1988). In reflecting on the Euro 2024 prediction game, it becomes evident that the outcomes extend far be‐ yond simple entertainment. These activities catalyze the formation of dynamic and enduring social net‐ works that underpin career development through strategic relationships, a crucial aspect of 'knowing whom' in Arthur’s framework. As organizations continue to evolve, recogniz‐ ing and nurturing these informal interactions be‐ comes vital. They enrich the workplace by providing a scaffold for robust, supportive relation‐ ships that contribute significantly to a resilient or‐ ganizational culture. The challenge for both scholars and practitioners lies in fostering these environments without compromising their organic and spontaneous nature. As we move forward, it is imperative for scholars and practitioners alike to recognize and foster these informal arenas of interaction. Not only do they en‐ rich the social and emotional dimensions of the workplace, but they also contribute significantly to the scaffolding of a supportive and resilient organi‐ zational culture. The challenge lies in intentionally cultivating these interactions without stripping them of their spontaneity and genuine human connection. The complex interplay of these dynamic rela‐ tionships is further explored through Bourdieu’s concept of social capital, which posits that social in‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 1 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 2 References: • Arthur, M. B., & Rousseau, D. M. (Eds.). (1996). The boundaryless career: A new employment principle for a new organizational era. Oxford University Press. • Bourdieu, P. (1986). The forms of capital. In J. Richardson (Ed.), Handbook of Theory and Re‐ search for the Sociology of Education (pp. 241‐ 258). Greenwood. • Coleman, J. S. (1988). Social capital in the cre‐ ation of human capital. American Journal of So‐ ciology, 94, S95‐S120. • Granovetter, M. (1973). The strength of weak ties. American Journal of Sociology, 78(6), 1360‐1380. 2 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 3 Vol. 13, No. 2, 3‐16 doi:10.17708/DRMJ.2024.v13n02a01 THE EFFECT OF COLLECTIVISM COGNITIVE ORIENTATION ON CENTRALITY BIAS AND COUNTERPRODUCTIVE KNOWLEDGE BEHAVIOR: AN EXPERIMENTAL STUDY Frida Fanani Rohma Economics and Business Faculty, Universitas Trunojoyo Madura frida.frohma@trunojoyo.ac.id Fitri Ahmad Kurniawan Economics and Business Faculty, Universitas Trunojoyo Madura Aliya Tiara Fatiha Economics and Business Faculty, Universitas Trunojoyo Madura Sayyidah Nafiatus Surur Economics and Business Faculty, Universitas Trunojoyo Madura Abstract This research investigates the causal relationship between centrality bias and counterproductive knowledge behavior. This research also identifies the moderating effect of inducing a collectivistic cognitive orientation on the relationship between centrality bias and counterproductive knowledge behavior. This research uses an experimental method with a 2x2 factorial design between subjects. Centrality bias was manipulated into two conditions: high vs. low. Meanwhile, the cognitive orientation of collectivist culture is categorized into two categories: horizontal vs. vertical. This research found that centrality bias encourages individuals to engage in greater counterproductive knowledge behavior. The cognitive orientation of a horizontal collectivist culture can minimize counterproductive knowledge behavior. This re‐ search found that the cognitive orientation of collectivist (horizontal) culture effectively filters the negative impact of centrality bias on counterproductive knowledge behavior. This study suggests a substantial impact of centrality bias on reluctance to exert effort and detrimental behavior. This research addresses the overlap between knowledge sharing and counterproductive knowledge behavior by referring to real‐effort experimental tasks. Keywords: Centrality Bias, Counterproductive Knowledge Behavior, Collectivism, Culture This research was supported by the Institute for Research and Community Services, University Trunojoyo Madura, under grant numbers (5521/UN46.4.1/PT.01.03/2023) 1 INTRODUCTION The existence of a halal industry is a new paradigm in encouraging economic growth (Wilson et al., 2013; Hassan et al., 2021). One of the reasons for the success of industrial and organizational growth is human resource capabilities (Rohma et al., 2023). The increasingly massive development of the halal industry needs to be supported by knowledge‐ sharing behavior, which is one of the primary keys Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 3 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 4 Frida Fanani Rohma, Fitri Ahmad Kurniawan, Aliya Tiara Fatiha, Sayyidah Nafiatus Surur: The Effect of Collectivism Cognitive Orientation on Centrality Bias and Counterproductive Knowledge Behavior: An Experimental Study to effectiveness and increased organizational per‐ formance (Argote et al., 2000; Vera‐Muñoz et al., 2006; Silvi & Cuganesan, 2006; Quigley et al., 2007; Rohma & Anita, 2024). Knowledge‐sharing behavior can encourage the formation of competitive advan‐ tage and the development of organizational strategy (Kim & Yun, 2015; Seerenko, 2019). Serenko (2019) and Seerenko & Bontis (2016) explain that many re‐ search developments have examined the driving factors and factors weakening knowledge‐sharing tendencies. However, research developments tend to view that an increase or decrease in knowledge‐ sharing tendencies is directly proportional to coun‐ terproductive knowledge behavior or a desire not to share one’s knowledge (Serenko & Bontis, 2016). This causes many research developments to only focus on knowledge‐sharing behavior and ignore counterproductive knowledge behavior. Meanwhile, Serenko & Bontis (2016) found that increasing or de‐ creasing knowledge sharing is not directly propor‐ tional to counterproductive knowledge behavior. Thus, efforts to understand the triggers and miti‐ gates of counterproductive knowledge behavior cannot be ignored. Mursita & Almilia (2020) succeeded in partially investigating that subjective incentive schemes can reduce counterproductive knowledge behavior. However, several previous studies have shown that subjective incentive schemes in the performance evaluation process often contain inaccuracies due to systematic measurement errors, indicating that performance assessments by evaluators are biased (Ahn et al., 2010). There are two types of systematic performance evaluation bias: centrality bias and generosity bias (Bol, 2011; Moers, 2005). Centrality bias tends to have a more considerable impact than leniency bias on reducing job achievement (Ahn et al., 2010; Berger et al., 2013; Bol, 2011). The pres‐ ence of centrality bias eliminates team competition, increases cooperation (Kampkötter & Sliwka 2016), and encourages knowledge‐sharing behavior (Cheng & Coyte 2014). However, Serenko & Bontis (2016) found that increasing or decreasing knowl‐ edge sharing is not directly proportional to counter‐ productive knowledge behavior. Apart from that, centrality bias can negatively influence the encour‐ agement/incentives for employee performance, es‐ pecially those whose performance exceeds the 4 average (Bol 2011; Trapp & Trapp 2018). This indi‐ cates that individuals who know that their evalua‐ tion results will be compressed by the evaluator towards the average evaluation results will not be encouraged to put more effort into the future (Gol‐ man & Bhatia 2012). Thus, the impact of centrality bias on counterproductive knowledge behavior is still ambiguous and has the potential to cause over‐ lapping perceptions. Thus, this research investigated by considering the possible impact of centrality bias on counterproductive knowledge behavior without ignoring the importance of preventive control ef‐ forts that can be carried out. Individual cognitive orientation mainly explains individual behavior and actions (Xin et al., 2006). Hofstede (1980) explains that individual cognitive orientation is divided into individualism and collec‐ tivism. Mursita & Almilia (2020) found that cogni‐ tive orientation influences counterproductive knowledge behavior. However, Mursita & Almilia (2020) have not succeeded in showing the effec‐ tiveness of cognitive orientation as a moderating factor. The inability of cognitive orientation to be‐ come a moderating factor may occur due to the in‐ compatibility of the manipulation given with the cultural conditions of the studied country. Indone‐ sia has a collectivist orientation. Borges et al. (2019) explain that a high knowledge‐sharing behavior oc‐ curs in Indonesia due to group‐based cultural ori‐ entation. Thus, in Asian countries with a collectivist culture, further elaboration efforts are needed. No longer paying attention to the individualist‐collec‐ tivist cognitive orientation. However, it is necessary to study the role of collectivism’s cognitive orienta‐ tion in depth, specifically divided into vertical and horizontal collectivism. Comprehensively, using the principle of cognitive orientation, this research in‐ vestigates the effect of inducing a collectivistic cog‐ nitive orientation on the relationship between centrality bias and counterproductive knowledge behavior. This research uses an experimental method with a 2x2 factorial design between subjects. Cen‐ trality bias was manipulated into two, namely pres‐ ence and absence. Meanwhile, collectivism’s cognitive orientation is categorized into vertical and horizontal. This research is vital for several reasons. First, Golman & Bhatia (2012) explained that cen‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 5 trality bias has direct (straightforward) negative con‐ sequences for individual behavior. Therefore, the impact of centrality bias on counterproductive knowledge behavior tendencies needs to be moni‐ tored and improved. Second, exploring cognitive orientation needs to be studied comprehensively by expanding the study of individualism‐collectivism because, over its development, mapping has been carried out by Hofstede (1980). Thus, elaboration efforts precisely match regional orientation; in this case, Indonesia is collectivist, so it is necessary to pay attention to the role of vertical and horizontal collectivism. This research is essential to conduct a more comprehensive study of management control by focusing on the determinants and preventive control efforts in one test model. This research contributes to several streams. Theoretically, the research contributes to the field of management control by comprehensively exam‐ ining it no longer in terms of knowledge‐sharing behavior but in terms of counterproductive knowl‐ edge behavior. This research shows the trigger fac‐ tors and mitigation efforts for counterproductive knowledge behavior. Empirically, this research ad‐ dresses the failure of previous research in examin‐ ing moderating effects by expanding the category of manipulation of collectivist cognitive orientation to vertical‐horizontal, which has not received much attention so far. Experimental research methods can induce stressors and measure individual cog‐ nitive and personality traits directly (real‐time). This complements previous research methods’ weaknesses that trigger cognitive confirmation bias (Ayyagari et al., 2011; Sellberg & Susi, 2014). Practically, this research can be a recommendation for organizations in determining evaluation schemes for organizational members to minimize the impact of centrality bias, as well as considering collectivism‐type elaboration efforts that are quite effective in optimizing employee performance and productivity by minimizing counterproductive knowledge behavior. Comprehensively, this article is written in several parts, including the second part, literature review, and hypothesis develop‐ ment. The third part is research methods. The fourth part is the research results and discussion. The final part is the conclusion, including implica‐ tions, limitations, and suggestions. 2 LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT 2.1 Centrality Bias Centrality bias is a condition where there is vari‐ ation in performance evaluation, which tends to be smaller than expected from the performance evalu‐ ation system (Kampkötter & Sliwka 2016). Centrality bias causes evaluators to fail to differentiate perfor‐ mance levels between employees (Bol 2011; Moers 2005), as well as causing disproportionate pay‐to‐ performance ratios due to compression and is achieved by downplaying the value of above‐average employees and exaggerating the value of below‐av‐ erage employees (Bol 2011). Evaluators use discre‐ tion in evaluating performance on one task to adjust for perceived deficiencies in evaluating performance on another task (Bol & Smith 2011). Centrality bias impacts the tendency for knowledge‐sharing behav‐ ior (Cheng & Coyte 2014). However, it should be noted that the literature has succeeded in showing that the effects of increasing and decreasing knowl‐ edge sharing are not directly proportional to increas‐ ing or decreasing counterproductive knowledge behavior. Golman & Bhatia (2012) explained that in‐ dividuals aware of centrality bias with evaluation re‐ sults being compressed towards average results will tend to behave with decreasing work patterns. 2.2 Individualism‐collectivism and cognitive orientation Individual cognitive orientation can be catego‐ rized into individualism and collectivism (Hofstede, 1980). The theory of individualism‐collectivism ex‐ plains the existence of two patterns of individual be‐ havior in responding to specific interests, namely individualism and collectivism (Chow et al., 000; Trian‐ dis & Gelfand, 1998; Wagner, 1995). Individuals with an individualistic cognitive orientation tend to priori‐ tize personal interests with a sense of self that tends to be autonomous, emotional independence, individ‐ ual initiative, the right to privacy, and even financial security (Triandis & Gelfand, 1998). Meanwhile, indi‐ viduals with a collectivist orientation tend to have cog‐ nitive behavior that emphasizes collective identity, emotional dependence, group solidarity, sharing, rights and obligations, shared needs, and group deci‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 5 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 6 Frida Fanani Rohma, Fitri Ahmad Kurniawan, Aliya Tiara Fatiha, Sayyidah Nafiatus Surur: The Effect of Collectivism Cognitive Orientation on Centrality Bias and Counterproductive Knowledge Behavior: An Experimental Study sions (Triandis & Gelfand, 1998). Bochner & Hesketh (1994) emphasized that individualism/collectivism refers to the relationship between individuals and col‐ lectivities within social groups. Collectivist cognitive orientation gives individuals more non‐formal contact with their environment (Naranjo‐Gil et al., 2012). The existence of non‐formal contracts makes it possible for collectivism’s cognitive orientation to filter the di‐ rect impact (straightforward) of centrality bias by con‐ sidering the cognitive orientation of the party being evaluated. Based on the individual cognitive orienta‐ tion perspective, collectivism in this research is grouped into two types of collectivism orientation: vertical and horizontal. Triandis et al. (1998) explained that the cognitive orientation of collectivism is divided into horizontal and vertical collectivism. Vertical and horizontal differences in collectivism and individual‐ ism are based on self‐concept, fiscal orientation, val‐ ues, and political system (Triandis, 1995). Triandis & Gelfand (1998) explained that vertical and horizontal are used to show differences in emphasis on cognitive orientation. Horizontal places an emphasis on equal‐ ity, while vertical places an emphasis on a more hier‐ archical structure (Triandis & Gelfand, 1998). 2.3 Counterproductive Knowledge Behavior Serenko & Bontis (2016) explain the main differ‐ ence between productive knowledge behavior (knowledge sharing) and counterproductive knowl‐ edge behavior, referring to the valence and motiva‐ tion sections. Knowledge‐sharing behavior focuses more on responsibility, accountability and obligation to the organization, willingness to help, and friendli‐ ness between individuals (Mursita & Almilia, 2020). Meanwhile, counterproductive knowledge behavior is the opposite, which can be in the form of disen‐ gagement from sharing knowledge (Ford et al., 2015), partial knowledge sharing (Ford & Staples, 2010), hoarding knowledge (Hislop, 2003), counter‐knowl‐ edge sharing (Martelo‐Landroguez et al., 2019). 2.4 Centrality bias toward counterproductive knowledge behavior Centrality bias directly impacts work behavior by eliminating team competition and encouraging increased cooperation (Kampkötter & Sliwka 2016) 6 and knowledge‐sharing behavior (Cheng & Coyte 2014). However, increasing or decreasing knowledge sharing is not linearly proportional to counterpro‐ ductive knowledge behavior (Serenko & Bontis, 2016). Centrality bias harms individual performance (Trapp & Trapp, 2018; Bol et al., 2016). Centrality bias can reduce employee performance because central‐ ity bias makes the pay‐to‐performance ratio dispro‐ portionate (Bol 2011). Moreover, Moers (2005) explains that centrality bias reduces performance and individual work motivation in the future. De‐ creased individual work motivation can be done by hiding knowledge and counterproductive knowledge behavior (Ford et al., 2015). Thus, individuals with high centrality bias tend to feel that the evaluator gives scores that tend to be the same without paying attention to the good or bad performance that has been shown. So, individuals tend to be reluctant to increase work effort and reduce work motivation, represented through counterproductive knowledge behavior. Thus, hypothesis 1 proposed is: H1: The tendency for counterproductive knowledge behavior will tend to be higher under conditions of high centrality bias than under conditions with low centrality bias. 2.5 Collectivist cognitive orientation toward counterproductive knowledge behavior Following the assumptions of the theory of col‐ lectivism‐individualism, individuals with a high level of collectivism will tend to mingle with many parties without being selfish in achieving individual perfor‐ mance, not storing knowledge for their interests, and focusing on group orientation. Mursita & Al‐ milia (2020) show that the cognitive orientation of individualism encourages greater counterproductive knowledge behavior than collectivism. Collectivist cognitive orientation gives individuals more non‐for‐ mal contact with their environment (Naranjo‐Gil et al., 2012). Triandis (1995) explains that horizontal collectivism leads more to an equality orientation, while vertical tends to refer to hierarchy (Triandis & Gelfand, 1998). Emphasizing equality encourages in‐ dividuals to share their knowledge with the environ‐ ment and enter into greater informal contracts. Meanwhile, the hierarchical emphasis still pays at‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 7 tention to the strata of knowledge levels in that in‐ dividuals at certain levels tend to have more non‐ formal contract power than at other levels. This can trigger a low desire to share knowledge because of the hierarchy of levels in the work environment. Thus, hypothesis 2 proposed is: H2: The tendency for counterproductive knowledge behavior will tend to be higher in conditions of ver‐ tical collectivism cognitive orientation than in hori‐ zontal collectivism cognitive orientation 2.6 The interaction of centrality bias and collectivism cognitive orientation on counterproductive behavior Cognitive orientation has a significant role in encouraging the effectiveness of control mecha‐ nisms in organizations (Sanchez‐Exposito & Naranjo‐ Gil, 2017). Mursita & Almilia (2020) show that collectivist cognitive orientation produces less coun‐ terproductive knowledge behavior than individual‐ ism. Naranjo‐Gil et al. (2012) explained that collectivist cognitive orientation gives individuals more non‐formal contact with their environment. Thus, based on the theory of individualism‐collec‐ tivism, a high level of individual collectivism can en‐ courage individuals to enter into non‐formal contracts with the environment through efforts to prioritize group interests, one of which is sharing knowledge. It is possible that a collectivist cognitive orientation can be used as a filter for actions that have the potential to cause counterproductive knowledge behavior, such as centrality bias. The theory of individualism‐collectivism, which empha‐ sizes differences in motivational patterns of behav‐ ior from cognitive orientation, with the horizontal collectivism pattern which prioritizes equality in all parts, encourages the tendency for counterproduc‐ tive knowledge behavior to be lower than the verti‐ cal collectivism pattern, which still takes into account the existence of hierarchical levels in a so‐ cial environment. Thus, counterproductive knowl‐ edge behavior in conditions of high centrality bias will tend to be lower in conditions of horizontal col‐ lectivism than vertical collectivism. Therefore, the hypothesis 3 proposed in this research is: H3: Collectivism cognitive orientation moderates the influence of centrality bias on counterproduc‐ tive knowledge behavior Figure 1 provides information about this re‐ search model. Individual cognitive capability is the main driving factor that triggers organizational cen‐ trality bias. Centrality bias can reduce employee performance because centrality bias makes the pay‐ Figure 1: Research Model Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 7 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 8 Frida Fanani Rohma, Fitri Ahmad Kurniawan, Aliya Tiara Fatiha, Sayyidah Nafiatus Surur: The Effect of Collectivism Cognitive Orientation on Centrality Bias and Counterproductive Knowledge Behavior: An Experimental Study to‐performance ratio disproportionate. Literature shows no effect of the absence of centrality bias on organizations. Thus, in research, centrality bias is manipulated into high and low, potentially impact‐ ing counterproductive behavior significantly. Previ‐ ous research shows that the cognitive orientation of individualism encourages more remarkable counter‐ productive knowledge behavior than collectivism. Horizontal collectivism leads to an equality orienta‐ tion, while vertical refers to hierarchy. Based on the assumptions of the theory of individualism‐collec‐ tivism, which emphasizes differences in motiva‐ tional patterns of behavior from cognitive orientation, with the horizontal collectivism pattern prioritizing equality in all parts, encouraging the ten‐ dency for counterproductive knowledge behavior to be lower than the vertical collectivism pattern, which still takes into account the existence of hier‐ archical levels in a social environment. Thus, based on the theory of individualism‐collectivism, collec‐ tivism’s cognitive orientation may moderate the in‐ fluence of centrality bias on counterproductive knowledge behavior. Counterproductive knowledge behavior in organizations is a broad phenomenon that includes Knowledge Sabotage behavior, Counter‐Knowledge Sharing, Accumulation of Knowledge, Disengagement From Knowledge Shar‐ ing, and Share Partial Knowledge. 3 RESEARCH METHODS 3.1 Research Design This research uses a laboratory experiment with a 2x2 between‐subjects factorial design. The process of developing instruments and assigning cases is carried out by involving halal industry play‐ ers. The core instrument created is tested on stu‐ dents as participants to avoid social desirability bias if involving genuine practitioners. Centrality bias was manipulated into 2, namely high and low. Col‐ lectivism was grouped into two, namely horizontal and vertical. Participants are positioned as employ‐ ees evaluated by evaluators and given work situa‐ tions and assignments related to centrality bias and task difficulty level. Based on this case, participants were asked to determine their unwillingness to share information requested by their colleagues, and their level of collectivism was measured. The experimental design in more detail is presented in Table 1 below: 3.2 Experimental Task and Manipulation The manipulation in this study for the centrality bias variable refers to Trapp & Trapp 2018 with mod‐ ifications adapted to the research context. The ex‐ perimental assignment in this study refers to Haesebrouck et al. (2017) with several modifications that placed participants in positions managing fi‐ nancial accounts in one of the halal industries. This trial program will display information regarding the new information system adopted by the company. Each participant is asked to prepare a chart of ac‐ counts in the Financial Report and classify unstruc‐ tured accounts into several main account classifications, namely assets, liabilities, equity, ex‐ penses, and income. The task of respondents is to concentrate individ‐ ually to complete their work. Participants were given information that participants had received incen‐ tives/bonuses equivalent to those they were entitled to based on performance, and other participants were manipulated and not given incentives/bonuses com‐ mensurate with their performance. As suggested by Tams (2011), this method is the most appropriate for experimental tasks related to performance and tech‐ nostress compared to anagram or jumper assignment. Next, participants will be given information about re‐ Table 1: Experimental Design Collectivism Cognitive Orientation Variables/Manipulation Centrality Bias 8 Horizontal Vertical Tall Group 1 Group 2 Low Group 3 Group 4 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 9 quests from colleagues to share their knowledge. Par‐ ticipants will be asked to determine how much they intend not to share their knowledge. The experiment in this research consisted of several stages, as presented in Figure 2. The first stage was filling out informed consent, which stated that participants were ready to participate until the experiment ended. The second stage is the random‐ ization of the distribution of experimental instru‐ ments. The randomization process is carried out with the help of permutations from Microsoft Excel, and participants will be given instruments according to the results of the permutation randomization. Par‐ ticipants work on the instrument in the third stage according to the manipulation received. Participants completed cognitive orientation measures in the fourth stage and answered manipulation checks. In the fifth stage, participants fill in demographic infor‐ mation. Completeness of the demographics section is crucial because demographic information will later be used to determine whether there is an experi‐ mental error. The sixth stage is data collection. 3.3 Research variables The independent variable in this research is centrality bias. In this condition, performance eval‐ uations above the average are evaluated and given lower incentives, while performance below the av‐ erage is evaluated and given higher incentives. Cen‐ trality bias was manipulated into two: the presence and absence of centrality bias. In conditions with centrality bias, participants have received incen‐ tives/bonuses equivalent to those they are entitled to based on their performance. Meanwhile, condi‐ tions with no centrality bias are characterized by not being given incentives/bonuses that are appropriate to their performance. The moderating variable in this research is collec‐ tivism cognitive orientation, namely, the individual’s cognitive condition in carrying out activities tends to focus more on the group (Triandis and Gelfand, 1998). Horizontal Collectivism is a condition of the cognitive orientation of individuals with strong self‐identifica‐ tion with groups without distinguishing between sta‐ tus levels. Each individual is interdependent by prioritizing equality and a family‐oriented group struc‐ ture. Meanwhile, vertical collectivism is an individual’s cognitive orientation that prioritizes group interests above personal interests by maintaining a shared hi‐ erarchy in the community, levels of authority, a sense of interdependence, and low levels of freedom (Sin‐ gelis et al., 1995). The instrument in this research refers to Singelis et al. (1995). Participants were grouped into horizontal and vertical conditions based on higher mean scores on each measure. The dependent variable in this research is coun‐ terproductive knowledge behavior, which is the behav‐ ior of individuals who deliberately do not want to share information with workgroup colleagues even though there is a request from that colleague (Serenko and Figure 2: Experimental Procedure Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 9 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 10 Frida Fanani Rohma, Fitri Ahmad Kurniawan, Aliya Tiara Fatiha, Sayyidah Nafiatus Surur: The Effect of Collectivism Cognitive Orientation on Centrality Bias and Counterproductive Knowledge Behavior: An Experimental Study Bontis, 2016). This variable is measured by providing an accumulative score from a given scale regarding the magnitude of the tendency to behave in a way that does not want to share one’s knowledge. 3.4 Participants This research involves students as stressor sub‐ jects from preparing financial report accounts in the halal industry. The use of students as research subjects is adjusted to the research design and has been ex‐ plained by Kunz (2015) and Trapp & Trapp (2018) that students may not have an idea about the design of performance appraisal systems that are generally used in the world of work. Hence, they tend to produce re‐ sults free from social desirability bias. Shadish et al. (2002), Rohma (2023a), and Nahartyo (2013) suggest researchers consider the requirements of the experi‐ ment to determine the appropriate subject level. Even so, students do not have enough experience like prac‐ titioners. That is why, to minimize social desirability bias, the students used as participants are students with criteria for fulfilling specific course requirements, namely accounting information systems, management accounting, and management control systems who understand the concept of accounting information sys‐ tems, risks, and controls from various cases studied conceptually. in the classroom. So that social desirabil‐ ity bias can be minimized. In addition, Mortensen et al. (2012) and Rohma (2022) also suggest that students with advanced accounting skills can become re‐ searchers and practitioners in social research. 4 RESULTS This research involved 195 participants. How‐ ever, 10 participants did not provide complete infor‐ mation at several experiment stages, and 13 failed to answer the manipulation check questions. Thus, the data used in the further data processing process was 172 data. Before testing the hypothesis, descriptive statistical analysis was carried out. Table 2 shows that the lowest average level of counterproductive behav‐ ior is in the low centrality bias condition, namely 2.66. The results of descriptive analysis based on dif‐ ferences in the treatment of each variable show that counterproductive behavior tends to be greater in conditions of high centrality bias with a value of 5.27 than low centrality bias, namely 2.66. Meanwhile, de‐ scriptively in the collectivist cognitive orientation, the tendency for counterproductive behavior tends to be more significant in the vertical condition, namely 4.50, than in the horizontal condition, 3.61. The av‐ erage value in Table 2 illustrates the data pattern under the proposed hypothesis. However, further hy‐ pothesis testing is needed to see the significance of the differences in each treatment. Testing the validity and reliability of the instru‐ ment is carried out before hypothesis testing is car‐ ried out to provide initial confidence in the instrument’s validity. The test results for all question items show that the overall r‐count value is greater than the r‐table for all question items, so the pro‐ posed instrument is valid. In addition, reliability test‐ Table 2: Descriptive Statistics Centrality Bias High Low Total 10 Collectivism Cognitive Orientation Mean Std. Deviation Vertical 5.76 1,445 Horizontal 4.70 2,197 Total 5.27 1,899 Vertical 2.70 1,102 Horizontal 2.60 1,482 Total 2.66 1,273 Vertical 4.05 1,981 Horizontal 3.61 2,128 Total 3.85 2,504 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 11 ing was carried out using Cronbach’s Alpha. The re‐ sults of the analysis show a p‐value <0.745, which indicates there is no reliability problem. Thus, there is sufficient initial confidence that the instrument is valid and reliable to continue in hypothesis testing. This study predicts and finds that the tendency for counterproductive knowledge behavior will tend to be higher in conditions of high centrality bias than in conditions of low centrality bias with p<0.000. The marginal value in Table 4 is higher in the high central‐ ity bias condition of 2.649 than in the low centrality bias condition of 5.232. Thus, H1 is supported. This research predicts and finds that the tendency for counterproductive knowledge behavior will be higher in vertical collectivism conditions than in horizontal collectivism conditions, with p<0.017, and the aver‐ age marginal value in vertical collectivism conditions is 4.230 rather than 5.762. Thus, H2 is supported. This research predicts and finds that collectivism moder‐ ates the effect of centrality bias on counterproductive behavior with p<0.047. Thus, H3 is supported. 5 DISCUSSION AND CONCLUSION 5.1 Discussion The first research hypothesis predicts and finds that individuals with high centrality bias tend to be‐ have with counterproductive knowledge. These re‐ sults are consistent with the findings of Mursita & Nahartyo (2022) that centrality bias significantly im‐ pacts the reluctance to exert performance effort. In Table 3: Hypothesis Testing Df Mean square F Sig Correlated models 3 104.416 42,982 0,000 Intercept 1 2623,565 1079.97 0,000 Centrality Bias 1 281,852 116,023 0,000* Collectivism 1 14,143 5,822 0.017* Centrality Bias* Collectivism 1 9,753 4,015 0.047** 157 2,429 Error Notes. Adj R‐square = 0.197, Note: *Sig at level 1%; **Sign at level 5%. Table 4: Marginal Mean for Each Condition Centrality Bias Mean Std. Error High 5,232 Low 95% Confidence Interval Lower Bound Upper Bound 0.176 4,885 5,579 2,649 0.163 2,327 2,971 Vertical 4,230 0.161 3,912 4,548 Horizontal 3,651 0.178 3,300 4,002 Vertical 5,762 0.214 5,287 6,237 Horizontal 4,703 0.246 4,197 5,209 Vertical 2,698 0.240 2,275 3,121 Horizontal 2,600 0.256 2,113 3,087 Collectivism Centrality Bias High Low * Religiosity Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 11 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 12 Frida Fanani Rohma, Fitri Ahmad Kurniawan, Aliya Tiara Fatiha, Sayyidah Nafiatus Surur: The Effect of Collectivism Cognitive Orientation on Centrality Bias and Counterproductive Knowledge Behavior: An Experimental Study other words, when individuals feel that their perfor‐ mance is being evaluated unfairly due to centrality bias, they will be less motivated to exert effort at work. Therefore, the existence of centrality bias con‐ ditions causes injustice in the workplace. Cao (2022) found evidence that injustice causes individuals to hoard knowledge because they consider their con‐ tributions not commensurate with the rewards they receive. Research developments have shown that centrality bias can influence disengagement from knowledge sharing. This condition refers to evalua‐ tions’ tendency to equalize individuals with high and low performance. This can cause a breakdown in morale, motivation, and performance, as employees who consistently produce quality work on average receive the same ratings as those who exceed. Employees who feel marginalized in the work‐ place due to leader bias tendencies are more likely to engage in knowledge‐hiding behavior, hindering organizational innovation and employee knowledge sharing. The existence of centrality bias conditions can lead to dissatisfaction with the organization, triggering the behavior of counterproductive knowl‐ edge, such as counter‐knowledge sharing. The dis‐ satisfaction referred to is a biased condition that evens out employees with high and low perfor‐ mance. Perotti et al. (2023) and Yean et al. (2022) show that employees dissatisfied with their jobs may engage in harmful behaviors that hinder orga‐ nizational knowledge flow, such as disengagement from knowledge sharing and counter‐knowledge sharing. Conditions of high centrality bias cause in‐ dividuals to feel dissatisfied and unfair due to the equal distribution of performance evaluations. These conditions can influence individuals to carry out counterproductive knowledge behavior, such as knowledge sabotage, counter‐knowledge sharing, knowledge hoarding, disengagement from knowl‐ edge sharing, and partial knowledge sharing. The second research hypothesis predicts and shows that counterproductive knowledge behavior can be minimized with horizontal collectivism. Sev‐ eral studies have found a positive relationship be‐ tween collectivist cognitive orientation and knowledge sharing. In line with previous research, this research shows that collectivist conditions harm the tendency for counterproductive knowledge be‐ havior. These results align with Agbejule et al. 12 (2021), who found evidence that horizontal trust has a more significant influence than vertical trust. Trust in individuals who are equal to them creates a more comfortable atmosphere in team learning, thereby enabling the knowledge‐sharing process. In line with the perspective of the theory of col‐ lectivism‐individualism, individuals in collectivist conditions will be willing to work as a team so that they have close relationships with other group mem‐ bers and always prioritize common goals. Nadeem et al. (2020) show that a shared goal is essential in minimizing the behavioral tendency to hide knowl‐ edge. Individuals who work together to achieve a common goal tend to share their knowledge and ex‐ pertise with others rather than hoard knowledge for themselves. Hernaus et al. (2019) also show that task interdependence can help reduce the tendency to hide knowledge. Interdependent conditions can re‐ duce competitive behavior between individuals and allow for knowledge sharing. Counterproductive knowledge behavior tends to be higher in vertical and horizontal collectivism con‐ ditions. This aligns with Nghia & Dong (2022), who state that horizontal collectivism tends to transfer more knowledge because it emphasizes interdepen‐ dence, equality, and cooperation, which can encour‐ age individuals to share their knowledge with others. Meanwhile, vertical collectivism emphasizes hierarchy and believes that each individual is at a different level. The existence of hierarchical emphasis can create gaps between individuals, hindering knowledge‐sharing. Differences in level give a feeling of discomfort and re‐ luctance to share knowledge, whereas horizontal col‐ lectivism tends to feel more accessible to share knowledge without considering hierarchy. The result of the third research hypothesis also found that collectivist cognitive orientation can be a filter to reduce the negative impact of centrality bias on counterproductive knowledge behavior. These findings align with Ma et al. (2022a) and Ma et al. (2022b) that collectivism can reduce the neg‐ ative impact of factors that trigger counterproduc‐ tive knowledge behavior tendencies. Individuals with high collectivism tend to prioritize the group’s interests to avoid behavior detrimental to the group’s interests, such as counterproductive knowl‐ edge behavior. Based on the perspective of the the‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 13 ory of collectivism‐individualism, horizontal collec‐ tivism emphasizes social relations based on equality so that counterproductive knowledge behavior is lower than vertical collectivism, which emphasizes differences in hierarchical levels. Jiang et al. (2023) found that cooperative commu‐ nication can create equal interpersonal relationships, reducing the behavior of hiding knowledge. Equal so‐ cial relations foster a harmonious communication at‐ mosphere, providing comfort in the knowledge exchange process. Iqbal et al. (2022) found that injus‐ tice felt by individuals can encourage individuals to carry out knowledge‐hiding behavior. Injustice can take the form of unfair performance evaluations such as centrality bias. The existence of centrality bias makes individuals feel maltreated, so they are reluctant to exert effort and tend to behave detrimentally. Condi‐ tions of horizontal collectivism that emphasize equal‐ ity, interdependence, and harmonious social relations can filter the negative impact of centrality bias by cre‐ ating an environment conducive to sharing knowledge. 5.2 Implications This research has implications in several areas. First, this research adds to previous studies by con‐ sidering the overlap between knowledge sharing and counterproductive behavior with determinant factors and mitigating efforts in one test model. Second, this research can be a recommendation for organizations in determining evaluation schemes for organizational members to minimize the impact of centrality bias. 5.3 Conclusion Research shows that a high centrality bias can be a trigger that can potentially cause greater coun‐ terproductive behavior than a low centrality bias. However, the presence of a collectivist cognitive ori‐ entation can be a filter for the negative impact of centrality bias on counterproductive behavior. This research is not free from all limitations. First, the lim‐ ited literature regarding counterproductive knowl‐ edge behavior means that the literature base for this research is still limited. Second, this research ignores the individual’s level of expertise in performing the task, which may influence their knowledge behavior. Third, some participants withdrew during the exper‐ imental process, causing the experiment to be car‐ ried out at several stages repeatedly, which had the potential to cause differences in the perceived con‐ ditions. Fourth, this research was conducted on a web basis, so network constraints caused the infor‐ mation not to be stored ideally. Future research is expected to consider the characteristics of centrality bias more comprehensively. Reserve participants are highly recommended to minimize participant with‐ drawal during the experiment. EXTENDED SUMMARY/IZVLEČEK Ta študija raziskuje vzročno zvezo med pristranskostjo centralnosti in kontraproduktivnim vedenjem znanja. Raziskava prav tako identificira moderacijski učinek kolektivistične kognitivne usmerjenosti na razmerje med pristranskostjo centralnosti in kontraproduktivnim vedenjem v zvezi z znanjem. Za to uporablja eksperimentalno metodo z 2x2 primerjalno analizo med subjekti. Pristranskost centralnosti je bila manipulirana v dveh pogojih: visoka proti nizki. Medtem je bila kognitivna usmerjenost kolek‐ tivistične kulture razvrščena v dve kategoriji: horizontalna proti vertikalni. Ta raziskava je pokazala, da pristranskost centralnosti spodbuja posameznike k večjemu kontraproduktivnemu vedenju znanja. Nadalje, kognitivna naravnanost horizontalne kolektivistične kulture lahko minimizira kontraproduktivno vedenje znanja. Prav tako je ta raziskava pokazala, da kognitivna naravnanost kolektivistične (horizon‐ talne) kulture učinkovito moderira negativen vpliv pristranskosti centralnosti na kontraproduktivno ve‐ denje znanja. Študija nakazuje pomemben vpliv pristranskosti centralnosti na nepripravljenost vlaganja truda in škodljivo vedenje. Raziskava z uporabo eksperimentalnih nalog z dejanskim trudom obravnava prekrivanje med deljenjem znanja in kontraproduktivnim vedenjem, povezanim z znanjem. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 13 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 14 Frida Fanani Rohma, Fitri Ahmad Kurniawan, Aliya Tiara Fatiha, Sayyidah Nafiatus Surur: The Effect of Collectivism Cognitive Orientation on Centrality Bias and Counterproductive Knowledge Behavior: An Experimental Study REFERENCES: Agbejule, A., Rapo, J., & Saarikoski, L. (2021). Vertical and horizontal trust and team learning: the role of orga‐ nizational climate. 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SAGE Open 12 (3). https://doi.org/10.1177/21582440221123289 16 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 17 Vol. 13, No. 2, 17‐36 doi:10.17708/DRMJ.2024.v13n02a02 GOVERNMENT POLICY, IT INFRASTRUCTURE, BUSINESS MODEL INNOVATION, DIGITAL TRANSFORMATION, AND DYNAMIC CAPABILITY: CATALYSTS FOR FIRM PERFORMANCE ENHANCEMENT Binh Tan Mai Center for Public Administration, International University, Vietnam National University‐Ho Chi Minh City, Vietnam tanbinh_mr@yahoo.com.vn Phuong Van Nguyen (corresponding author) Center for Public Administration, International University, Vietnam National University‐Ho Chi Minh City, Vietnam nvphuong@hcmiu.edu.vn Ngan Thi Thanh Vo The School of Business, International University, Vietnam National University‐Ho Chi Minh City, Vietnam thankshabanks.23@gmail.com Zafar U. Ahmed The School of Business, International University, Vietnam National University‐Ho Chi Minh City, Vietnam zafaruahmed@gmail.com Peter Stokes Leicester Castle Business School, De Montfort University, Great Britain peterstokesmail@gmail.com Abstract Small and medium‐sized firms (SMEs) encounter substantial obstacles in today’s rapidly changing economic landscape, primarily due to their restricted resources and management capacities. This study utilises the resource‐based view theory to investigate how government policies might assist SMEs in utilising their information technology (IT) infras‐ tructure for digital transformation and enhancing firm performance. In the face of emerging technology and increased competition worldwide, SMEs must give utmost importance to innovation and the ability to adapt to achieve long‐ term success. The study, utilising data from 658 SME participants in Vietnam, highlights the significant impact of gov‐ ernment policies on shaping IT infrastructure and emphasises the significance of innovation in bolstering dynamic capacities and overall business success. These findings provide valuable insights for managers and policymakers, in‐ dicating prospective areas for future research that have consequences for SMEs. Keywords: Firm Performance, SMEs, Government Policy, Digital Transformation, Business Model Innovation, Dynamic Capability Funding: This research is funded by International University, VNU‐HCMC, Vietnam; SV2022‐PM‐07 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 17 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 18 Binh Tan Mai, Phuong Van Nguyen, Ngan Thi Thanh Vo, Zafar U. Ahmed, Peter Stokes: Government Policy, IT Infrastructure, Business Model Innovation, Digital Transformation, and Dynamic Capability: Catalysts for FIRM Performance Enhancement 1 INTRODUCTION Organisations are continually challenged to adapt and thrive in a dynamic environment marked by unprecedented technological advancements and regulatory changes. Indeed, disruptive technologies of the fourth industrial revolution have given rise to several opportunities and obstacles for surviving and competing in the highly dynamic market. The digital era offers a favourable environment for busi‐ nesses to operate with the aid of technological ex‐ pertise. With the emergence of various digital solutions on the market, the potential for digital transformation has never been more significant (Bharadwaj et al., 2013; Li, 2020). New technologies, such as artificial intelligence, machine learning, big data and cognitive computing, have the potential to fundamentally transform the corporate landscape (Yang et al., 2017). The growing interest in digital transformation among scholars and practitioners has been highlighted by Obschonka & Audretsch (2020). Furthermore, Vial (2019) has emphasised the strategic relevance and process‐centred charac‐ ter of digital transformation, which has been consis‐ tently discussed in diverse academic literature and practitioner discussions. Fernandez‐Vidal et al. (2022) reported that most Chief Executive Officers now consider digital transformation a strategic and top priority for businesses. Most executives and managers from various sec‐ tors believed that completing digital transformation would be necessary for their businesses (Nadkarni & Prügl, 2021). Although numerous organisations em‐ brace technology‐driven strategies, not all get the same advantages, hence overlooking significant chances (Li et al., 2022). Besides, Zaki (2019) highlights the capacity of digital transformation to generate novel business models, optimise processes, and ele‐ vate consumer experiences. Similarly, Sia et al. (2021) perceive this period as a catalyst for organisations to reassess the incorporation of information technology (IT) strategy with business strategy. The emergence of advanced IT and the resurgence of pre‐internet tech‐ nologies have reinvigorated its significance within the realm of organisational transformation (Nadkarni & Prügl, 2021; Pelletier & Raymond, 2023). The in‐ creased velocity of change brought about by digital technologies has resulted in higher environmental in‐ 18 stability, complexity, and uncertainty (Gupta & Bose, 2022). As a result, it affects business processes, oper‐ ational routines, and organisational capacities. The in‐ creasing research interest in digital transformation in various contexts is a result of the digital transforma‐ tion phenomenon (Malodia et al., 2023). Despite the growing interest, there are calls for more empirical and conceptual studies into how firms digitally trans‐ form (Warner & Wäger, 2019). SMEs have recently been undergoing a signifi‐ cant transformation in their operations. To remain competitive and sustainable, they must adapt to the changes brought about by digitalisation (Tian et al., 2023). Nevertheless, they fall behind more promi‐ nent companies due to their lack of appropriate training and resources for investment in digitalisa‐ tion (Eller et al., 2020; Hakaki & Nikabadi, 2022). Fur‐ thermore, having limited financial resources, SMEs frequently face restrictions on their ability to inno‐ vate, which limits their ability to succeed (Radzi et al., 2017). Digital transformation also revolutionises communications, retail, healthcare, medicine, agri‐ culture, and manufacturing. Some companies are ahead, but most are falling behind (Mugge et al., 2020). Importantly, government policies are believed to foster IT infrastructure development and digital transformation within SMEs through financial incen‐ tives, regulatory support, and tax benefits (Mai et al., 2023). Prior studies have highlighted the significant role of government assistance in facilitating the growth and enhanced digital productivity of SMEs (Garzoni et al., 2020; Indrawati, 2020). Dynamic capabilities often result from an or‐ ganisation’s growth, adoption of new business models, consistency, and adaption efficiency (Ha‐ reebin et al., 2018). Likewise, Dynamic capabilities are the ability to perceive, seize, and restructure in‐ ternal and external resources to adapt to changing business conditions (Li et al., 2022). Moreover, strong dynamic capabilities enable enterprises, par‐ ticularly their top management, to effectively or‐ chestrate resources and competencies, anticipate market and technological changes, realign assets accordingly, and strategically collaborate with other enterprises for business ecosystem co‐creation (Teece, 2020). Similarly, According to Martins (2023), dynamic capabilities (sensing, seizing, and transforming) have a notably positive impact on Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 19 SME performance, with digitalisation significantly enhancing the relationship between these capabil‐ ities and SME performance. Businesses use an ecosystem of related busi‐ nesses to create new products, provide services to clients, and develop innovative capabilities (Lee et al., 2017). To encourage innovative behaviour, the organisation relies on resources obtained from its external surroundings (Sahrom et al., 2016). SME in‐ novation requires strategic innovation and business strategies that encourage creativity, risk‐taking, and innovation. This requires a solid basis, cooperative networks, and a robust institutional structure to support their efforts (Halim et al., 2016). While previous research has traditionally fo‐ cused on the implementation of digital technologies in large corporations (Cenamor et al., 2019) or in in‐ novative businesses, digital startups, and high‐tech giants, studies that examine SMEs operating in tra‐ ditional industries are scarce (Matarazzo et al., 2021). Nevertheless, SMEs are recognised as inno‐ vative and significant contributors to economic growth in many countries, such as Vietnam, where most local companies are small and medium‐sized (Vo et al., 2022). Moreover, a more in‐depth exam‐ ination is required to understand how SMEs can utilise digitalisation to produce greater strategic val‐ ues. There is a lack of comprehensive studies con‐ sidering digital transformation and its causes and effects (Cenamor et al., 2019). Consequently, this study aims to bridge a research gap by addressing two inquiries: RQ1: How do governmental policies contribute to advancing the evolution of business models and IT infrastructure within SMEs? RQ2: How does the process of digital transformation and the introduction of innovative business models contribute to the development of a company’s dy‐ namic abilities and overall performance? The research contributes to the existing litera‐ ture by presenting a resource‐based framework that scrutinises the interconnections and mediating mechanisms among IT infrastructure, business model innovation, digital transformation, and dy‐ namic capabilities. This study strengthens the em‐ pirical evidence by showing that contemporary gov‐ ernment policies, internal digital changes, and innovation affect firm performance in Vietnamese SMEs. These findings can serve as a valuable basis for shaping future regulatory and strategic decisions for governments, organisations, and enterprises. 2 THEORETICAL FRAMEWORK 2.1 The resource‐based view theory The Resource‐Based View (RBV) describes a cor‐ poration as a collection of resources and capabilities that can be used to gain a competitive advantage (Varadarajan, 2023; Zahra, 2021). The primary tenet of this theory is that more fantastic firm performance is linked to firm‐specific, scarce, and difficult‐to‐imi‐ tate resources (Barney, 1986; Bharadwaj, 2000; Varadarajan, 2023). Furthermore, company capabili‐ ties are a company’s ability to utilise current re‐ sources to undertake tasks or activities (Gavronski et al., 2011; Salvato & Vassolo, 2018). Consequently, or‐ ganisations may gain a competitive advantage by cre‐ ating or acquiring organisational capabilities that are unique, non‐substitutable, and inimitable (Harsch & Festing, 2020). Similarly, Varadarajan (2020) and Wu (2010) demonstrated that a company can use its ca‐ pabilities to grow its resources to gain a competitive advantage and enhance its performance. The RBV provides valuable insight into SME dig‐ ital transformation. Each digital transformation stage has its resources, structure, strategies, measure‐ ments, and objectives. Specifically, digital transfor‐ mation is multidisciplinary in nature, encompassing changes in strategy, management, structure, infor‐ mation technology, marketing, and supply chain (Ver‐ hoef et al., 2021). Additionally, it is an essentially strategic process (Vial, 2019; Warner & Wäger, 2019). Hence, it can be inferred that the digital transforma‐ tion process involves a wide range of advanced re‐ sources and capabilities (Hanelt et al., 2021; Warner & Wäger, 2019), and investment in digital transfor‐ mation generates new strategies and business mod‐ els that facilitate the development of capabilities and resources to build competitive advantage (Gil‐Gomez et al., 2020; Tekic & Koroteev, 2019), ultimately en‐ hancing firm performance (Nadkarni & Prügl, 2021). Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 19 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 20 Binh Tan Mai, Phuong Van Nguyen, Ngan Thi Thanh Vo, Zafar U. Ahmed, Peter Stokes: Government Policy, IT Infrastructure, Business Model Innovation, Digital Transformation, and Dynamic Capability: Catalysts for FIRM Performance Enhancement Despite several studies showing these resources’ rel‐ evance to firm performance, the theory still needs to effectively explain the gap between firm perfor‐ mance and how these resources are transformed into capabilities (Kristoffersen et al., 2021). 2.2 Government policies Government policies are pivotal in promoting IT infrastructure and digital transformation in SMEs (Dutta et al., 2020; Garzoni et al., 2020). Federal, state, and local governments extend funding, regu‐ lations, and incentives to qualifying SMEs and indus‐ tries (Mai et al., 2023). These policies play a role in fostering business growth, enhancing resilience in the face of economic uncertainties, and driving eco‐ nomic expansion. They offer financial incentives, regulatory support, and tax benefits to improve technology accessibility and provide funded educa‐ tional programs and training initiatives to boost SMEs’ digital skills (Chege et al., 2020). Additionally, public‐private partnerships provide guidance and support, ensuring SMEs’ competitiveness in the evolving economic landscape, underscoring govern‐ ment policies’ critical role in driving digitisation among these enterprises (Mpofu, 2023). Previous research regarding government support has proved how it can lead to numerous positive outcomes at the company level, including performance, globali‐ sation, innovation, entrepreneurial orientation, and capability building (Faria et al., 2023). For instance, whereas the German government strongly encour‐ ages technological progress, notably by supporting the digitalisation of SMEs (Radicic & Petković, 2023), the Vietnamese government favouring state‐owned enterprises (SOEs) tends to squeeze out the poten‐ tial involvement of SMEs (Walsh et al., 2023). In‐ deed, government policy in Vietnam has shown a preference for both state‐owned and foreign‐owned enterprises over domestic SMEs (Walsh et al., 2023). these resources’ significance in determining firm performance (Kristoffersen et al., 2021). Overall, firm performance encompasses the overall proficiency and effectiveness of a company in accomplishing its goals, typically evaluated through a range of financial and non‐financial metrics, including profitability, market share, productivity, innovation, customer sat‐ isfaction, and employee engagement. The statement refers to the firm’s capacity to generate value for its stakeholders, encompassing shareholders, employ‐ ees, consumers, and the community (Rindova & Fombrun, 1999). Particularly, in this study, firm per‐ formance refers to a firm entity’s overall success, ef‐ ficiency, and effectiveness in attaining its goals, which is frequently measured using a variety of fi‐ nancial and non‐financial criteria. 2.4 IT infrastructure IT infrastructure has been proposed to con‐ tribute greatly to the digital transformation process. IT infrastructure is a component of IT capabilities (Lu & Ramamurthy, 2011), consisting of a firm’s archi‐ tecture, data management services, and application platforms, and is essential to creating a solid com‐ munication and integration system both within and outside organisational boundaries (Ko et al., 2022; Li & Chan, 2019; Tallon et al., 2019). Specifically, gov‐ ernment policy encourages the accessibility of IT in‐ frastructure by offering these incentives, supporting technical breakthroughs, and assisting businesses in keeping up with growing digital trends ((Mpofu, 2023). Similarly, Government policies can help SMEs enhance IT infrastructure, helping the economy and technical advancement (Mai et al., 2023). Based on the above arguments, the following hypothesis is proposed: H1: Government policies significantly foster the de‐ velopment and accessibility of IT infrastructure. 2.3 Firm performance 2.5 Business model innovation The RBV posits that firms achieve a competitive edge by acquiring tangible and intangible organisa‐ tional assets that possess characteristics of value, rarity, inimitability, and non‐substitutability (Barney, 1991). Previous studies have provided evidence of The concept of business model innovation (BMI) BMI refers to the intentional process of re‐ structuring the fundamental elements that drive the business value proposition for the company, its cus‐ tomers, and other stakeholders (Ciampi et al., 20 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 21 2021). Moreover, corporate strategies have con‐ cerned a critical component of digitalisation and digital transformation (Bharadwaj et al., 2013; Ko et al., 2022), which suggests a link between digital transformation and BMI. For example, companies that use digital technology may consider data streams as crucial and use them to aid their digital transformation efforts (Correani et al., 2020; Dąbrowska et al., 2022), which contrasts with tradi‐ tional business model frameworks (Pigni et al., 2016). Therefore, digital technologies are funda‐ mentally linked to strategic changes in business models, leading to business model innovation. H2: Government policies positively impact business model innovation. IT infrastructure can boost a company’s product, process, methodology, capability, and business model innovation (Cassia et al., 2020). Previous research has classified the role of IT in businesses into strategic, operational, and infrastructural categories, with a sig‐ nificant emphasis on its connection to innovation (Tallon et al., 2019). IT infrastructure implementation demands major organisational processes and invest‐ ment adjustments to preserve economic and finan‐ cial sustainability and competitiveness (Mauerhoefer et al., 2017; Mohamad et al., 2017). Therefore, this paper suggests that implementing IT infrastructure is positively related to facilitating the process of BMI, which leads to the following hypothesis: H3: IT infrastructure has a significant impact on business model innovation. 2.6 Digital transformation, dynamic capability, innovation and performance Technology is pivotal in driving digital transforma‐ tion, opening avenues for innovative business oppor‐ tunities and strategic initiatives (Dąbrowska et al., 2022). Particularly, companies equipped with ad‐ vanced IT infrastructure can spearhead digital trans‐ formation by revamping and envisioning existing business processes and transforming traditional prod‐ ucts, services, and customer offerings into digital solu‐ tions (Gong & Ribiere, 2021). Furthermore, the organisation excels in modern IT infrastructure, result‐ ing in higher‐quality products than competitors (Rasool et al., 2023). Besides, the drive for digital transforma‐ tion is fuelled by the notion that new technologies have tremendous potential for driving innovation and competitive advantage (Radicic & Petković, 2023). Ac‐ cording to Scuotto et al. (2021), SMEs must cultivate internal digital capabilities to adapt to market dynam‐ ics swiftly. Hence, they can actively contribute to their innovation performance and achieve growth in an ever‐evolving digital competitive landscape. Consequently, the following hypothesis ensues: H4: IT infrastructure has a significant impact on dig‐ ital transformation. Indeed, digital technology, social media, and the Internet would boost SMEs’ innovation and help them grow locally and globally (Cenamor et al., 2019). Ad‐ ditionally, SMEs can gain a competitive edge through organisational digitalisation (Dutta et al., 2021). Par‐ ticularly, many developing countries’ SMEs lack digital literacy. A significant number of SMEs in developing nations have a deficiency in digital literacy. In the ab‐ sence of digital technology, SMEs would lack aware‐ ness of the necessity for digital transformation, leading to a deficiency in digital preparedness and ca‐ pability (Warner & Wäger, 2019). Although digital technologies are essential for the success of SMEs, many are hesitant to adopt these solutions due to their limited capabilities and resources (Kraus et al., 2022). Generally, digital transformation enhances in‐ novative activities in the workplace. According to Kopka & Fornahl (2024), SMEs experience increased productivity with Artificial intelligence (AI) integration at the productivity frontier, contrary to the leapfrog‐ ging hypothesis. However, evidence suggests that larger latecomer firms benefit more from AI adoption in terms of innovation, illustrating a divergent impact on productivity and innovation growth. Hence, the following hypothesis is proposed: H5: Digital transformation has a significant impact on business model innovation. Dynamic capabilities are the ability to perceive, seize, and restructure internal and external re‐ sources to adapt to changing business conditions (Li et al., 2022). The framework includes creating, im‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 21 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 22 Binh Tan Mai, Phuong Van Nguyen, Ngan Thi Thanh Vo, Zafar U. Ahmed, Peter Stokes: Government Policy, IT Infrastructure, Business Model Innovation, Digital Transformation, and Dynamic Capability: Catalysts for FIRM Performance Enhancement plementing, and preserving competencies and re‐ sources to respond to business changes. To manage unforeseen changes in the dynamic corporate world, digital sensing requires scanning, learning, comprehending, identifying, developing, co‐creat‐ ing, and analysing technical potential (Teece, 2014). Moreover, strong dynamic capabilities enable enter‐ prises, particularly their top management, to effec‐ tively orchestrate resources and competencies, anticipate market and technological changes, re‐ align assets accordingly, and strategically collaborate with other enterprises for business ecosystem co‐ creation (Teece, 2020). However, little research has examined how digital transformation affects dy‐ namic capabilities. Therefore, this study proposes a hypothesis based on these findings: H6: Digital transformation has a significant impact on dynamic capability. Dynamic capabilities support business models in the sense that an agile and responsive firm can adopt, trial, and refine new and revised business models quickly (Lüdeke‐Freund, 2020). Similarly, the mastery of creating and modifying business models is an essential foundation for establishing dynamic capabilities (Correia et al., 2021). Effective business model re‐engineering skills are necessary to facili‐ tate efficient seizing, promote strong dynamic capa‐ bilities that free resources for future growth, and align strategic outcomes with make/buy decisions. Besides, innovation ecosystems are a foundation for dynamic organisational capabilities (Guerrero & Siegel, 2024). However, the existing research pri‐ marily focuses on the one‐sided impact of dynamic capabilities on BMI (Warner & Wäger, 2019). There‐ fore, to address this research gap, the study pro‐ poses the following hypothesis: H7: Business model innovation has a significant im‐ pact on dynamic capability. The strategic utilisation of digital technologies significantly impacts both innovation capacity and growth for companies, particularly for SMEs, high‐ lighting the enduring importance of ICT as a critical success factor for SMEs’ growth (Scuotto et al., 22 2021). Digital transformation, through improved au‐ tomation, lower operating costs, and increased cus‐ tomer satisfaction, can positively impact overall performance (Dąbrowska et al., 2022; Li, 2020). Firm performance is enhanced by the reduced expenses related to coordination, transactions, and agency that come with integrating digital transforma‐ tion across suppliers and partners in the value chain (Arji et al., 2023). Likewise, leading SMEs demon‐ strate the benefits of digital integration through their approach to synchronising data, ideas, and informa‐ tion to enhance customer‐side business processes (Correani et al., 2020; Tekic & Koroteev, 2019). This paper posits the following hypothesis as a result: H8: Digital transformation has a significant impact on firm performance. Notably, researchers have also attempted to in‐ vestigate the impact of BMI on firm performance in recent years. Innovation has been connected to var‐ ious beneficial outcomes, including market uncer‐ tainty adaption (Vrontis & Christofi, 2021) and enhanced stakeholder relationships (Leonidou et al., 2020). Moreover, companies with superior financial performance placed double the amount of attention on BMI compared to underperforming companies (Bashir, 2023). Similarly, previous studies examined the correlation between BMI and firm performance and found that successful companies place twice as much importance on BMI as underperforming com‐ panies (Bhatti et al., 2021; Lüdeke‐Freund, 2020). Based on such argumentation, the following hy‐ pothesis is proposed: H9: Business model innovation has a significant im‐ pact on firm performance. According to Martins (2023), dynamic capabili‐ ties (sensing, seizing, and transforming) have a no‐ tably positive impact on SME performance, with digitalisation significantly enhancing the relation‐ ship between these capabilities and SME perfor‐ mance. Meanwhile, dynamic capabilities are a meaningful way to analyse the total influence on a firm’s growth (Mathivathanan et al., 2017). Like‐ wise, dynamic capabilities play an essential role in Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 23 entrepreneurial resources for increasing the firm performance of start‐ups while reliably mediating the relationship between resources and perfor‐ mance (Wu, 2007). Additionally, product develop‐ ment reconfiguration capability was favourably associated with firm performance and performance enhancements over time (Qiu et al., 2020). How‐ ever, success is not always guaranteed, even if SMEs can collect or replenish massive resources in a dy‐ namic market (Sharma et al., 2023). Without dy‐ namic capabilities, business resources would not transfer into firm performance (Bashir, 2023). Addi‐ tionally, to enhance the impact of dynamic capabil‐ ities on SME performance, digitalisation strategies, including consistent incorporation of digital analyt‐ ics, operations, marketing and sales, ecosystem, and products and services, should be integrated into the transforming process (Martins, 2023). Based on these arguments, the last hypothesis is suggested: H10: Dynamic capability significantly influences firm performance. Figure 1 depicts the research model with hypoth‐ esis development. The figure includes six essential ele‐ ments, such as IT infrastructure, digital transformation, government policy, business model innovation, dy‐ namic capabilities, and company performance. 3 METHODOLOGY 3.1 Data collection The research predominantly gathered data through the distribution of questionnaires. To en‐ hance the applicability of the measurements in the Vietnamese context, the items were initially trans‐ lated into Vietnamese and subsequently revised by two social science specialists. Subsequently, the questionnaire was rendered into English once again to present updated versions of previous measure‐ ments while guaranteeing the preservation of the original meanings. Moreover, the final version of the questionnaire was modified after conducting a pilot test with 42 respondents and one group discussion with five company managers and three local govern‐ ment officials. The questionnaire was disseminated via snow‐ ball and convenience sampling methods. By subdi‐ viding the districts’ target SMEs by geography and population density, the authors aimed to avoid se‐ lection bias. With local authorities’ help, the authors contacted several top managers from a list of busi‐ nesses in each district. Participants were requested to volunteer. The managers learned about the study’s goals, were assured of their privacy, and were told there were no wrong answers. Those who cannot answer a question can stop at any time. Figure 1: Research framework Source: Created by the authors Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 23 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 24 Binh Tan Mai, Phuong Van Nguyen, Ngan Thi Thanh Vo, Zafar U. Ahmed, Peter Stokes: Government Policy, IT Infrastructure, Business Model Innovation, Digital Transformation, and Dynamic Capability: Catalysts for FIRM Performance Enhancement Between March and August 2023, a total of 950 questionnaires were distributed to executives of SMEs and then shared with other managers. It was anticipated that the board management team and managers would complete the survey. A total of 880 samples were collected, out of which 658 were deemed suitable for further investigation. Conse‐ quently, Table 1 presents more details regarding the characteristics of the sample. 3.2 Measurement The primary variables concerning the literature were measured in combination with the practices of the examined firms to ensure the research’s va‐ lidity and reliability. The participants were asked to assess their degree of agreement with each item’s measurement using a 5‐point Likert scale, ranging from “1 = strongly disagree” to “5 = strongly agree.” Table 1: Characteristics of SMEs Number of respondents (N=659) Percentage (%) Production 336 51.0 Shipping & Logistics 123 18.7 ICT companies 89 13.5 Food & drinks 78 11.8 Others 32 5.0 Limited Liability Company 325 49.3 Joint Stock Company 252 38.2 Foreign Invested Enterprise 51 7.9 State‐owned Firms 30 4.6 Executive Managers 340 51.6 Board of Company Council 145 22.0 Senior Managers 133 20.2 Board of Directors 40 6.2 Less than 20 344 52.2 20 – 50 111 16.8 51 – 99 60 9.1 100 – 200 62 9.4 More than 200 82 12.4 Less than 5 191 29.0 5 – 10 193 29.3 11 – 20 173 26.3 More than 20 102 15.5 Industry of operation Types of business Job title Number of employees Operation time of business (years) Source: Created by the authors 24 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 25 First, the four‐item measurement scale was adapted from Wong et al. (2020) to measure govern‐ ment policy. Second, IT infrastructure with four items was adapted from Lu and Ramamurthy (2011). Third, the three‐item scale for measuring digital transfor‐ mation was adapted from Thuy (2021). Fourth, as for the construct of business model innovation, the four items were adapted from Ciampi et al. (2021). Fifth, four items were adapted from Wu (2007) to measure dynamic capabilities. Finally, the five‐item scale used to measure firm performance has been adapted from Tajvidi and Karami (2021). The participants were requested to evaluate the performance of their enterprise in relation to its growth and profitability. Details of the measurement scale with a total of 24 items are presented in Table A1 in the Appendix. 3.3 Date analysis approach Because of its efficiency and versatility, the Par‐ tial Least Squares Structural Equation Modelling (PLS‐SEM) technique is employed for analysis. It is frequently utilised in the social sciences and fits complicated models with intricate structures and many construct‐level interactions (Ali et al., 2018; Han et al., 2018; Joseph et al., 2022). As this study seeks to assess interactions across multiple dimen‐ sions in the new theoretical model, PLS‐SEM helps investigate the causal links between distinct inde‐ pendent and dependent components, prioritising the support or rejection of hypotheses. item correlations across different constructs and the average correlations within a specified construct should not exceed 0.85 (Henseler et al., 2012). In Table 3, all values fall within this range, indicating that the criteria for discriminant validity have been satisfied. The structural model accounted for 8.5% of the variance in IT infrastructure (R2 = 0.085), 43.1% of the variance in digital transformation (R2 = 0.431), 32.6% of the variance in business model innovation (R2 = 0.326), 63.9% of the variance in dynamic ca‐ pability (R2 = 0.639), and 56.7% of the variance in firm performance (R2 = 0.567). Specifically, the stan‐ dardised root mean square residual (SRMR) stands at 0.054, which falls below the threshold of 0.08, in‐ dicating a favourable fit (Hair et al. 2017). Table 4 and Figure 2 present the research hy‐ potheses and the analysis outcomes. All hypotheses were supported at a significant level. 4.2 Mediation effect Furthermore, mediation tests were conducted to examine whether business model innovation and digital transformation indirectly impact firm performance, with dynamic capability acting as a mediating factor. The findings in Table 5 indicate positive indirect correlations between business model innovation and firm perfor‐ mance as well as digital transformation and firm perfor‐ mance, both partially mediated by dynamic capability. 5 4 RESULTS AND DISCUSSIONS 4.1 Hypothesis testing results. The confirmatory factor analysis results in Table 2 indicate strong convergent and discriminant valid‐ ity, as evidenced by all item factor loadings surpass‐ ing the 0.7 threshold. Furthermore, the average variance extracted (AVE) exceeds 0.5. Moreover, Cronbach’s alphas range from 0.855 to 0.930, well above the 0.7 benchmark. These outcomes strongly support the reliability and convergent validity (Caldeira & Kastenholz, 2018; Henseler et al., 2012). Furthermore, the research followed the Hetero‐ trait ‐ Monotrait Ratio (HTMT) criterion to assess dis‐ criminant validity. The HTMT ratio between the average IMPLICATIONS AND CONCLUSION 5.1 Discussion This study affirms the positive effects of govern‐ ment policy on enhancing IT infrastructure. It also con‐ firms the positive influence of IT infrastructure on driving digital transformation. Moreover, the study es‐ tablishes the constructive impacts of government pol‐ icy, IT infrastructure, and digital transformation on fostering business model innovation and the positive effects of digital transformation and business model innovation on enhancing dynamic capability, ulti‐ mately resulting in improved firm performance. The RBV theory effectively explains how digital transfor‐ mation and IT advancement enable firms to surmount constraints in capital and resources, thereby acceler‐ ating growth and fostering positive performance. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 25 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 26 Binh Tan Mai, Phuong Van Nguyen, Ngan Thi Thanh Vo, Zafar U. Ahmed, Peter Stokes: Government Policy, IT Infrastructure, Business Model Innovation, Digital Transformation, and Dynamic Capability: Catalysts for FIRM Performance Enhancement Table 2: Reliability and Convergent Validity Constructs Items Loadings BMI1 0.885 BMI2 0.898 BMI3 0.926 BMI4 0.887 DC1 0.906 DC2 0.912 DC3 0.890 DC4 0.910 DT1 0.937 DT2 0.959 DT3 0.937 FP1 0.866 FP2 0.858 FP3 0.874 FP4 0.873 FP5 0.756 GP1 0.761 GP2 0.858 GP3 0.888 GP4 0.826 INF1 0.900 INF2 0.870 INF3 0.895 INF4 0.908 Business Model Innovation (BMI) Dynamic Capability (DC) Digital Transformation (DT) Firm Performance (FP) Government Policy (GP) IT Infrastructure (INF) Alpha rho_A CR AVE 0.921 0.922 0.944 0.809 0.926 0.926 0.947 0.818 0.939 0.940 0.961 0.892 0.900 0.903 0.927 0.717 0.855 0.870 0.902 0.697 0.915 0.917 0.940 0.798 Source: Created by the authors Table 3: Heterotrait ‐ Monotrait Ratio BMI DT DC FP GP BMI DT 0.561 DC 0.840 0.611 FP 0.735 0.558 0.797 GP 0.298 0.359 0.261 0.182 INF 0.549 0.707 0.641 0.583 0.324 Source: Created by the authors 26 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 INF DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 27 Figure 2: Testing results Source: Created by the authors Table 4: Path coefficients 𝛃 T statistic P values Results Business Model Innovation → Dynamic capability 0.657 23.078 0.000 Supported Business Model Innovation → Firm Performance 0.241 5.112 0.000 Supported Digital Transformation → Business Model Innovation 0.315 6.362 0.000 Supported Digital Transformation → Dynamic capability 0.227 6.721 0.000 Supported Digital Transformation → Firm Performance 0.116 3.354 0.001 Supported Dynamic capability → Firm Performance 0.476 10.167 0.000 Supported Government Policy → Business Model Innovation 0.085 1.978 0.048 Supported Government Policy → IT Infrastructure 0.291 6.439 0.000 Supported IT Infrastructure → Business Model Innovation 0.274 5.639 0.000 Supported IT Infrastructure → Digital Transformation 0.657 22.206 0.000 Supported Hypotheses Source: Created by the authors Table 5: Mediation test results Specific indirect effects Estimates T statistic P values Results Business Model Innovation → Dynamic Capability → Firm Performance 0.313 9.133 0.000 Supported Digital Transformation → Dynamic Capability → Firm Performance 0.108 5.591 0.000 Supported Source: Created by the authors Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 27 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 28 Binh Tan Mai, Phuong Van Nguyen, Ngan Thi Thanh Vo, Zafar U. Ahmed, Peter Stokes: Government Policy, IT Infrastructure, Business Model Innovation, Digital Transformation, and Dynamic Capability: Catalysts for FIRM Performance Enhancement Echoing prior research (Faria et al., 2023; Mai et al., 2023; Mpofu, 2023), government policy support significantly influences IT infrastructure, fostering business model innovation directly and indirectly. Fi‐ nancial incentives and regulatory frameworks, cou‐ pled with digital transformation initiatives, create an environment conducive to technological advance‐ ment. This prompts businesses to invest in cutting‐ edge technologies, forming a strong foundation for innovation in products and processes. Besides pro‐ viding technical expertise and resources, government support nurtures an innovation‐friendly corporate environment, encouraging companies to leverage ad‐ vanced IT capabilities for value delivery, process op‐ timisation, and responsiveness to market demands. Moreover, the findings affirm the positive impact of IT infrastructure on digital transformation and inno‐ vation, aligning with previous studies (Thuy, 2021). A well‐developed IT structure facilitates the seamless integration of advanced technologies like cloud com‐ puting, big data, and AI, empowering organisations to expand and make informed decisions through data processing. Proficient IT infrastructure positions or‐ ganisations for successful digital transformation, of‐ fering new strategies and growth opportunities. Additionally, digital transformation supports existing firms, enhancing competitiveness and sustainable growth. Enhanced connectivity and communication fostered by a reliable IT infrastructure facilitate col‐ laboration, accelerating the implementation of inno‐ vative ideas and solutions. The research confirms that digital transforma‐ tion significantly influences business model innova‐ tion, dynamic capability, and firm performance, aligning with earlier studies (Ciampi et al., 2021; Eit‐ eneyer et al., 2019). It fosters innovation by creating new revenue streams and innovative customer ap‐ proaches. Successful digital transformation drives businesses to innovate, create new products, and gain a competitive edge through digitised operations for market analysis and adaptive organisational struc‐ tures, ensuring sustained profitability. Enhanced effi‐ ciency, agility, and customer‐centricity improve firm performance and competitive advantage. Further‐ more, in line with prior research (Jaidi et al., 2022), this study underscores the substantial impact of in‐ novativeness and dynamic capability on firm perfor‐ mance. It emphasises dynamic capability mediating 28 between business model innovation and firm perfor‐ mance. Innovation refines processes, creates value, and accesses intangible assets. Dynamic capability grants firms’ agility, adaptability, and innovative ca‐ pacity to thrive in evolving business landscapes, lead‐ ing to enhanced performance, sustained competitive advantage, and improved customer satisfaction. 5.2 Theoretical implications Although business model innovation and digital transformation have become a benchmark for sur‐ viving in a competitive marketplace (Anning‐Dorson & Nyamekye, 2020; Rupeika‐Apoga et al., 2022), previous research has mainly shown identifying multiple influencing factors rather than delving into studying correlations and intermediate effects. This paper provides a valuable theoretical addition by clarifying the interconnections between govern‐ ment policy, IT infrastructure, digital transformation, business model innovation, dynamic capabilities, and firm performance. This study highlights the beneficial effects of government policy and IT infras‐ tructure in promoting digital transformation, which in turn encourages innovation in business models. Expanding upon the RBV paradigm, the study em‐ phasises the role of digital transformation and IT progress in helping SMEs overcome limitations in re‐ sources and expedite their growth, which is consis‐ tent with earlier research. Furthermore, the theoretical contribution of this study lies in its exploration of the relationship between firm performance and digital transforma‐ tion initiatives, particularly within the context of SMEs operating in dynamic economic markets, with Vietnam as a focal point. The research emphasises the significance of government engagement in cre‐ ating a favourable environment for digital innova‐ tion and knowledge exchange among enterprises by analysing correlations in this particular context. This study highlights the need to provide incentives and promote active government involvement in busi‐ ness platforms to enable the acquisition of knowl‐ edge and the integration of digital technology, ultimately leading to improved firm performance. Moreover, the study highlights the importance of providing specialised direction to tackle the distinct obstacles encountered by SMEs, especially when it Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 29 comes to managing the intricacies of digital trans‐ formation during the epidemic and following eco‐ nomic rebound. The study enhances the existing literature by offering valuable insights into practical strategies for SMEs to adapt successfully and pros‐ per in the changing business environment. This is achieved through a practical problem‐solving ap‐ proach and analysis of crucial factors that influence firm performance during digital transformation. 5.3 Practical implications First, based on the research findings, it is recom‐ mended that the Vietnamese government proactively improve the IT infrastructure designed specifically for SMEs. This can be accomplished by implementing measures like tax incentives, initiatives for technology development, and programmes focused on enhancing workforce skills. Businesses can improve their global competitiveness by utilising these strategies. More‐ over, it is advised that corporate executives take ad‐ vantage of the existing government incentives, streamline resource allocation, and participate in col‐ laborative platforms to promote the development of creative business models that can successfully adapt to changing market conditions. Second, the incorporation of AI applications sig‐ nificantly impacts business operations, emphasising the need for SME owners to embrace innovative models, efficiently integrate data, and prioritise cus‐ tomer‐centric strategies to enhance competitive‐ ness. It is recommended that SMEs focus on investing in the growth of their workforce, keep clear and open financial records to make it easier to obtain financial assistance, and actively pursue strategic collaborations across different platforms to take advantage of new opportunities. Finally, the findings provide SME managers with actionable insights for optimising firm performance through sophisticated resource allocation. Under‐ standing which resources significantly impact per‐ formance enables targeted investments, such as cultivating a positive workplace culture, to improve performance. Policymakers can use these findings to build policies that promote resource develop‐ ment, focusing on areas such as digital transforma‐ tion and dynamic capacities to help SMEs flourish. In managerial decision‐making, taking into account unique resources, such as financial assets, is critical for prioritising activities to improve performance. Moreover, SMEs can use the study’s findings to ex‐ amine their competitive positioning by recognising and using unique resources, such as new business models, to distinguish themselves in the market. 5.4 Limitations and future studies The study draws critical theoretical implications and specific business applications but lacks compre‐ hensive insights, necessitating further research. It doesn’t illustrate the cause behind the weak empir‐ ical link between government policies and business model innovation. While documenting the study’s general model and variable correlations, it falls short in detailing their influences and interdepen‐ dencies. Future studies should delve deeper into these relationships, offering more applicable in‐ sights to guide SMEs in formulating relevant and practical business strategies. Additionally, future re‐ search could propose diverse government policies to bolster economic growth, primarily supporting SMEs. The study broadly outlines factors influencing SME performance in the digital transformation era, enabling business leaders to chart development paths, leverage government support, and innovate business models. However, it overlooks differences among SME categories—ownership structure, in‐ dustry sector, geography, and business models— that directly impact study outcomes. Future investigations should meticulously explore techno‐ logical advancements crucial for successful digital transformation, offering valuable lessons for SMEs. Recognising these businesses’ limitations in human resources, resources, and access to optimal IT in‐ frastructure, the study identifies pivotal opportuni‐ ties and orientations beneficial for SME executives. 5.5 Conclusions The study emphasises the critical link between government policies influencing IT infrastructure and the subsequent impact on SMEs’ digital trans‐ formation, fostering enhanced firm performance and dynamic capabilities. Recommendations urge active government involvement through support Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 29 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 30 Binh Tan Mai, Phuong Van Nguyen, Ngan Thi Thanh Vo, Zafar U. Ahmed, Peter Stokes: Government Policy, IT Infrastructure, Business Model Innovation, Digital Transformation, and Dynamic Capability: Catalysts for FIRM Performance Enhancement policies, tax incentives, startup initiatives, training, and international trade engagement to fortify SMEs for contemporary integration and development. No‐ tably, while government policies don’t directly influ‐ ence business model innovation, bolstering IT infrastructure is pivotal, fostering intrinsic factors that drive such innovation. Highlighting the crucial role of digital transformation for SMEs, the study underscores its positive influence on innovating business models, integrating digitisation programs, and facilitating data analysis, thereby enabling more optimal business strategies and product develop‐ ment. This transformation indirectly enhances the company’s dynamic capacity and human resources, culminating in improved firm performance, growth, and a strengthened financial standing. EXTENDED SUMMARY/IZVLEČEK Majhna in srednje velika podjetja (MSP) se v današnjem hitro spreminjajočem se gospodarskem okolju soočajo z velikimi ovirami, predvsem zaradi omejenih virov in zmožnosti ravnateljevanja. Ta študija uporablja teorijo virov za raziskovanje, kako lahko vladne politike pomagajo MSP pri izko‐ riščanju njihove informacijske tehnologije (IT) za digitalno preobrazbo in izboljšanje poslovne us‐ pešnosti. Glede na hitro razvijajočo se tehnologijo in povečano konkurenco po svetu morajo MSP dati prednost inovacijam in sposobnosti prilagajanja za doseganje dolgoročnega uspeha. Študija, ki temelji na podatkih 658 MSP udeležencev v Vietnamu, poudarja pomemben vpliv vladnih politik na oblikovanje IT infrastrukture in izpostavlja pomen inovacij pri krepitvi dinamičnih zmožnosti in splošnega poslovnega uspeha. Ti izsledki nudijo dragocene vpoglede za menedžerje in oblikovalce politik ter nakazujejo potencialna področja za prihodnje raziskave, ki imajo posledice za MSP. 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GP4 The laws and regulations in place today are adequate to protect the application of digital transformation. INF1 Data management services and architectures (for example, databases, data warehousing, data availability, storage, accessibility, sharing, and so on). INF2 Network communication services (for example, connectivity, dependability, availability, LAN, WAN, and so on). INF3 Portfolio of applications and services (e.g., ERP, ASP, reusable software modules/components, new technologies, etc.) INF4 IT facility operations/services (for example, servers, large‐scale processors, performance monitors, and so on). DT1 Our enterprise is pioneering new business processes based on technology such as big data, analytics, cloud, mobile, and social media platforms. DT2 Our enterprise is incorporating digital technologies such as social media, big data, analytics, cloud, and mobile technology to promote change. DT3 Our business operations are evolving toward the utilisation of digital technologies such as big data, analytics, cloud, mobile, and social media platforms. BMI1 When necessary, we are able to carry out massive internal reconfigurations to enhance our overall value proposition to our customers. Government Policy (GP)/ (Wong et al., 2020) IT Infrastructure (INF)/ (Lu & Ramamurthy, 2011) Digital Transformation (DT)/ (Thuy, 2021) Business Model Innovation (BMI)/ BMI2 When we sense an opportunity, we are quick at re‐organising our operating processes. (Ciampi et al., 2021) When necessary, we are able to reorganise our partner network to improve our value BMI3 proposition to our customers. BMI4 New opportunities to serve our customers are quickly understood. Dynamic Capabilities (DC)/ (Wu, 2007) Firm Performance (BP)/ (Tajvidi & Karami, 2021) DC1 Our enterprise has the capabilities to integrate resources effectively. DC2 Our enterprise has the capabilities to reconfigure resources effectively. DC3 Our enterprise has the capabilities to learn fast. DC4 Our enterprise has the capabilities to respond to the rapidly changing environment. FP1 Our enterprise has been able to develop a sustainable business in the past three years. FP2 Our enterprise has a good reputation in the industry. FP3 Our enterprise’s customers appreciate the company’s product/service quality. FP4 Our enterprise has achieved its sales target over the past three years. FP5 Our enterprise reached the profit target over the past three years. Source: Created by the authors 36 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 37 Vol. 13, No. 2, 37‐54 doi:10.17708/DRMJ.2024.v13n02a03 A SYSTEMATIC LITERATURE REVIEW ON THE IMPACT OF JOB STRESS ON EMPLOYEE PERFORMANCE WITH SPECIAL REFERENCE TO THE BANKING SECTOR Nikita Mukherjee BITOC, Lalpur, Ranchi nikitamukherjee.0108@gmail.com Syed Anis Haider BITOC, Lalpur, Ranchi drsyedanishaider@bitmesra.ac.in Satrajeet Choudhury BITOC, Lalpur, Ranchi satrajeetchoudhury@bitmesra.ac.in Abstract One of the main objectives of this research paper is to determine the influence of job stress on employee performance, with a focus on the banking industry. Stress is considered a common element in all kinds of jobs and individuals are facing it in almost every walk of life. Employees are under tremendous amounts of stress in every organization, and the same condition prevails in the industry of banking and among banking professionals. Employee performance is critical to the success and continual development of any organization. After final screening and evaluation by the Preferred Reporting Items for Sys‐ tematic Reviews and Meta‐Analyses (PRISMA) guidelines, thirty‐seven (37) study out of seventeen thousand eight hundred (17800) were considered to be relevant and included in this systematic review. Using numerous online sources such as Google Scholar, Research Gate, and Web of Science, the aforementioned documents were identified. The study only includes articles published between 2011 to 2023. After a thorough and systematic review of the literature, it can be said that job stress and employee performance are negatively correlated. Various stress‐inducing factors such as uncertainty about roles (Role ambiguity), role dispute (Role conflict), role overload (Work overload/underload), and insecurity at work (Job insecurity) are identified and these elements play a substantial part in increasing bankers’ stress levels and negatively impacting the ability to perform. According to the research, there is a mutually reinforcing connection between job stress and performance among workers. When a person’s level of stress in the workplace rises, it adversely affects performance. Keywords: Job Stress, Employee Performance, Banking Sector Role Conflict, Role Ambiguity, Work Overload/Underload, Job Insecurity 1 INTRODUCTION Stress is considered to be prevalent in all types of jobs, and individuals face it in nearly every facet of life. Stress is defined as how the body responds in general to any demand placed on it. These de‐ mands are commonly referred to as ‘stressors.’ and can refer to both pleasant and challenging circum‐ stances or factors. Hans Seyle, the founder of Stress Theory, describes stress as a “nonspecific response of the body to any demand” (Seyle, 1956). He went on to say that stress is not always damaging or harmful. It depends on how you take it and deal with it. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 37 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 38 Nikita Mukherjee, Syed Anis Haider, Satrajeet Choudhury: A Systematic Literature Review on the Impact of Job Stress on Employee Performance with Special Reference to the Banking Sector The stress has been categorized into two dis‐ tinct forms (Ratnawat & Jha, 2014): I. Good stress is referred to as eustress. II. Dysfunctional or negative stress is referred to as distress. It is stated that the optimum level of stress (Eu‐ stress/ Positive stress) is essential for the success and growth of individuals but when it goes beyond the acceptable level it becomes Distress or Dysfunc‐ tional or negative stress which is harmful to the in‐ dividual’s success as well as health. Stress is the most increasing problem in today’s world which is faced by every individual in every field and profes‐ sion and often causes adverse effects on perfor‐ mance. Positive stress, or eustress, has the potential to boost employees’ motivation and productivity. This type of stress is often associated with a sense of chal‐ lenge and can result in employees feeling energized and focused. Distress, on the other side, or negative stress, can result in an overall decrease in perfor‐ mance, burnout, and motivation. For example, em‐ ployees in the banking sector may experience eustress when they are given challenging goals to achieve, which can drive them to perform at their best. Conversely, distress may arise when employees are faced with unrealistic workloads, conflicting de‐ mands, or a lack of support from management. It is critical for banks to identify the influence of both eu‐ stress and distress on employee performance and to employ proactive stress management strategies in the workplace. This can involve providing adequate resources, encouraging work‐life balance, and offer‐ ing assistance to assist employees in effectively deal‐ ing with stress. Through this approach, banks can cultivate a more optimistic and efficient work atmo‐ sphere for their workforce. Another important element of the study is em‐ ployee performance. Employees or say workforce are the most valuable asset for any organization; hence the success and the organization’s success as well as development are heavily dependent on em‐ ployee performance. If the employees perform all the duties and responsibilities effectively and effi‐ ciently it helps the organizational growth and suc‐ cess. In general, we define performance as the 38 fulfillment of a responsibility in such a way that the performer is relieved of all stated responsibilities and duties. Employee performance is defined as the amount and standard of work completed by an em‐ ployee by the responsibilities assigned to them (Mangkunegara & Rosadakarya, 2004). The ability to do the task assigned to them by using their skills and knowledge to achieve the goal is known as employee performance. Employee performance is critical for any organization’s achievement of organizational goals and contributes to the organization’s progress and achievement. Employee performance is critical to an organization’s long‐term survival. According to various studies, stress is increasing at an alarming rate in the banking sector. The bank‐ ing industry is recognized as the fundamental pillar of the economic system of any nation. Banks play a significant role in the growth and development of all sectors of the global economy. The nature of the job of bank employees is extremely stressful because of the tremendous increase in the level of competition as a result of globalization and liberalization. Rapid technological changes, bank restructuring (mergers and acquisitions), and digitalization have increased the stress level of bank employees in manifolds. The banking industry faces several obstacles, which add to job stress among its personnel. One significant cause is increased competitiveness in the sector, which leads to higher performance expectations and job pressure. Furthermore, frequent changes in reg‐ ulations and policies by the government and the apex banking authority create an unpredictable work environment, increasing employee stress levels. There may be a relationship between stress at the workplace (job stress) and employee perfor‐ mance. A high level of stress at the workplace may also result in high employee turnover which acts as a hindrance to the growth and success of any orga‐ nization. Hence any organization needs to monitor the stress level of the employees and incorporate effective measures to reduce the stress at the work‐ place. The banking sector must address these fac‐ tors and prioritize the mental and emotional well‐being of its employees. Implementing strate‐ gies for work‐life balance, providing resources for stress management, and fostering a supportive work culture can help alleviate job stress and create a healthier work environment for employees. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 39 The main objectives of this research paper are enumerated below‐ I. To determine the different stress factors influenc‐ ing bank employees. II. To investigate how stress in the workplace affects employee performance. This study explores the complex relationship that exists between job stress and employee perfor‐ mance in the banking industry. This study seeks to provide significant insights for both academia and industry practitioners by identifying the factors that contribute to stress among bank employees and in‐ vestigating how it affects their performance. Under‐ standing the underlying causes of stress and its impact on performance is critical for creating a sup‐ portive work environment, increasing employee productivity, and, ultimately, maintaining the bank‐ ing sector’s competitiveness and growth. To begin, we looked at the various factors that cause stress among bank employees. Examining the internal and external stressors that are common in the banking industry is necessary to do this; these can include role ambiguity, workload constraints, job insecurity, and interpersonal problems. This study provides a comprehensive overview of these stressors to pro‐ vide a deeper understanding of the challenges that bank employees encounter daily. Secondly, this paper investigates the effects of job stress on the performance of bank employees. We conducted a thorough literature study to inves‐ tigate how stress manifests in several dimensions of employee performance, such as job satisfaction, job engagement, customer service quality, and organi‐ zational commitment. By revealing the complicated interplay between stress and performance out‐ comes, this study aims to shed light on the mecha‐ nisms by which stress influences employee effectiveness and organizational success. Finally, the findings of this study have important consequences for both academics and industry stakeholders. By explaining the causes behind job stress and its impact on employee performance in the banking sector, this study aims to contribute to the development of specific strategies and tech‐ niques for reducing stress and improving productiv‐ ity. Furthermore, this study will aid in the investigation of modulating and modifying variables influencing the relationship between stress and per‐ formance. Individual differences in coping tech‐ niques, organizational culture, leadership styles, and job features, for example, may interact with stresses to amplify or mitigate their impact on performance results. Such findings are crucial for developing a pleasant work environment that prioritizes em‐ ployee well‐being and organizational success in the resilient banking industry around the globe. 2 RESEARCH METHODOLOGY 2.1 Data collection The objective of this research is to identify the various workplace stressors that bank employees face and comprehend how these factors affect their performance and general well‐being. The study is descriptive, and it is based on secondary data that was gathered from numerous national and interna‐ tional journals. 2.2 Method of Data collection An in‐depth and systematic review of the exist‐ ing and pertinent literature was carried out to dis‐ cover answers to the two study questions posed. RQ1: What are the major factors that influence stress in bank employees? RQ2: How do these elements affect the perfor‐ mance of bank employees? This section thoroughly decides and discusses the study selection strategy, the conditions of eligi‐ bility for inclusion and exclusion, the evaluation guidelines of Preferred Reporting Items for System‐ atic Reviews and Meta‐Analyses (PRISMA) and pro‐ cedure, and the final result of the systematic review. 2.2.1 Study Selection Strategy Various online resources are employed to gather information about the research topic and ob‐ tain answers to essential research questions. As the study is based on secondary data, online resources Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 39 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 40 Nikita Mukherjee, Syed Anis Haider, Satrajeet Choudhury: A Systematic Literature Review on the Impact of Job Stress on Employee Performance with Special Reference to the Banking Sector such as Google Scholar, Research Gate, and Web of Science are used. The specified phrases were uti‐ lized to search for pertinent information. Some of them include “Impact of job stress on employee performance in the banking sector,” “Effects of workplace stress on employee performance in the banking sector,” “Impact of occupational stress on employee productivity and performance in the banks,” and so on. Apart from this some of the key‐ words utilized in the search were “bank,” “banking,” “work‐related stress,” “job stress,” “organizational stress,” and “stress,” and we looked for them in the title and abstracts of papers. To be included, papers had to describe the results of original studies, be published in English, and have their full text online. Using PRISMA guidelines, a systematic and in‐ depth review of the available literature was con‐ ducted and findings from this literature are reported by the guidelines to get the answer to the pertinent research questions formulated. 2.2.2 The conditions of eligibility for inclusion and exclusion The study related and relevant to the present research topic and questions were included. The studies explaining the influence of job stress on the performance of employees in the banking sector are included for further review. The primary objective of the study is to investigate the impact of job stress on the employee’s performance in the banking sector including studies from this industry aligned closely with research focus and questions. The banking sec‐ tor is known to face unique stressors that signifi‐ cantly to job stress levels among the employees. By including the studies specific to the banking sector, we were able to explore the distinctive factors con‐ tributing to stress within this industry. The papers published in journals that were peer‐reviewed were included. Since peer‐reviewed paper demonstrates transparency and accountabil‐ ity in its selection criteria, it mitigates the risk of in‐ cluding studies with methodological weakness, misleading interpretations, or inaccurate conclu‐ sions, thereby enhancing the robustness of the re‐ view findings. Moreover, only the journal articles are included in this systematic review of the litera‐ 40 ture. Since the journal typically undergoes a rigor‐ ous peer review process ensuring a higher standard of quality and reliability therefore only peer‐re‐ viewed are included in this study. Since the book chapters offer specific and specialized perspectives or summaries rather than original research and the newspaper articles do not meet the peer review standards therefore these are not included in this systematic literature review. The study only includes articles published be‐ tween 2011 to 2023. Although financial inclusion ef‐ forts in India as well as across the globe have been ongoing for several years and aimed at expanding access to banking services and promoting financial literacy among the citizens of the country the con‐ cept of financial inclusion gained prominence glob‐ ally around 2011. Financial inclusion was not especially specified as a standalone aim in the Millennium Development Goals (MDGs) adopted by. However, financial inclu‐ sion was implicitly addressed in some of the MDGs, including Goal 1 (eliminate extreme poverty and hunger) and Goal 8. Despite not being expressly mentioned as a goal, the international community is increasingly recognizing the necessity of financial inclusion in ensuring long‐term development and poverty reduction. As a result, financial inclusion has gained prominence in future development frameworks, such as the Sustainable Development Goals (SDGs), which replaced the MDGs.Financial inclusion has been cited as a facilitator of the Sus‐ tainable Development Goals, which were officially endorsed by the United Nations General Assembly on September 25, 2015.As a result, between 2011 and 2017, 1.2 billion adults gained access to bank accounts around the world. In the period between 2011 to 2023, many poli‐ cies were implemented like Pradhan Mantri Jan Dan Yojana (PMJDY‐2014), Digitalization in the banking sector (2015), etc which aimed at providing univer‐ sal access to banking facilities, promoting financial literacy and ensuring access to financial services for all the citizens particularly those from marginalized communalities. These reforms marked milestones towards achieving financial inclusion and accessibil‐ ity for all the segments and hence resulted in in‐ creased workload, and target pressure which Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 41 resulted in increased stress among bank employees therefore the journal articles published in the afore‐ mentioned period were included in this research. Another crucial inclusion criterion was that the ar‐ ticle be written in the English language to ensure broad accessibility and comprehensibility of the reviewed lit‐ erature. The English‐language journal articles ensure that the review findings are easily understood and uti‐ lized by the researchers as well as the diverse audience facilitating broad dissemination and uptake of research evidence. Moreover, English language articles adhere to standardized reporting guidelines and peer review processes to ensure the quality and validity of pub‐ lished research. Therefore the journal articles pub‐ lished in English are included in this research. As per the exclusion criteria, the studies conducted in other sector than banking were excluded. The studies pub‐ lished in other languages than English and related to the subject matter were not taken into consideration. Only journal articles were included, news articles, re‐ ports, and dissertations were not taken into consider‐ ation. The publications unable to provide answers to the research question were excluded. 2.2.3 The evaluation guidelines (PRISMA) and procedure The PRISMA standards were followed for se‐ lecting studies for additional review. The goals and objectives of each study were assessed to deter‐ mine if they addressed the specified research ques‐ tions. The studies that did not provide answers to the research questions were discarded. While screening and selecting titles, abstracts, and com‐ plete texts for further investigation, all inclusion and exclusion parameters were followed. 2.2.4 The final result of the systematic review Thirty‐seven (37) papers were selected and in‐ cluded in this study which meet the selection pa‐ rameters and address the research questions. stated, seventeen thousand eight hundred (17800) documents were identified utilizing multiple online databases. Sixteen thousand eight hundred seventy‐ eight papers were excluded in the first step of screening due to duplication, or the title and ab‐ stract were irrelevant to the current study, or they were not published in English. The remaining nine hundred twenty‐two (922) studies were examined and scrutinized by the eligi‐ bility standards, and seven hundred fifty‐six (756) papers were excluded since the full text did not cor‐ respond with the current study topic. Again, in the last phase of screening, 126 papers were removed because the methodologies employed were not rel‐ evant to this study or the complete text did not pro‐ vide answers to our research questions. As a result, thirty‐seven (37) studies were determined to be rel‐ evant and included in this systematic review after final screening and evaluation. The solution to the formulated research questions is identified based on these thirty‐seven (37) papers Various factors causing job stress among bank employees have been identified and their consequence on bank em‐ ployee performance is thoroughly examined. The research papers from which the PRISMA Flow dia‐ grams are derived are mentioned as Borst, Kruyen, Lako and Vries (2019), Rashid and Bukhari (2022), and Anakpo, Nqwayibana and Mishi (2023). The PRISMA flow diagram (Page, Mckenzie, Bossuyt, & Boutron, 2021; Figure 1) demonstrates the screening and selection process in details. 3 LITERATURE REVIEW RESULTS The major focus of this paper is to review the available literature to identify stress inducers and determine how stress inducers affect employee per‐ formance. The factors that are stress inducers are identified through various relevant and important reviews are enlisted as follows. 2.2.5 Outcome of the Systematic Review 3.1 Factors Inducing Job Stress among the Bank Employees at the Workplace Although there was no geographical restriction, many inclusion and exclusion characteristics were examined for ultimate selection. As previously According to an American Institute of Stress sur‐ vey (n.d.), “80 % of employees feel stress on the job; nearly half say they need help in learning how to Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 41 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 42 Nikita Mukherjee, Syed Anis Haider, Satrajeet Choudhury: A Systematic Literature Review on the Impact of Job Stress on Employee Performance with Special Reference to the Banking Sector Figure 1: PRISMA flow diagram of study search and selection manage stress.” In reality, workplace stress is ranked higher than economic issues, family responsibilities, and even personal wellness challenges. Various fac‐ tors induce stress among the employees at the work‐ place. Banking is considered one of those sectors in which employees have the highest stress level (Kaur & Sharma, 2016). As stated, banks come in the list of 42 the top ten stressed workplaces in India. Jayashree (2014) analyses that 97% of bankers face an ex‐ tremely high level of job stress. Most of them are overburdened with workload. Work‐life imbalance and work pressure are the major reasons for increas‐ ing stress among the employees which results in in‐ creased absenteeism and reduced productivity. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 43 According to Jamwal and Avkshit (2023) work overload is the major towards inducing stress among bank employees followed by Role ambiguity and Role conflict. Along with these long working hours, the pressure of time and unrealistic targets also act as stress inducers in the banking sector which pres‐ surizes the bank employees. Similarly Lyimo and Joachim (2022) considered work overload/under‐ load to be the most imperative element that acts as a stressor in the banking sector. Along with work overload, time pressure faced by the employees in‐ creases their stress levels. Along with the above‐ mentioned stressors role ambiguity, role conflict, job overload, and lack of job autonomy as the major fac‐ tors that result in job stress among the bank employ‐ ees. Bhat and Alaf (2017) developed a conceptual framework to understand the connection between job stressors along their impact on employee perfor‐ mance. They identified four stressors namely role ambiguity, Role conflict, Job Insecurity, and work over‐load/under‐load. However, according to them, work overload plays an important role in increasing the stress level of the individual at work and nega‐ tively influences the performance of the workforce. This results in lowered efficiency, increased absen‐ teeism, and low motivation which deteriorate the performance and productivity of the individual as well as the organization. Dhankar (2015) identified role overload along with role ambiguity, conflict, and political pressure are the major stressors in the workplace. According to the researcher in the Public sector banks, political pressure acts as an important stressor that creates an impact on the performance of the employees. They analyzed there is a very neg‐ ligible discrepancy in the level of stress between the Public and Private sector bank employees. Pandey (2021) conducted comparative analysis to examine the severity of workplace stress among Public and private banking professionals and it was discovered that Private banking professionals have an elevated degree of ambiguity regarding their roles, whereas Public sector bank employees face political pressure, which acts as a major stress in‐ ducer. In the same year, a comparative study to an‐ alyze the bank employee stress levels and the effect they have on the balance between work and per‐ sonal life and differences in stress levels of bank em‐ ployees in the State Bank of India and ICICI were evaluated. Demand, control, role, reward, and rela‐ tionship were identified as work stress dimensions that have a substantial influence on their profes‐ sional lives; State Bank of India personnel are more stressed than ICICI employees (Joyce, 2021). In con‐ trast to this study, Mariappan and Kalidoss (2017) conducted a comparison study to assess the impact of stress on staff performance in both public and pri‐ vate banks in Tamil Naidu’s Sivagangai district. Ac‐ cording to the research conducted, private bank employees experience higher levels of stress at work than public sector bank employees. The most common causes of stress experienced by bank em‐ ployees in the private sector are role overload, role authority, role conflict, and an absence of support from management in general. The main issue that employees of public sector banks face is long work‐ ing hours. Niharika and Kiran (2014) conducted a study to determine the level of work‐related stress among employees of commercial and public banks in the city of Lucknow, which supports the previous study’s findings. The study discovered that employ‐ ees of private banks have higher levels of job/occu‐ pational stress than employees of nationalized institutions. There is a relationship between inde‐ pendent variables like hierarchy, work experience, and bank type and dependent variables like role am‐ biguity, role conflicts, role overload, and so on. It was discovered that the impact of role overload is larger in nationalized banks since private bank per‐ sonnel encounter the problem of role conflict. Kishori and Vinothini (2016) conducted research that solely focused on employees of the State Bank of India (main branch) in Tiruchirappalli. However the authors generalized the finding of the study to public as well as private sector bank employees and the results revealed that there is an elevated degree of stress associated with work among private and public sector bank employees due to prolonged hours of work, conflict related to role and responsi‐ bility, and political constraints. Deepanshi and Ar‐ rawati (2018) conducted a study on 126 public sector bank personnel along with 104 private bank personnel to identify various organizational role stress factors using the scale of organizational role stress developed by Udai Pareek in 1983, and ten role stressors were identified, namely ‐ role stagna‐ tion, inter role distance, role degradation and over‐ load, role confinement, role expectation disputes, Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 43 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 44 Nikita Mukherjee, Syed Anis Haider, Satrajeet Choudhury: A Systematic Literature Review on the Impact of Job Stress on Employee Performance with Special Reference to the Banking Sector personal deficiencies, self role distance, ambiguity in role, and resource deficiencies. They discovered that employees in private‐sector banks face more stress than employees in public‐sector banks. Following the comparative analysis of public and private banks, we may concentrate on the studies where researchers conducted a comparative analysis to determine the factors that cause more elevated stress in male and female banking personnel. Sharma, Basumatary, & Hazarika (2020) carried out a study to look at how stress at work affects both male and female bank employees’ performance. Work overload is the major stress‐inducing factor fol‐ lowed by time pressure and poor communication with the organization. It was found that female bank employees face more stress than their male coun‐ terparts. Workshops on stress management should be introduced and flexible working conditions should be adopted in the banks. Gaur, Gupta, & Jaiswal (2021) conducted a study in which two hundred (200) female bank personnel were selected for the study. The results of this study showed a positive and very strong association between job satisfaction and work‐life integration. Therefore bank management must make policies to improve the satisfaction level of female bank personnel and help them balance their work and personal life. Since banks represent the foundation of the na‐ tion’s economy, numerous studies evaluating the ef‐ fect of stress on employee performance in the banking industry are conducted throughout the sub‐ continent. Pandey (2020) a study was conducted on bank employees in Kathmandu, Nepal and it re‐ vealed that the main reason for increasing stress among the bank staff is employment/job overload which is followed by employment insecurity, ineffec‐ tive system of communication, role conflict, and poor reward system. These factors adversely affect the morale of the employees which results in de‐ creased productivity and declining performance. (Nazmul, Hassan, & Hossain (2019) carried out a study to investigate the influence of stress on Pubali Bank Limited, Bangladesh employees’ performance. Unrealistic targets of the business, job insecurity, in‐ effective management, improper reward systems, and multiple reporting lines were identified as major stressors. These stressors resulted in in‐ creased absenteeism, increased turnover, reduced 44 productivity, and increased conflicts hence they stated that stress at the workplace harm employee’s performance because it acts as a hindrance to the growth of an organization. Well‐articulated perfor‐ mance appraisal system and a straightforward re‐ porting line should be adopted by the bank. Ahmed and Ramzan (2013) stated that productivity and stress levels are inversely proportionate if the stress increases, productivity decreases, and vice versa. They analyzed the data collected from the banking employees in Pakistan by utilizing correlation anal‐ ysis. It was stated that a correlation exists between productivity and job/workplace stress. Over time, numerous studies were conducted to identify the various stress‐inducing factors and their impact on the bank employee’s performance and productivity. Kumar, Suseendar, & Philims (2022) carried on a study of 148 bank employees in Tamil Nadu and discovered that there is a sub‐ stantial connection between stress and employee productivity and performance. It was deduced that the majority of the employees are facing increased levels of stress at banks due to an absence of job autonomy as well as non‐participation in organiza‐ tional decision‐making processes, and thus they lose a sense of belonging to the organization. Lopes and Kachalia (2016) identified some of the factors that induce stress in the workplace. Role ambiguity, overload, role conflict, time pressure, and lack of motivation are some of the major stres‐ sors that influence the performance of the individ‐ ual at the workplace. They also found out that there is a notable relationship between the type of bank, gender, age of the employees, their job role, interpersonal relationships in the workplace, and influence of job stress. According to them, the five‐day‐week concept should be implemented to minimize the stress level of bank employees. Goswami (2015) explained that there is a detri‐ mental effect of workplace stress on the psycholog‐ ical and physiological health of personnel, as well as a negative influence on employee productivity, per‐ formance, and organizational profits. After analysis, he inferred that a lack of proper and healthy work‐ ing conditions induces stress among the employees. Workload is one of the major stress inducer which affects the performance and productivity of the em‐ ployees. He suggested that proper career develop‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 45 ment planning and healthy working conditions can improve the morale of the employees. Ratnawat and Jha (2014) their study “Impact of Occupational Stress on Employee Performance” stated that neg‐ ative stress /distress affects the physical and mental well‐being of the bank employees which affects their performance at the workplace. They identified Thirty‐Five Occupational Stress Inducer that induce stress and affect performance. Some of them are workload pressure, time pressure, long working hours, role ambiguity, role conflict, job insecurity, etc. Shukla and Sinha (2013) dentified that job stress is one of the major reasons for an increasing num‐ ber of employee turnover. If the employees experi‐ ence stress at the workplace, it results in a lack of commitment towards the organization and job dis‐ satisfaction which compels them to quit the job. Joshi and Goyal (2012) identified several stressors, including uncertainty, job insecurity, job changes, workload, insufficient pay, working hours, techno‐ logical changes, and communication gaps. Accord‐ ing to the study, the aforementioned variables elevate the stress level of personnel at banks and impair their performance. It was suggested that management prioritize job satisfaction to encourage employees to achieve the desired goal. Samartha, Begum, & Lokesh (2011) stated that personal factors and psychological strains induce stress which nega‐ tively influences the performance and satisfaction level of bank employees. Lack of promotion, non‐in‐ volvement in the decision‐making process, and poor reward systems induce stress at the workplace and reduce employee productivity. According to various studies, the banking in‐ dustry’s top stressors are identified as work over‐ load, role ambiguity, role conflict, time constraints, unattainable goals, job insecurity, lack of job auton‐ omy, political pressure, extended work hours, inad‐ equate communication within the company, and inadequate reward structures. These stressors have been shown to have a considerable impact on bank employee performance and productivity, resulting in decreased efficiency, higher absenteeism, low motivation, and lower job satisfaction. Furthermore, factors such as gender, age, job type, and relation‐ ships in the workplace have been identified as influ‐ ences on the level of stress experienced by bank employees. The stress levels differ between public and pri‐ vate sector bank employees based on various studies and comparative analyses. Private banking profession‐ als often experience an elevated degree of ambiguity regarding their roles, as well as stressors such as role overload, role authority, and role conflict. On the other hand, public sector bank employees face stress inducers such as political pressure and long working hours. Studies have consistently shown that private bank employees generally experience higher levels of stress at work compared to their counterparts in pub‐ lic sector banks. Additionally, factors such as work overload, time pressure, and poor communication with the organization have been identified as major stress‐inducing factors for both male and female bank employees, with female employees often facing higher stress levels. It has been suggested that stress management workshops and flexible working condi‐ tions should be introduced to mitigate these stressors in both public and private sector banks. Overall, the research indicates that there is a notable discrepancy in stress levels between public and private sector bank employees, with private bank employees generally ex‐ periencing higher levels of job‐related stress. The degree of stress that bank workers face is significantly influenced by organizational character‐ istics, job position, and gender. Studies have regu‐ larly demonstrated that female bank employees face higher levels of stress than their male counterparts. This is frequently attributed to causes such as work overload, time constraints, and inadequate commu‐ nication with the employer. Additionally, work re‐ sponsibilities and organizational characteristics have a significant impact on stress levels. Role ambiguity, role conflict, job instability, and a lack of job auton‐ omy, for example, have all been highlighted as key stressors that affect individual workplace perfor‐ mance. Moreover, the dual responsibility the fe‐ males have to perform at work as well as at home acts as a major stress inducer among them. 3.2 Impact of Job Stress‐Inducing Factors on the Employee’s Performance Several job stress inducers are identified based on the literature review. Several authors examined the influence of these inducers on employee perfor‐ mance in their studies. Tyagi and Rani (2023) re‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 45 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 46 Nikita Mukherjee, Syed Anis Haider, Satrajeet Choudhury: A Systematic Literature Review on the Impact of Job Stress on Employee Performance with Special Reference to the Banking Sector searched 150 employees of Yes Bank in New Delhi. They discovered that job stress has an enormous in‐ fluence on employees and has a high and adverse ef‐ fect on employee satisfaction. Job stress has a linear association that is negative with performance and the performance declines as the stress level rises. Yadav (2023) opines that job stress is extremely high among bank employees in Rajasthan, the increasing stress at the workplace results in poor psychological and mental health which adversely affects the over‐ all well‐being of the employees and thus hampers the productivity of the employees. It exacerbates feelings of insecurity, fear, anxiety, and depression among the employees, which results in a variety of behavioral changes in them. According to the Manzoor, Irfan, Baig, Sajjad, Ullah, & Nabeel (2021) several factors such as un‐ certainty about roles, job overload, and work‐family conflicts cause stress among bank employees. The above‐mentioned factor adversely influences the employee’s productivity and performance. This leads to a rise in absenteeism among employees. According to the study (Jain, 2021) increased absen‐ teeism, high employee turnover rates decreased productivity and poor health conditions are some of the impacts of high levels of Job Stress. Job stress has an unfavorable effect on employee perfor‐ mance. This also has an influence on the employee’s overall health, including both physical and mental well‐being. Increased level of stress at the work‐ place leads to high blood pressure and diabetes and even cause depression among the employees. Cherukur and Sherlin (2020) researched 60 HDFC bank employees in Chennai to find out the impact of Job stress on Employee performance in HDFC banks in Chennai. It was analyzed that bankers are exposed to a high level of stress at the workplace and it was found that two out of five bankers face extreme levels of job stress which hampers their productivity and performance. Work pressure and time constraints are cited as the primary stressors. According to the au‐ thors (Nguyen, Hoang, & Nguyen, 2020), increased workplace stress reduces job satisfaction, which im‐ pairs bank employees’ performance. Increased stress and discontent among bankers leads to more work‐ place conflicts and has a detrimental impact on inter‐ personal interactions among bankers, as well as with customers and other stakeholder. 46 According to the authors (Eshan & Ali, 2019), the various sources of stress include job overload, conflicting roles, and ambiguity in roles which neg‐ atively influence the work environment, induce stress, and deteriorate the performance of the em‐ ployees. The researchers concluded in their study that higher job stress leads to increased employee frustration and undermines bankers’ commitment to their organization. Sharma and Yadav (2018) found that the influence of stress on the perfor‐ mance of bank employees working in both private and public banks has been compared. Working hours are the most stressful element in private banks, but role erosion and role inadequacy are the most stressful factors in public banks. The aggra‐ vated level of stress not only impairs employee per‐ formance and productivity, but it harms bank employees’ psychological and physiological health. Fredrick and Idris (2018) stated that job stress and employee performance are negatively con‐ nected, i.e., as stress grows, it adversely impacts per‐ formance. Workplace stress affects employees’ intentions and motivation to perform, and it has a significant impact on their psychological well‐being. According to the authors (Kaur and Kumar, 2017), the stress level among the bank employees is extremely high and it significantly influences the performance of the employees. The authors comprehend several reasons for increased workplace stress, including poor working conditions, competing job demands, ever‐increasing targets and job complexity, and so on. This results in an unfriendly workplace environment, low productivity, diminished self‐confidence, in‐ creased absenteeism, and so on. Akther, Akter and Uddin (2017) conducted a study on 246 banking pro‐ fessionals working at private banks in Bangladesh. In Chittagong and Dhaka, an increase in job stress has resulted in lower organizational commitment and sat‐ isfaction among employees, which leads to greater turnover intentions, job pressure, and, in some cases, job burnout. Employees’ work‐life balance is some‐ times hampered by rising job stress. The research by Lopes and Kachalia (2016) in‐ tended to discover the relationship between job stress and job performance among the employees of banks in the city of Mumbai. According to the study, increased job stress harms employee perfor‐ mance as well as productivity. When the stress level Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 47 in the organization rises, an employee’s intention to complete the assigned task decreases. Shukla and Sinha (2013) found that job stress is the main reason for employee turnover in an organization. The ex‐ treme level of stress reduces commitment in the em‐ ployees toward their organization and hence they tend to quit their jobs as they are unable to perform well and cope with the stress level at the workplace. Paputungan (2013) used multiple regressions and found out that various stress‐inducing factors such as work overload, time pressure, and poor ad‐ ministrative support affect the employee’s perfor‐ mance and productivity in the banks. It is stated by the author that stress not only hampers employees’ performance and productivity but is equally harmful to organizations as employee retention is adversely affected. Employee retention and job stress have an inverse link with each other. When the stress level at work increases the retention intention among the employees drastically diminishes. Karunanithy & Pon‐ napalam (2013) stated that female bank employee faces more stress at work because of their dual re‐ sponsibility at work and home. Stress‐inducing fac‐ tors have significant but adverse consequences on the performance of employees. The authors ex‐ plained a model in which they stated that job‐related stressors, organization‐related stressors, and individ‐ ual stressors result in poor performance, lack of punc‐ tuality and self‐confidence, increased absenteeism, and conflicts at the workplace (banks). Samartha, Begum and Lokesha (2011) conducted a study on 100 employees of 5 commercial banks in Mangalore. The authors concluded that technological changes and work overload are the main reason for increasing stress levels in the employees, these results in de‐ creased satisfaction and productivity in the bank em‐ ployees. The performance of the bank employees deteriorates because of the extreme level of stress. 4 INTERPRETATION 4.1 Factors Inducing Job Stress among the Bank Employees at the Workplace Based on the literature review, various factors inducing stress among the bank employees are identified. Numerous factors cause stress at the workplace but the top ten factors that induce stress are: Role Ambiguity, Role Conflict, Long Working Hours, Time Pressure, Unrealistic Targets, Workload, Lack Of Job Autonomy, Poor Reward System, Inef‐ fective Communication, and Job Insecurity. These factors are the major contributors to the stress among bank employees. Most of the bank employees face the problem of role ambiguity. They are unable to understand their responsibilities to perform as well as the authorities they possess. The bankers also experience incompatible work de‐ mands. The greater the role conflict experienced by the banker the higher the stress level they have to face. Pandey (2021), Eshan and Ali (2019), Bhat and Alaf (2017), and Ranawat and Jha (2014) some of the researchers who have identified role ambiguity and role conflicts as the major stressors. Long work‐ ing hours, work overload, and time pressure were identified as major job stressors by Jamwal and Avshit (2023), Lyimo and Joachim (2022), Jayshree (2014). Since the bank is a service sector the em‐ ployees have to perform operational tasks as well as serve the customer needs, therefore, they have excessive workloads and hence to do work for long hours which hamper the work‐life balance and in‐ duces stress among them. Moreover in the last decade banking sector has undergone tremendous change along with technological change the bankers have to adopt new trends, huge and unre‐ alistic targets are assigned to the bankers and they are compelled to achieve them within a specified period which causes unbearable pressure and anx‐ iety in them, therefore time pressure and unrealis‐ tic targets are considered the major stressors. Nazmul, Hassan, & Hossain (2019) along with other authors in their research attribute unrealistic tar‐ gets as the most important stress‐inducing factor. Job insecurity was identified as a major stress in‐ ducer among bank employees by (Sharma, Ba‐ sumatary and Hazarika (2020) and Joshi and Goyal (2012). The increasing competition due to global‐ ization, privatization, and recent policy changes in the form of mergers paved the way for new com‐ petitors and this also creates a fear of job loss among the bank employees. Hence lack of job se‐ curity increases the level of stress among the bank. Pandey (2020) and Samartha, Begum and Lokesha (2011) opine poor reward system is the major stress inducer which acts as icing on the top, de‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 47 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 48 Nikita Mukherjee, Syed Anis Haider, Satrajeet Choudhury: A Systematic Literature Review on the Impact of Job Stress on Employee Performance with Special Reference to the Banking Sector spite working with full commitment bankers are poorly rewarded and most of the time their work is not given the due recognition. Bankers feel de‐ moralized and stressed. Bank employees are gen‐ erally not given any freedom in decision‐making and policy‐making. Nowadays the concept of mi‐ cromanagement is adopted by the majority of the banks which leads to a lack of autonomy in the banks and creates an inflexible working environ‐ ment that affects the mental well‐being of the em‐ ployees and the employees lose a sense of belongingness towards the organization. Deepan‐ shi and Arrawati (2018) identified lack of job auton‐ omy as one of the major stressors as it results in a lack of commitment towards the organization in the long run. Joyce (2021) identified ineffective com‐ munication as the main attribute of counterproduc‐ tive behavior in employees. It is well said that if the stress level is high among the employees in the or‐ ganization then there is a loophole in the commu‐ nication system of the organization. Poor feedback causes ineffective communication among the em‐ ployees in the organization. Lack of proper commu‐ nication in the banks is considered as the major factor that causes stress at the workplace among the employees. Apart from the above‐listed factors, there are many other stressors. Poor relations with superiors/colleagues, political pressure, continuous technological graduation, frequent transfers, organi‐ zational culture, and toxic work environment are some of the stress inducers that are faced by bank employees at regular periods. According to various studies, the banking indus‐ try’s top stressors are identified as work overload, role ambiguity, role conflict, time constraints, unattainable goals, job insecurity, lack of job auton‐ omy, political pressure, extended work hours, inad‐ equate communication within the company, and inadequate reward structures. These stressors have been shown to have a considerable impact on bank employee performance and productivity, resulting in decreased efficiency, higher absenteeism, low motivation, and lower job satisfaction. Furthermore, factors such as gender, age, job type, and relation‐ ships in the workplace have been identified as influ‐ ences on the level of stress experienced by bank employees. 48 The stress levels differ between public and pri‐ vate sector bank employees based on various studies and comparative analyses. Private banking profes‐ sionals often experience an elevated degree of am‐ biguity regarding their roles, as well as stressors such as role overload, role authority, and role conflict. On the other hand, public sector bank employees face stress inducers such as political pressure and long working hours. Studies have consistently shown that private bank employees generally experience higher levels of stress at work compared to their counter‐ parts in public sector banks. Additionally, factors such as work overload, time pressure, and poor com‐ munication with the organization have been identi‐ fied as major stress‐inducing factors for both male and female bank employees, with female employees often facing higher stress levels. It has been sug‐ gested that stress management workshops and flex‐ ible working conditions should be introduced to mitigate these stressors in both public and private sector banks. Overall, the research indicates that there is a notable discrepancy in stress levels be‐ tween public and private sector bank employees, with private bank employees generally experiencing higher levels of job‐related stress. The degree of stress that bank workers face is significantly influenced by organizational character‐ istics, job position, and gender. Studies have regu‐ larly demonstrated that female bank employees face higher levels of stress than their male counterparts. This is frequently attributed to causes such as work overload, time constraints, and inadequate commu‐ nication with the employer. Additionally, work re‐ sponsibilities and organizational characteristics have a significant impact on stress levels. Role ambiguity, role conflict, job instability, and a lack of job auton‐ omy, for example, have all been highlighted as key stressors that affect individual workplace perfor‐ mance. Moreover, the dual responsibility the fe‐ males have to perform at work as well as at home acts as a major stress inducer among them. 4.2 Impact of Job Stressor on Employee’s Performance Various stress‐inducing factors have been iden‐ tified, and every one of these factors possesses an adverse consequence on the work performance of Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 49 employees in the banking industry. The perfor‐ mance and productivity of the employees are neg‐ atively influenced by job stress levels. If the level of stress in the bank employees increases then it is ob‐ served that the performance of the employees de‐ creases drastically. When the employees are stressed their willingness to work diminishes which results in increased absenteeism from the work. Manzoor and colleagues (2021) and Kaur and Kumar (2017) discovered that workplace stress causes in‐ creased absenteeism among employees. The pro‐ ductivity of the employees also decreases which has a huge impact on the growth of the organization. Low productivity leads to elevated expenses and waste of resources, which results in enormous fi‐ nancial losses for the company. When the influence of the job stressor increases the commitment and sense of belongingness among the employees de‐ creases and finally the employees quit the job, hence employee turnover rates increase if the em‐ ployee faces an increased level of stress at the work‐ place. Due to the increasing job stress, workplace conflicts are also increasing rapidly. The unrealistic targets and time pressure increase the level of com‐ petition between colleagues which creates rivalry among them and hence the conflicts among the col‐ leagues increase moreover the superiors also badly pressure the subordinates to achieve the targets which de‐motivates the employees and even leads to arguments and conflicts in the workplace. In‐ creasing workplace conflicts and employee turnovers are consequences of the ever‐increasing stress among bank employees as identified by re‐ searchers like Akther, Akter and Uddin (2017) and Karunanithy and Ponnapalam (2013). A toxic and stressful work environment brings many behavioral changes in employees. Continuous pressure makes the employees frustrated, moody, and even lethar‐ gic. The anxiety and anger level of the employees increases and sometimes it leads to depression, sleeping disorders, and other health issues. Jain (2021) explained in their study that stress causes be‐ havioral changes that affect the physiological and psychological health of bank employees. Nowadays stress is becoming a lifestyle disorder. The aforementioned visual investigates the im‐ pact of job stress on employee performance in the banking industry. It highlights a variety of stressors that harm employees’ job performance, productiv‐ ity, and general health. According to the study, greater job stress reduces employee performance, productivity, and dedication, leading to higher ab‐ senteeism and turnover rates. Additionally, work‐ place confrontations grow owing to unrealistic expectations, time constraints, and competitiveness Figure 2: The Impact of Job Stressors on Employee’s Performance Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 49 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 50 Nikita Mukherjee, Syed Anis Haider, Satrajeet Choudhury: A Systematic Literature Review on the Impact of Job Stress on Employee Performance with Special Reference to the Banking Sector among coworkers, all of which contribute to a toxic work environment. Continuous pressure and stress also cause behavioral changes in employees, leading to irritation, moodiness, lethargy, increased anxiety and rage levels, and potential health issues like de‐ pression and sleeping difficulties. The findings highlight the detrimental effects of job stress on both the individual and organizational levels within the banking industry. Notably, this study emphasizes how job stress not only dimin‐ ishes employee performance and productivity but also leads to increased costs, resource wastage, fi‐ nancial losses, and a decline in employee commit‐ ment and retention. Furthermore, the escalating workplace conflicts and behavioral changes result‐ ing from stress contribute to a challenging and un‐ healthy work environment, impacting the physiological and psychological health of bank em‐ ployees. Overall, the research findings underscore the pervasive and multifaceted nature of job stress as a significant concern that can have far‐reaching implications for both employees and the organiza‐ tions they work. 5 DISCUSSION AND CONCLUSION 5.1 Conclusion This study provides an understanding of the consequences of job stress by identifying various factors that induce stress in the workplace and how it influences the performance of bank employees. Stress in general is increasingly becoming a serious issue for society as a whole. Not only at the individ‐ ual or personal level but at the organizational level also there is an alarming increase the stress levels which are becoming a major concern for all. Stress at the workplace is a psychological construct that may be experienced by employees daily and cannot be avoided or prevented. Almost in all the industry the employees as well as the employers are facing increased stress and pressure. Banks, as a service sector and the foundation for every nation’s econ‐ omy, have extremely elevated degrees of stress and pressure across personnel. Several job stressors are identified in this research paper. Role ambiguity, role conflict, long working hours, time pressure, unreal‐ istic targets, workload, and lack of job autonomy, as 50 well as a poor reward system, ineffective communi‐ cation, and job insecurity, have been identified as major contributors to the escalating degree of job stress among bank employees, and these factors have an adverse influence on their performance. In‐ creased absenteeism, decreasing productivity, in‐ crease in employee turnover, and increasing conflicts are the results of the increasing stress at the banks. Moreover, changes in the behavior of the employees can be observed because of the increas‐ ing pressure and stress at the banks. As a customer‐ centric sector, where customer service and customer retention are the main concerns, behav‐ ioral changes in employees are extremely harmful to the business as a whole. Human beings are con‐ sidered the most important asset for the growth and profitability of any organization and bank is not an exception. Human resource performance and ef‐ ficiency are key components of every organization’s success. Banks are regarded as the backbone of the economy of a nation, therefore employee perfor‐ mance is vital not just for employers but also for the development of the nation as a whole. The banking sector is seen as a vital contributor to GDP growth, capital formation, and the development of small savings habits among our nation’s citizens. Banks play an important part in the growth of the national economy. Therefore performances, productivity, and physical and psychological well‐being of the bank employees are of utmost importance to the whole nation. It can be inferred from certain studies that fe‐ male bank employees typically endure higher stress levels than their male counterparts. Work overload, time limits, and inadequate communication are some of the factors that make female employees more stressed out. However, not all research has found the same gender difference in stress levels. Following a thorough analysis of the literature, com‐ parative studies show which distinct factors con‐ tribute to stress in both the public and private sectors. Private bank employees typically deal with stressors including role overload, authority, and con‐ flict, whereas public sector bank employees deal with pressures like political pressure and long work‐ ing hours. In the majority of cases, private bank em‐ ployees report more stress than public sector bank employees. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 51 An individual working in the banking sector can adopt various stress coping strategies such as proper time management, attending motivational sessions, or seeking professional guidance can help bankers manage stress, Moreover, yoga and meditation or pursuing hobbies such as painting, gardening, cook‐ ing, or spending time with family and friends can act as a stress buster. 5.2 Managerial Implications Stress management at work is a complex matter that falls within the purview of managers and bank management. This study will help the top‐level man‐ agement and the managers at the branch level iden‐ tify the specific stressors within the banking sector that are negatively affecting employee performance. After the correct and timely identification of the stressor, the managers can implement strategies to manage and distribute workload effectively. This could involve revising the job roles, providing addi‐ tional resources or support where necessary, and en‐ suring that employees have manageable workloads to prevent burnout. This study will also assist man‐ agement in creating and providing training programs for employees on time management, resilience building, stress management strategies, and coping mechanisms. By providing employees with these skills, the management will be able to better manage job stress and enhance performance. Along with supporting employee well‐being and addressing the underlying causes of job stress, this study will aid in the examination of prevailing orga‐ nizational policies and procedures. The results of this study will aid in reforming the policies about perfor‐ mance expectations, leave policies, work hour fixing, and workload management. The results of this study will also assist branch managers and upper manage‐ ment in developing a culture that encourages collab‐ oration and mutual respect as well as establish open channels of communication to create a positive and encouraging work environment where employees feel appreciated, acknowledged, and supported. The organization must adopt various stress cop‐ ing strategies to take care of the physiological as well as the psychological well‐being of its employ‐ ees. The adoption of a five‐day workweek combined with a flexible working environment will aid in the reduction of stress among banking employees. A comprehensive performance appraisal system, in addition to relieving the pressure of meeting unre‐ alistic sales targets, can aid in motivating employees and increasing productivity. Bank employees’ stress management should be prioritized at the individual, organizational, and national levels. 5.3 Limitations and future research The secondary data used in the study were ac‐ quired via a systematic review of the body of work published in a wide range of national and interna‐ tional journals. The primary constraint on this re‐ search work is the small number of articles that were assessed. Despite the critical assessment, the number of papers reviewed may be inadequate. Moreover, this research focused on the identification of stress‐ inducing factors and their impact on the employee’s performance in the banking sector hence it cannot be generalized to other sectors therefore these can be considered as the shortcoming of the study. Job stres‐ sors and performance outcomes in the banking sector may be influenced by industry‐specific factors, such as competition, financial market conditions, and cus‐ tomer demands. Failure to account for these distinct elements may reduce the review results’ relevance and applicability to the banking sector. Another major limitation in the context of this sys‐ tematic literature review on the impact of job stress on employee performance in the banking sector is the frequency of cross‐sectional study designs. While these studies can identify connections between job stress and performance measures, they fall short of proving correlation or documenting longitudinal pat‐ terns. Cross‐sectional studies, which collect data at a single time point, cannot account for changes in job stress levels or performance outcomes over time, thereby leading to biased or incomplete results. Lon‐ gitudinal studies, which monitor employees’ stress lev‐ els and performance metrics over time, provide a more robust methodological approach to determining the causal association between occupational stress and performance. However, such longitudinal studies may be less common in the literature due to practical issues such as resource limits, participant attrition, and the time required to detect important changes. De‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 51 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 52 Nikita Mukherjee, Syed Anis Haider, Satrajeet Choudhury: A Systematic Literature Review on the Impact of Job Stress on Employee Performance with Special Reference to the Banking Sector spite their relative scarcity, longitudinal studies are im‐ portant for providing greater evidence and a deeper understanding of how job stress affects employee per‐ formance in the banking sector across different time points and circumstances. the aforementioned are some of the major limitations of this research. This study and its findings are based on secondary data gathered through a systematic review of available literature published in both national and international journals. As a result, future research should concen‐ trate on the collection and analysis of primary data from individuals working in the banking sector to de‐ velop a comprehensive view of job stress, its factors, and its influence on bank employees’ performance and quality of life. Further studies may examine effi‐ cacious interventions aimed at alleviating occupational stress and its impact on the work performed by bank‐ ing personnel. It can focus on developing and imple‐ menting certain strategies designed for the banking in‐ dustry. Future studies can examine the correlation between job stress, employee engagement, and job satisfaction which will aid the organizations to design more holistic strategies to improve the overall well‐ being and performance of the bank employees. Future research should focus on examining the effects of job stress on the physical and mental health of banking sector personnel. Examining stress‐related health con‐ ditions including depression, burnout, and cardiovas‐ cular disorders may fall under this category. This review paper on the impact of job stress on employees’ performance in the banking sector can serve as a foundation for future research and practical interventions aimed at improving work‐ place well‐being and organizational effectiveness. EXTENDED SUMMARY/IZVLEČEK Eden glavnih ciljev članka je ugotoviti vpliv delovnega stresa na uspešnost zaposlenih, s poudarkom na bančništvu. Stres velja za pogost element delovnega okolja na vseh vrstah delovnih mest, s katerim se posamezniki soočajo v skoraj vseh vidikih življenja. Zaposleni v vsaki organizaciji doživljajo ogromne količine stresa, kar velja tudi za bančni sektor in bančne strokovnjake. Uspešnost zaposlenih je ključna za uspeh in nadaljnji razvoj vsake organizacije. Po končnem pregledu in oceni na podlagi smernic PRISMA je bilo sedemintrideset (37) raziskav od sedemnajst tisoč osemsto (17800) ocenjenih kot ustrezne in vključenih v ta sistematični pregled. Te smo identificirali z uporabo številnih spletnih virov, kot so Google Scholar, Research Gate in Web of Science. Študija vključuje le članke, objavljene med letoma 2011 in 2023. Po temeljitem in sistematičnem pregledu literature lahko rečemo, da sta delovni stres in uspešnost zaposlenih negativno povezana. Različni dejavniki, ki povzročajo stres, kot so negotovost glede vlog (nejasnost vlog), spor glede vlog (konflikt vlog), pre‐ obremenjenost vlog (delovna preobremenjenost/podobremenjenost) in negotovost pri delu (nevarnost izgube službe), so opredeljeni kot ključni elementi, ki močno povečujejo raven stresa bančnikov in negativno vplivajo na njihovo sposobnost za delo. Raziskava kaže, da obstaja medse‐ bojna povezava med delovnim stresom in uspešnostjo delavcev. 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BIMS International Re‐ search Journal of Management and Commerce, 23‐27. 54 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 55 Vol. 13, No. 2, 55‐70 doi:10.17708/DRMJ.2024.v13n02a04 ORGANIZATIONAL CLIMATE AND EMPLOYEE SATISFACTION FOLLOWING THE REFORM OF SOCIAL SERVICES: LESSONS FROM SLOVENIA Matej Babšek Faculty of Public Administration, University of Ljubljana, Slovenia matej.babsek@fu.uni‐lj.si Polonca Kovač Faculty of Public Administration, University of Ljubljana, Slovenia polonca.kovac@fu.uni‐lj.si Nina Tomaževič Faculty of Public Administration, University of Ljubljana, Slovenia nina.tomazevic@fu.uni‐lj.si Abstract The main goal of the paper is to present how employees of social services in Slovenia view the reorganization carried out in 2018 with the purpose to draw attention to the importance of both the organizational climate and employee satisfaction before and after the reorganization given the established connection between these constructs. In the re‐ search, mixed methods were used, specifically an explanatory sequential design. In the quantitative phase, an online survey adapted to these organizations was conducted among employees, while in the following qualitative phase in‐ depth semi‐structured interviews were performed with managers and professional workers. The results show the fail‐ ure of the reorganization of social services because the set objectives were not accomplished. Employees rated both organizational climate and employee satisfaction worse after the reorganization than before it. Here, the most critical aspects are the lack of knowledge concerning the new organization’s mission, vision, and goals, coupled with the em‐ ployees’ lack of identification with them. While, as expected, a connection exists between climate and satisfaction as well as satisfaction and attitudes to the reorganization, the research also reveals the important connection between digitalization and the principles of good governance pursued by these services. The findings of the research may be valuable for policymakers and practitioners while designing and implementing future reforms in social services orga‐ nizations in terms of ensuring a favorable work climate and employee satisfaction. Keywords: Organizational Climate, Employee Satisfaction, Social Services, Reform, Reorganization, Slovenia Acknowledgments This article is a result of the basic research program “Development of an Efficient and Effective Public Ad‐ ministration System” (P5‐0093). The authors acknowledge the financial support of the Slovenian Research and Innovation Agency. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 55 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 56 Matej Babšek, Polonca Kovač, Nina Tomaževič: Organizational Climate and Employee Satisfaction Following the Reform of Social Services: Lessons from Slovenia 1 INTRODUCTION The organizational climate adds considerably to the effectiveness and efficiency of employees at work and, in turn, to the realization of the vision, mission, and goals of organizations. Studies show that organi‐ zational climate refers to the perception and feelings that employees have about their work environment and is based on their beliefs and experiences, and re‐ lated to employee satisfaction, performance, and motivation on the individual, team, and organiza‐ tional levels (Gil et al., 2023; Schneider et al., 2013). Unlike organizational culture, which is relatively per‐ manent and built from common systems of values, attitudes, and principles, organizational climate rep‐ resents the way organizational members perceive the organization’s existing practices, and what members feel about the organization and their role within it (Prastiawan et al., 2020). More recent research (Ahmad et al., 2018; D’Amato, 2023; Zahid and Nau‐ man, 2023) identifies several of its dimensions, such as communication, leadership, cohesion, autonomy, innovation, rewarding, consistency between strategy and operational management, dynamics and free‐ dom of expression, and particularly in the public sec‐ tor it is strongly influenced by institutional leadership as a reflection of the integrity and responsibility of managers (Viđak et al., 2023). Given the complexity of the phenomenon, or‐ ganizational climate is defined by many theoretical frameworks. Gil et al. (2023) relate it to social ex‐ change theory, according to which employees per‐ ceive opportunities to develop their own skills, become visible in the organization and participate in decision‐making, while contributing to a positive work environment and engagement. In this context, D’Amato (2023) highlights the theory of construc‐ tivist epistemology, according to which organiza‐ tional climate emerges in a process in which employees construct its meaning by collecting and modifying their assessments of organizational events as a result of their interactions with (significant) oth‐ ers in the workplace. Furthermore, Schneider et al. (2013) distinguish between service, safety and diver‐ sity organizational climates. With the development of these dimensions, the theory approaches practi‐ cal implications as these concepts focus more on or‐ ganizational processes and their outcomes. 56 Studies also establish that the leadership style in public organizations has a significant impact on the climate since, as noted by Novac and Bratanov (2014), flexibility within the public system, motiva‐ tion, and trust are essential factors in the success and strengthening of the reputation of organizations. The role of managers in these hierarchical organiza‐ tions must accordingly be to ensure legitimacy and nurture agreements between different levels of management, whereas top management must con‐ sistently translate strategic messages to lower levels and provide formal and informal guidance, support, and empowerment for the operationalization of strategic directions by lower‐level managers (Stanton et al., 2010). The basic foundation of the leadership style is trust, both of managers towards employees and employees towards managers, which is shown in public services of higher quality (Martínez‐Tur et al., 2020). As stated by Tomaževič et al. (2014), in the repressive part of the public sector (e.g. police ser‐ vice), the feeling employees have that the employer will protect them if they are exposed as part of per‐ forming their otherwise legal and professional work is important, while trust in one’s immediate superior also has a strong influence. Most studies of organizational climate in the public sector refer to its connection with specific aspects of the work of such employees. Moussa et al. (2018) and Mutonyi et al. (2020) found a strong positive connection between organizational climate and the creativity of employees at work. A support‐ ive organizational climate was shown to be signifi‐ cantly positively related to the results of the employee training process and to the emphasized role of relationships (Gil et al., 2023). Ancarani et al. (2019) established a positive connection be‐ tween organizational climate and employee en‐ gagement, as reflected in the autonomy of workers, their empowerment and well‐being, and simulta‐ neously as concerns reforms in the public sector the authors claim that an organizational climate which is based on efficiency and is target‐oriented does not have a positive effect on civil servants’ commitment, and reforms do not therefore in‐ crease employee commitment. To ensure an adequate organizational climate, the public sector often needs an organizational trans‐ formation with new innovative methods of organiza‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 57 tion and operation that lead to a more agile, flexible, and innovative environment (Boufounou and Argyrou, 2022). As noted by Ng et al. (2016), it is crucial that the motivation for employment in the public sector is often related to external rewards (e.g., job security) or an easier work–life balance compared to the pri‐ vate sector (as also stressed by Kalliath et al., 2020). This is even more apparent in the case of younger generations of civil servants who no longer feel so much that motivation for being employed in these fields is built on a sense of commitment to serving the country and the common good. Public sector organi‐ zations are also characterized by a certain legal deter‐ mination with the aim of protecting the public interest in administrative activities and users’ rights (Babšek et al., 2020), which is also accompanied by relative or‐ ganizational rigidity and fewer opportunities for indi‐ vidual and collective innovation. Employee satisfaction is influenced by many fac‐ tors and exerts a positive effect on the effectiveness, efficiency, and stability of organizations. Employees are satisfied at work when they fulfill their desires and needs, taking various facets into account, including job security, work tasks, benefits, reward options, ca‐ reer development etc. (Sageer, et al., 2012; Tomaževič et al., 2014). As the theory of relative utility shows, higher job satisfaction can arise in various ways: through improvements in the objective aspects of the job, through lower expectations of the job and through a change in the weighting of the various as‐ pects of the job so that the negative aspects receive less attention compared to the pleasant ones (Pacheco and Webber, 2016). It is important to note, as Herzberg’s theory of job satisfaction, also known as Herzberg’s two‐factor theory or theory of motiva‐ tion and hygiene, shows that the factors that lead to job satisfaction are different from those that lead to job dissatisfaction, meaning that these two feelings are not on a single continuum, but are independent phenomena (Maidani, 1991). Measuring employee satisfaction and monitoring its trends is thus a vital measurement that quantitatively helps to determine the overall health of an organization (Thomas et al., 2019). At the same time, employee satisfaction is a complex and multifaceted construct that holds differ‐ ent meanings for different people, and mainly in‐ cludes interpersonal relationships as a key intangible facet of work, material security, a positive work envi‐ ronment, and opportunities for personal and profes‐ sional development (Laguador and Gonzales, 2023). Employee satisfaction hence reduces turnover and has a positive effect on work results and long‐term performance (Myskova, 2011). When it comes to examining employee satisfac‐ tion in the public sector compared to the private sec‐ tor, even over a long period of time there are no uniform findings. Maidani (1991) states that overall employee satisfaction at work is largely based on in‐ ternal facets, especially motivation, which applies equally to the public and private sectors, while em‐ ployees in the public sector find external facets and rewards more important. In this regard, a study by Dirzyte and Patapas (2022) showed that employee satisfaction is most influenced by positive organiza‐ tional practices and general life satisfaction, whereas employees in the private sector have more strongly expressed qualities of dignity, support, care, and op‐ timism. In their study, Andersen et al. (2013) con‐ cluded that for civil servants’ user orientation is more strongly positively related to their employee satisfac‐ tion than motivation for public service in general (Ng et al., 2016), albeit in both the public and private sec‐ tors the social component of the motivation of em‐ ployees has a positive impact on their satisfaction. Other studies (Gastearena‐Balda et al., 2021; Mihajlov et al., 2013; Zeffan and Bani Melhem, 2017), which found higher employee satisfaction in the public sector compared to the private sector, at‐ tributed the reasons for this to the greater security and predictability of the employment of public em‐ ployees, who are in turn less interested in changing their current job and, on the other hand, the public sector offers fewer opportunities to change jobs. Other studies underscore interpersonal relation‐ ships and trust in the work of managers as being a vital factor of employee satisfaction in the public sector which, notably in the service sector of public institutions, increases engagement and reduces the possibility of burnout at work (Martínez‐Tur et al., 2020). Additional reasons for this include the posi‐ tion of employees within the organization and fol‐ lowing the principles of Total Quality Management (TQM) (Škarica and Vrtodušić Hrgović, 2021). Re‐ gardless of the various facets of employee satisfac‐ tion, in their comparative study Juana‐Espinosa and Rakowska (2018) established that motivational fac‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 57 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 58 Matej Babšek, Polonca Kovač, Nina Tomaževič: Organizational Climate and Employee Satisfaction Following the Reform of Social Services: Lessons from Slovenia tors have a positive effect on employee satisfaction in the public sector, with no significant differences between the countries being studied. Both organizational climate and employee satis‐ faction are crucial for the introduction of change in organizations. According to Kuipers et al. (2014), change management theory and institutional theory are the most commonly used theoretical perspec‐ tives when studying change in public sector organi‐ zations. Institutionalists argue that organizational change is imposed by the environment and that or‐ ganizations seek legitimacy by adapting to environ‐ mental pressures. Change management theory, on the other hand, emphasizes how organizational change is brought about by the deliberate actions of the actors involved in the change, with the focus of the theory being on the intra‐organizational level. All of the above allows the conclusion that un‐ derstanding the organizational climate and employee satisfaction in the public sector is crucial for analyzing the effectiveness and efficiency of public institutions that pursue their vision, goals, and mission to con‐ tribute to social welfare, progress, and democracy. This means it is important for researchers as well as policymakers and practitioners to understand these processes and the factors influencing them. In our re‐ search, we employed multiple research methods with the main goal of analyzing employee satisfaction and organizational climate before and after the reor‐ ganization of Slovenian social services in 2018. After presenting the basic constructs being studied (em‐ ployee satisfaction and organizational climate), the paper describes the social services system in Slovenia – its institutional framework together with its reor‐ ganization that commenced in 2018 – followed by an explanation of the study’s significance, the method‐ ology, presentation, and interpretation of the results and, finally, a discussion and conclusion. 2 SOCIAL SERVICES IN SLOVENIA 2.1 Institutional framework To fully appreciate this research and the impli‐ cations it holds for the human resources manage‐ ment theory, it is necessary to understand the institutional environment of Slovenian social ser‐ vices and the reforms implemented in this context, 58 particularly the reorganization of social work cen‐ ters (SWCs) in 2018. The SWCs are the central, pri‐ mary, and coordinating institution in the sense of having acted as a single entry point to the system of social services in Slovenia ever since they were es‐ tablished in the 1960s. From a legal and organiza‐ tional point of view, SWCs are legal entities under public law with their own legal subjectivity ‐ public institutes as holders of public powers that carry out the professional tasks delegated to them by the state. The goal of such an arrangement should be to bring social services closer to people and ensure apolitical decision‐making (Babšek et al., 2020). With this kind of institutional arrangement of social services, the professionalism and independence of action of SWCs in an extremely sensitive area are guaranteed. In September 2018, 62 SWCs were op‐ erating in Slovenia, with their local jurisdiction being determined by the areas of administrative units as a territorial division of the state administration. In October 2018, in the process of reorganizing them, they were merged into 16 organizationally indepen‐ dent public institutes which are managed in a fairly centralized way via uniform regulations and instruc‐ tions of the competent ministry. Reorganization is the transformation of structures, procedures and mechanisms specifically designed to deliver services to citizens, leaving aside broader changes affecting public administration in general (Bolgherini et al., 2019). Although this process was labeled as a reor‐ ganization, it went beyond mere changes to the or‐ ganizational structure. According to the established goals, it was a reform intended to address the struc‐ tural aspects and strategic functioning of these or‐ ganizations. Here, it must be noted that with its administra‐ tive and social system Slovenia belongs to the coun‐ tries of Central and Eastern Europe regarding which, on top of striving for the efficiency, resilience, and agility of public organizations, the ongoing transition from former post‐socialist arrangements to modern democratic principles is still typical. Further, in the case of administrative reforms, Slovenia follows the legal culture and norms specific to the German‐Aus‐ trian tradition, with its relatively strict legalism and formalism (Kovač and Bileišis, 2017). During times of reforms, these sociological‐cultural phenomena usu‐ ally constitute an obstacle that must be properly ad‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 59 dressed, i.e., incorporated into the existing system. The administrative tradition is a core factor for effi‐ cient reforms, which means the successful public management approaches developed in the Anglo‐ Saxon world are not necessarily a suitable mecha‐ nism for achieving reform goals in Central Europe. Alternatively, according to the way changes are intro‐ duced, their adaptation is necessary, e.g., also placing otherwise managerial‐organizational measures in the legal framework which, on one hand is thus quite rigid in relation to private or Anglo‐Saxon practices and, on the other, leads to predictability and legal se‐ curity for stakeholders and is in line with the other‐ wise formalized nature of public administration. 2.2 The Reorganization of Social Work Centers Before the changes in 2018, the SWCs had not been significantly reformed since their inception. Their reorganization was foreseen on the level of strategic documents by the Resolution on the na‐ tional social welfare program for the period 2013– 2020 (Official Gazette of the Republic of Slovenia, No. 39/13) that pursued the objectives of ensuring the availability, accessibility, and reachability of ser‐ vices while simultaneously improving the quality and efficiency of their implementation. This was to be achieved by reorganizing the SWCs since this would strengthen their coordinating and connecting role with the services of other departments and non‐governmental organizations. In the entire social services system, this was expected to encourage the expansion of the offer and the introduction of mod‐ ern innovative approaches based on the profes‐ sional autonomy of the providers. Irrespective of the above, the provision of social services was ex‐ pected to be primarily taken care of by public ser‐ vice providers in this area. On the political level, the reorganization of the SWCs arose from two coalition agreements of the governments at the time, and legislatively was im‐ plemented with the Act on Amendments to the So‐ cial Security Act (ZSV‐H, Official Gazette of the Republic of Slovenia, No. 54/17) as the central legal basis for the organization and operation of SWCs in Slovenia. In addition to merging public institutions and establishing new organizational structures (e.g., regional joint services at the headquarters and branches in a local area), it introduced social activation services for long‐term unemployed per‐ sons, an informative calculation of social rights (e.g., child allowance, kindergarten payment sub‐ sidy), and other legal and managerial novelties (ACSW, 2018). In summary, the reform did not achieve the set objectives in terms of reducing ad‐ ministrative burdens for users, greater opportuni‐ ties for fieldwork, and the development of new methods of professional work, chiefly due to insuf‐ ficient strategic planning of the reform and the in‐ sufficient participation of relevant stakeholders (Babšek et al., 2020). Concretely, the reform para‐ doxically led to increased bureaucratization and for‐ malization of substantive work, unsuccessful rationalization, a failure to achieve the economic objectives of the reform, insufficient autonomy of the profession and social responsibility, and addi‐ tional staff malnutrition and employee burnout (Rape Žiberna et al., 2020). The systemic reasons for this may be found in the lack of a central coor‐ dination approach and insufficient rational discus‐ sion, along with cross‐sector uncoordinated solutions, which led to inadequate reform results concerning operationalization of the principle of the welfare state relative to the publicly declared objectives of this reform (Kovač and Bileišis, 2017). Given the above, from the point of view of or‐ ganizational theory the SWC reorganization process was not carried out optimally as it did not cover all essential aspects of the operations of these organi‐ zations (whose key stakeholders are employees), nor did it focus on their participation and individual factors of employee satisfaction (Pacheco and Web‐ ber, 2016). Even today, several years after the re‐ form, employees do not identify with the newly established organizations and do not know their vi‐ sion, goals, and strategies (Rape Žiberna et al., 2020). The reasons for the failed reform in the view‐ point of employees are to be found in the fact that in the Slovenian public sector, even though the for‐ mal aspects of civil servants are otherwise well taken care of, there is a lack of a strategic view and attitude concerning human resources management, which would have a long‐term effect on assuring a stimulating environment and thus on the profes‐ sional and personal development of employees at work (Stare, 2021). Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 59 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 60 Matej Babšek, Polonca Kovač, Nina Tomaževič: Organizational Climate and Employee Satisfaction Following the Reform of Social Services: Lessons from Slovenia 3 SIGNIFICANCE OF THE PRESENT STUDY In the literature, not many studies comprehen‐ sively deal with the organizational climate and em‐ ployee satisfaction in social services in connection with their organizational or substantive reforms, but instead generally refer to just one aspect of the work of social services. Analyses accordingly often refer to strictly organizational‐institutional aspects of reforms in terms of agencification, decentraliza‐ tion, and governance‐related optimization of the welfare state in individual legal regulations/arrange‐ ments (Van Berkel, 2010) or analyze the objectives of administrative relief, cost reduction, and effi‐ ciency increase (Johnston and Romzek, 1999). Re‐ forms have also been frequently studied in terms of the creation of policies and governance models of the welfare state, especially the operationalization of reform policies (Borghi and Van Berkel, 2007), the institutionalization and empowerment of citizens as prevention against political influences (Kekez, 2018), or political responsibility for the results of reforms arising from the administrative responsibility of so‐ cial services (Byrkjeflot et al., 2014). Most studies in the field of social service reforms refer to their professional autonomy as the basis for their managerial independence and apolitical func‐ tioning, for example in the context of less radical re‐ forms of social services due to professional values and the rootedness of institutions in public systems (Ackroyd et al., 2007), the risk of standardization as a result of reforms for the professional basis of social work (Røysum, 2013), the key role of managers in successful reform implementation (Niiranen et al., 2019), the impact of reforms on the transformation of the practice of social services in the direction of citizens’ needs (Gilbert, 1998), and the importance of involving social services in reforms with a complex cross‐sectoral impact to assure a supportive environ‐ ment for employees (Levin et al., 2020). Although many analyses refer to the satisfaction of employees in social services with their work, yet only in general and not specifically in connection with reforms, some individual studies of the organi‐ zational climate in these services in relation to the implemented reforms can still be found, for instance on the connection between quality reform policies and the organizational climate in social organizations 60 (Olin et al., 2014), on the tangible effects of a posi‐ tive organizational climate on solving the situations of individuals and families (Glisson and Green, 2011), and on the influence of organizational climate on the work of managers during the process of introducing the changes (Carnochan and Austin, 2002). Almost no studies in the literature focus on es‐ tablishing a link between organizational changes and organizational climate and employee satisfac‐ tion. Studies that partially referred to the men‐ tioned topics were carried out in other countries and, due to the different cultural environment, are not directly comparable and applicable in Slovenia. The presented research therefore provides im‐ portant insights into the operation of social services from the point of view of both reforms as part of their external environment as well as the organizational cli‐ mate and employee satisfaction. The aim of the re‐ search was to determine how employees of Slovenian SWCs generally view the reorganization of these ser‐ vices with the purpose of highlighting the importance of organizational climate and their work satisfaction. This was done by assessing their satisfaction and se‐ lected facets of the organizational climate before and after the reform and to establish whether a positive relationship exists between the studied variables. Ac‐ cordingly, three research questions were formulated. The first question (RQ1) was concerned with how em‐ ployees evaluate the achieved results of the SWCs’ re‐ organization in relation to the set objectives. While finding an answer to this, the presence of statistically significant differences in the attitudes of managers and professional workers was also checked. The sec‐ ond research question (RQ2) asked how employees evaluate the organizational climate and their satisfac‐ tion before and after the reorganization. The third question (RQ3) was whether a correlation exists be‐ tween employees’ attitudes to the reorganization and the employee satisfaction and organizational climate. 4 METHOD 4.1 Participants An online survey on reorganization, organiza‐ tional climate, and employee satisfaction in Slovenian SWCs was administered at the beginning of 2022. An email was sent to the official e‐mail addresses of all Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 61 16 SWCs in the country with an introduction to the survey, instructions for completing it, information stating that the results were confidential, and a link to the online survey. In order to achieve greater re‐ sponsiveness, employees were also sent two re‐ minders to participate in the survey. The population of the survey consisted of all 1,387 employees em‐ ployed at the SWCs at the beginning of the survey. The survey was started by 351 participants – who an‐ swered at least one substantive question, and 243 surveys were completed. The share of participants in the survey was thus 25.3%, among which 95.9% were women, which is representative of the gender struc‐ ture of the entire population. Most were aged 40 to 49 years old (41.0%), followed by those 50 to 59 years (29.0%) and 30 to 39 years (24.0%). The majority (68.0%) had a university education or education of the 2nd Bologna cycle, followed by those with a higher education or education of the 1st Bologna cycle (16.0%) and those with a higher secondary pro‐ fessional education (9.0%). According to the position in the organization they occupy, 8.0% of them were management representatives, 74.0% were civil ser‐ vants – professional workers, while the remainder did not want to define themselves in this way. In the second research phase that followed the online survey, in‐depth semi‐structured interviews with representatives of management and professional workers in SWCs were conducted. The goal was to achieve a representative sample in terms of the char‐ acteristics of individual SWCs. The interviews were held in 2022 after the survey results had been pro‐ cessed. Nine representatives of SWCs participated, in‐ cluding four managers and five professional workers. 4.2 Procedure In view of the mentioned problematic situation, the study used mixed methods of research in a ex‐ planatory sequential design manner (Creswell and Plano, 2010) according to which a quantitative sur‐ vey method was first used, followed by in‐depth semi‐structured interviews to clarify any unex‐ pected results and provide a comprehensive under‐ standing in a wider context of social services’ reforms. The research was conducted at a time when just over 3 years had passed since the reorga‐ nization of the SWCs had been implemented since it was estimated that by this stage the reform was already well implemented and the operation of the institutions thereafter had stabilized to an extent making it possible to examine its effects more inde‐ pendently, even with as little influence as possible from the COVID‐19 epidemic, which by then was al‐ ready partly under control, and at the same time the findings were still sufficiently up‐to‐date given the timing of the completed reorganization. The questionnaire prepared for an online survey was adapted from questionnaires already used in other studies to measure employee satisfaction at SWCs (Sladojević, 2021) and the organizational cli‐ mate in local self‐government administrations (Tašner, 2013). The questions concerning the reorga‐ nization of SWCs were developed by the authors themselves. To measure the organizational climate, the SiOK questionnaire, which is standardized in the Slovenian environment (Jordan et al., 2017), was adapted to the studied population. The survey con‐ tained closed‐ended questions that required the level of agreement with each statement to be expressed using a Likert scale, where a score of 1 meant “Do not agree at all” and a score of 5 “Strongly agree”. Due to the greater variability of the results, questions about the extent to which the reorganization’s objectives had been achieved contained a Likert scale with val‐ ues from 1 to 10, where a score of 1 meant “Least” and 10 “Most”. When measuring organizational cli‐ mate and employee satisfaction, scores on a 1–5 scale referred to the situation before and after the re‐ organization. Based on the survey results, the authors developed semi‐structured interview questions that measured the same variables to provide for the tri‐ angulation and validation of the research results. Quantitative data were processed in the statis‐ tical program IBM SPSS 28.0. Initially, exploratory‐ descriptive statistics were used. The non‐parametric Mann‐Whitney test (MW U test) was used to deter‐ mine statistically significant differences in the atti‐ tudes of the two groups of employees (managers and professional workers), and correlation analysis with Pearson’s correlation test (r) was used to de‐ termine the interdependence of the variables. The Atlas.ti 22 tool was used to process the qualitative data. The analysis was performed in line with the principle of open and axial coding with the creation of thematic networks of constructs. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 61 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 62 Matej Babšek, Polonca Kovač, Nina Tomaževič: Organizational Climate and Employee Satisfaction Following the Reform of Social Services: Lessons from Slovenia 4.3 Variables In the research, the following facets of the SWCs’ work were studied as variables of individual phases in the research: • generally about the reorganization (its necessity and usefulness, involvement of employees, reduc‐ tion of administrative burdens, development of new work methods); • achieving the declared objectives of the reorga‐ nization (simplified procedures, unified opera‐ tions, the same standard of services, social activation, multidisciplinarity, location and time availability, field work, development of profes‐ sional work methods); • employee satisfaction (satisfaction generally, sat‐ isfaction with management and colleagues, satis‐ faction with tasks at work, satisfaction with permanent employment and salary, satisfaction with training and education opportunities, satis‐ faction with promotion opportunities); • organizational climate (employee commitment, organization, the fact that the mission, vision, and goals are well known, vision and goals, internal communication and informing); • digitalization (the need for and usefulness of training, simplicity and transparency, time ratio‐ nalization, supervision by superiors); and • good governance principles (accountability, trans‐ parency, responsiveness, equality and inclusion, effectiveness and efficiency, rule of law, participa‐ tion, and consensus orientation). Employee satisfaction and organizational cli‐ mate variables were measured by assessing the views held by employees before and after the reor‐ ganization in 2018. Based on an examination of re‐ lated research in the Slovenian environment (Jordan et al., 2017; Sladojević, 2021; Tašner, 2013), relevant demographic data concerning gender, age, level of education, and the position held by the participants in the organization were collected for the research. It is important to emphasize that the variables mentioned were studied in the context of reorgani‐ zation as reform and not just as organizational change. Regardless of its (mis)designation and final outcomes, the reorganization of the SWC in the strategic documents and the reform policy was 62 broader than just a change with a specific focus, which also included managerial, financial, legal, in‐ stitutional and social aspects. The analysis must al‐ ways be based on the actual purpose and objectives of the reforms as defined at the institutional level of governance, and not only on what is publicly stated, as there are often discrepancies here (Bol‐ gherini et al., 2019). 5 RESULTS Employees generally assessed that although the reorganization of the SWCs was needed, it did not lower the administrative burdens and lead to the development of new work methods or more time becoming available to work with users (Table 1). Statistically significant differences between all the assessments made by managers and profes‐ sional workers also emerged, except for the contri‐ bution to the development of new professional work methods where all aspects of the reorganiza‐ tion were rated better by the managers. As may be seen in Table 2, employees assessed that the intro‐ duction of the informative calculation of social transfers and the unification of SWCs’ operations across the country were the objectives of this re‐ form that were achieved to the greatest extent. Managers statistically significantly rated the fol‐ lowing objectives had been accomplished to a bigger extent better than professional workers: (1) the same standard of customer service throughout the coun‐ try; (2) the unification of practice via the introduction of a new organizational structure; (3) more field work; and (4) services becoming more accessible. Employees were the most satisfied with the working hours, permanent employment, and col‐ leagues, and the least satisfied with the salary, op‐ portunities for promotion and training, and the top management (Table 3), thus confirming theoretical findings on employee satisfaction in the public sec‐ tor (e.g., Gastearena‐Balda et al., 2021; Mihajlov et al., 2013; Zeffan and Bani Melhem, 2017). As for the climate in their organizations, the re‐ spondents rated the internal communication and in‐ formation, as well as organization the best, while knowing the mission, vision, and goals of newly estab‐ lished organizations and commitment were assessed Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 63 Table 1: General assessment of the reorganization – arithmetic means, standard deviation, MW U test Management Professional workers MW U Variable n* M** SD n* M** SD Δ U p SWCs' reorganization was necessary 19 3.32 1.20 180 2.48 1.21 0.84 1.064.500 0.005 SWCs' reorganization was beneficial 19 2.84 1.12 180 1.82 0.91 1.02 836. 000 <0.001 SWCs' employees were sufficiently involved in the reorganization process 19 2.58 1.02 180 1.81 0.90 0.77 986. 000 <0.001 The reorganization made it possible to have more time to work with citizens 19 1.84 0.96 180 1.27 0.62 0.57 1.049.500 <0.001 The reorganization contributed to the development of new methods of professional work 19 1.84 0.90 180 1.53 0.87 0.31 1.321.500 The reorganization reduced the administrative burdens 19 1.68 0.58 180 1.28 0.65 0.40 1.010.000 <0.001 0.058 Note: *Number of answers ** 1 – completely disagree, 5 – completely agree. A non‐parametric Mann‐Whitney U test was used for assessing the differences between the two groups of respondents with the limit of statistical significance set at p ≤ 0.05. Source: Questionnaire survey, 2022 (see “Method”); calculations by the authors. Table 2: Assessment of the declared objectives of the reorganization – arithmetic means, standard deviation, MW U test Management Professional workers MW U Variable n* M** SD n* M** SD Δ U p Simplification of procedures for exercising rights from public funds by introducing informational calculation 19 5.21 2.57 180 4.24 2.44 0.97 1333. 500 0.112 Standardization of SWCs' operation with the introduction of a new organizational structure 19 5.05 2.27 180 3.13 1.98 1.92 891. 500 <0.001 The same standard of services for users across the country 19 4.42 2.41 180 2.48 1.94 2.48 900. 000 <0.001 Improving the situation of long‐term beneficiaries of financial social assistance through involvement in the social activation project 19 3.89 2.64 180 3.09 1.90 0.80 1457. 500 0.282 Ensuring multidisciplinary case management by teams of experts with specialized qualifications 19 3.84 2.69 180 2.86 2.11 0.98 1371.500 0.143 Better local and time accessibility for users 19 3.42 2.06 180 2.27 1.71 1.15 1097. 500 0.006 More fieldwork 19 2.84 2.36 180 1.71 1.34 1.13 1264. 000 0.029 Development of new methods of professional work with users 19 2.74 2.18 179 2.19 1.72 0.55 1454.000 0.262 Note: *Number of answers. ** 1 – completely disagree, 10 – completely agree. A non‐parametric Mann‐Whitney U test was used for assessing the differences between the two groups of respondents with the limit of statistical significance set at p ≤ 0.05. Source: Questionnaire survey, 2022 (see “Method”); calculations by the authors. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 63 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 64 Matej Babšek, Polonca Kovač, Nina Tomaževič: Organizational Climate and Employee Satisfaction Following the Reform of Social Services: Lessons from Slovenia to be the worst. All measured facets were rated worse after the reorganization than before. General em‐ ployee satisfaction was also measured, with 26.1% being very dissatisfied, 35.4% dissatisfied, 30.9% nei‐ ther satisfied nor dissatisfied, and only 7.3% satisfied and 0.3% very satisfied. At the same time, 66.0% rated their overall employee satisfaction lower than prior to when the reorganization started in 2018. The following are the results of Pearson’s cor‐ relation analysis (see Table 4) of the correlation be‐ tween individual variables: general assessment of the reorganization (REORG), the objectives of the reorganization (OBJECT), employee satisfaction (SATISF), organizational climate (CLIMAT), digitaliza‐ tion (DIGIT), and good governance principles (GOODG). Among the measured variables, a posi‐ tive two‐way relationship was established between employee satisfaction and general attitudes to SWCs’ reorganization, as well as the organizational climate and employee satisfaction at the level of 0.05 (p ≤ 0.05). Employees who were more satisfied had a better assessment of the reorganization car‐ ried out and vice versa, while employees who had a better assessment of the organizational climate also assessed their own satisfaction better. It was somewhat surprising that, unlike em‐ ployee satisfaction, no statistically significant corre‐ lation was found between organizational climate and attitudes to the reorganization, nor were organiza‐ tional climate or employee satisfaction related to the assessment of the extent to which specific objectives of the reorganization had been achieved. In particu‐ lar, the connection between digitalization and the good governance principles is worth highlighting, with both being significant at the 0.01 level ( p ≤ 0.01), which points to the significance and impor‐ tance of digital services for SWC employees in pur‐ suing the principles of good governance such as, according to the OECD/Sigma, responsibility, trans‐ parency, responsiveness, equality, inclusion, effec‐ tiveness, efficiency, the rule of law, participation, and a consensus orientation (Kovač and Bileišis, 2017). Table 3: Facets of employee satisfaction and organizational climate – arithmetic means, standard deviation, skewness, and kurtosis – before and after the reorganization Before reorganization After reorganization n* M** SD γ 278 4.33 0.76 ‐1.34 276 4.32 0.82 277 4.20 279 Κ n* M** SD γ Κ 2.91 Working time 279 4.12 1.02 ‐1.40 1.77 ‐1.25 1.65 Employment stability 278 4.07 1.07 ‐1.28 1.19 0.82 ‐1.07 1.37 Colleagues 278 3.76 1.09 ‐0.66 ‐0.31 3.96 0.69 ‐0.55 1.14 Tasks 279 2.97 1.06 ‐0.11 ‐0.70 275 3.80 1.01 ‐0.63 ‐0.21 Immediate manager 277 3.32 1.35 ‐0.31 ‐1.13 272 3.64 1.10 ‐0.62 ‐0.15 Top management 277 2.82 1.30 0.15 ‐0.09 277 3.57 1.08 ‐0.57 ‐0.25 Training possibilities 279 2.66 1.14 0.20 ‐0.80 279 3.21 1.21 ‐0.75 1.59 Advancement possibilities 279 2.68 1.18 0.11 ‐0.85 277 2.87 0.99 ‐0.14 ‐0.32 Salary 279 2.77 1.13 ‐0.43 1.53 n* M** SD γ n* M** SD γ Κ 267 3.79 0.97 ‐0.67 0.19 Internal communication and information sharing 269 3.00 1.25 ‐0.09 ‐1.02 271 3.72 0.94 ‐0.66 0.35 Organization 271 2.94 1.16 ‐0.40 ‐0.83 272 3.58 0.91 ‐0.50 0.24 Familiarity with mission, vision, and goals 274 2.63 1.11 0.20 ‐0.75 270 3.39 1.10 ‐0.45 ‐0.33 Employee commitment 271 2.64 1.18 0.27 ‐0.75 Κ Satisfaction with Facets of org. climate Note: *Number of answers. ** 1 – extremely dissatisfied, 5 – extremely satisfied. Source: Questionnaire survey, 2022 (see “Method”); calculations by the authors. 64 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 65 Table 4: The Pearson`s correlation matrix of variables REORG OBJECT SATISF CLIMAT DIGIT REORG 1 OBJECT 0.132 1 SATISF 0.778* ‐0.071 1 CLIMAT 0.368 ‐0.342 0.781* 1 DIGIT ‐0.252 0.524 ‐0.452 ‐0.244 1 GOODG 0.120 0.407 ‐0.156 ‐0.049 0.874** GOODG 1 Note: *mutual interdependence is characteristic at the level 0.05 (p ≤ 0.05); **mutual interdependence is characteristic at the level 0.01 (p ≤ 0.01). Pearson’s Correlation test (r) was employed to measure the correlation between the following variables: general assessment of the reorganization (REORG), the objectives of the reorganization (OBJECT), employee satisfaction (SATISF), organizational climate (CLIMAT), digitalization (DIGIT), and good governance principles (GOODG). Source: Questionnaire survey, 2022 (see “Method”); calculations by the authors. The main findings of the analysis of the inter‐ views conducted with four managers and five pro‐ fessionals, taking the findings of the previous quantitative phase into account, were: • generally speaking, while managers were not more in favor of the reorganization compared to professional workers, they still evaluated the ex‐ tent to which the objectives of the reorganization had been accomplished better than professional workers, especially with respect to unifying the practice and rationalizing the business processes in the newly created joint organizational units; • managers’ expectations of the reorganization were that they would be able to provide employ‐ ees with working conditions that would allow them greater time to work with users, which would unify the practices of individual organiza‐ tional units and the possibilities of developing professional work methods, while professional workers expected more from the reorganization in terms of the possibilities of field work with users and a reduction of administrative burdens; • both managers and professionals assessed digi‐ talization as mostly positive and necessary and in relation to its effects they largely highlighted the simplified procedures for users, albeit not for the employees who are conducting them; • employees noted the good interpersonal relation‐ ships, working hours, and job stability as key facets of employee satisfaction, and training op‐ portunities as well as satisfaction with the orga‐ nizations’ top management as the most critical; • employee satisfaction was rated the highest by employees in the newly created joint organiza‐ tional units, while the least satisfied were employ‐ ees from previously independent larger institutes, which have now merged, primarily due to the loss of professional autonomy and managerial inde‐ pendence; • both managers and other employees underscored the lack of a common vision and goals of the newly formed organizations as the most critical facets of the organizational climate following the reorganization, along with the fact that the em‐ ployees do not (yet) identify with them; and • both managers and professional workers pointed to the lack of personnel, the administrative bur‐ dens, the low reputation held by the organiza‐ tions in the public, and the limited financial resources as the biggest factors affecting the poor organizational climate and employee satisfaction. 6 DISCUSSION AND CONCLUSION Although the reorganization of the SWCs in 2018 saw management being centralized and a changed or‐ ganizational structure, it had no impact on substantive work. Despite being necessary, the reorganization did not achieve the objectives of getting rid of red tape, greater field work, the development of new work Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 65 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 66 Matej Babšek, Polonca Kovač, Nina Tomaževič: Organizational Climate and Employee Satisfaction Following the Reform of Social Services: Lessons from Slovenia methods and to a certain extent only achieved the unification of practices. Accordingly, SWC employees mostly evaluated it as unsuccessful (RQ1). Compared to professional workers, managers rated individual facets and the extent to which the reform objectives were realized significantly better. This indicates the need for well‐considered holistic change management before (planning and organizing), during (leading), and after (controlling) any reform. The role of superior in‐ stitutions and managers is crucial for analyzing the sit‐ uation, setting the objectives and purpose of the reform along with the activities and key performances indicators to enable detailed control of the whole re‐ form process, all in collaboration with the employees and users as the main stakeholders, as also stressed by other authors (Carnochan and Austin, 2002; Levin and Baruch Ben‐Abou, 2020). This even more implic‐ itly applies in today’s turbulent times (Greve et al., 2020), especially if management wishes to preserve or even increase levels of employees’ satisfaction and organizational climate, with both benefitting users’ satisfaction and the long‐term effectiveness and effi‐ ciency of the social services system, as noted by Boufounou and Argyrou (2022), Gil et al. (2023), Myskova (2011), and Schneider et al. (2013). Both organizational climate and employee sat‐ isfaction were rated worse after the reorganization than before (RQ2) for each of their facets. It is quite concerning that all four organizational climate facets, indicating the situation after the reform, were given a score of 3 or lower, which means the employees do not feel sufficiently acquainted with information within the organization or that they are sufficiently involved in planning processes, and in turn do not feel committed to the new organiza‐ tional system. Similarly, all facets of employees satis‐ faction were assessed lower after than before the reform, especially as concerns the training and ad‐ vancement possibilities, again showing the need for a different approach by top management while im‐ plementing changes (also see Ackroyd et al., 2007; Dirzyte and Patapas, 2022; Jordan et al., 2017). The drop in satisfaction was also significant with respect to the tasks and top management. This reveals that there is huge room for improvement for both poli‐ cymakers and managers on all levels (even in the su‐ perior ministries) to plan and perform future reforms as effectively and efficiently as possible. 66 As expected, Pearson’s correlation test showed a correlation between organizational climate and employee satisfaction, as well as employee satisfac‐ tion and general attitudes to the reorganization. In contrast, there is no correlation between organiza‐ tional climate and general attitudes to the reorga‐ nization, which may be explained by the mentioned critical facets of the organizational climate, such as being acquainted with the strategic orientations of new organizations and identifying with them. The significant (p ≤ 0.01) positive correlation between the digitalization of social services and the principles of good governance (RQ3) also stands out. Still, this outcome is not surprising because modern admin‐ istrative reforms in various fields and countries in‐ clude e‐government and digitalization of public services as one of the central pillars of systemic im‐ provements (Kovač and Bileišis, 2017). The digital‐ ization of social services also increases transparency, participation, responsiveness and, of course, the ef‐ ficiency of the implementation of activities, which applies in relation to both users and the internal or‐ ganization of work, and the possibilities of em‐ ployee participation. This was shown by previous studies conducted specifically for social work cen‐ ters that examined the importance of the rule of law and other good governance principles, and the re‐ lationships between them (Babšek et al., 2020). Successful change management in organizations requires a strategic approach based on the involve‐ ment of employees in all phases of these processes and supported by transparent communication based on the trust of employees towards managers and vice versa (Moussa et al., 2018; Pacheco and Web‐ ber, 2016). To increase employee satisfaction, they need to be trained and supported emotionally and professionally to adapt to new roles and processes (Sageer, et al., 2012). According to Schneider et al. (2013) this also contributes to the established and well‐known system of incentives and rewards, as well as the established mechanisms to provide em‐ ployees with initiatives and feedback according to the system of a continuous feedback loop. To im‐ prove the organizational climate, it is crucial to en‐ sure adequate psychological safety for employees in a changing organizational environment, and the re‐ forms must be aligned with the values and organiza‐ tional culture of the organization (Moussa et al., Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 67 2018). Only in this way can the reforms not only maintain but also significantly improve existing levels of employee satisfaction and organizational climate. This research had some limitations. It was car‐ ried out in Slovenian social services and hence while interpreting and generalizing the results to other ar‐ rangements one must take account of the social, cultural, and political environment of the transi‐ tional countries of Central and Eastern Europe and the fact that the welfare state and administrative system in these environments are shaped predom‐ inantly by the provisions of legislation. The research also focused on employees’ attitudes regarding the reorganization, the organizational climate, and their satisfaction. It is known that these phenomena, em‐ phasized in the public sector, are also considerably influenced by other factors, especially stakeholders from the external environment. As a predominantly exploratory study, the research primarily focused on the still unexplored aspects of evaluating a given or‐ ganizational change and its connection with the or‐ ganizational climate and employee satisfaction, but not on the influence held by facets of selected phe‐ nomena as independent variables on others as de‐ pendent ones. Given the cross‐sectional nature of the current study, it might be beneficial for further research to take a longitudinal approach in order to examine the development of views on reorganiza‐ tion, organizational climate and employee satisfac‐ tion over time. This approach could provide a more nuanced insight into the lasting effects of such or‐ ganizational changes. Nevertheless, the results of the study can be generalized to other countries or sectors. In view of the common administrative tradition of the Rule of law and the associated organization of social services, the results are also useful for planning corresponding reforms in the countries of Central and Eastern Eu‐ rope. Since reforms, employee satisfaction and orga‐ nizational climate are very current and at the same time important facets of the efficiency and effective‐ ness of public organizations, the results can also be generalized to other countries in Europe and world‐ wide. Moreover, the results of this study should be considered not only in social services but also in other public administration structures, as the latter, due to its institutional setting, has different variables influ‐ encing employee satisfaction and organizational cli‐ mate than the private sector, especially given the lack of studies in public administration in this area. EXTENDED SUMMARY/IZVLEČEK Temeljni cilj prispevka je predstaviti, kako zaposleni na centrih za socialno delo v Sloveniji ocen‐ jujejo leta 2018 izvedeno reorganizacijo ter opozoriti na pomembnost organizacijske klime in zado‐ voljstva zaposlenih pred in po reorganizaciji, glede na ugotovljeno povezavo med tema konstruktoma. V raziskavi so bile uporabljene mešane metode, natančneje način zaporednega pojasnjevanja. V kvantitativni fazi je bilo s tem organizacijam prilagojenim vprašalnikom med zaposlenimi izvedeno spletno anketiranje. V naslednji, kvalitativni fazi, so bili opravljeni poglobljeni polstrukturirani inter‐ vjuji z vodji in strokovnimi delavci. Rezultati kažejo, da reorganizacija centrov za socialno delo ni bila uspešna, saj zastavljeni cilji niso bili doseženi. Zaposleni so tako organizacijsko klimo kot tudi lastno zadovoljstvo z delom po reorganizaciji ocenili slabše kot pred njo. Najbolj kritična sta bila vidik ‘po‐ manjkanje poznavanja poslanstva, vizije in ciljev organizacij’ ter ‘pomanjkanje identifikacije za‐ poslenih z njimi’. Čeprav obstaja pričakovana povezava med organizacijsko klimo in zadovoljstvom pri delu, pa tudi med zadovoljstvom in stališči do reorganizacije, raziskava ugotavlja tudi pomembno povezavo med digitalizacijo in načeli dobrega upravljanja, ki jih zasledujejo te službe. Ugotovitve raziskave lahko bodočim snovalcem politik in izvajalcem koristijo pri načrtovanju prihodnjih reform v socialnovarstvenih organizacijah z namenom zagotavljanja ugodne organizacijske klime in zado‐ voljstva zaposlenih. 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Employee Relations, 39(7), 1148‐1167. https://doi.org/10.1108/ER‐06‐2017‐0135 70 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 71 Vol. 13, No. 2, 71‐89 doi:10.17708/DRMJ.2024.v13n02a05 REQUIREMENTS CHANGE MANAGEMENT: A CASE STUDY OF AN ENTERPRISE SYSTEM IMPLEMENTATION PROJECT Laura Fink GEA College, Ljubljana, Slovenia laura.fink@gea‐college.si Ajda Fošner GEA College, Ljubljana, Slovenia ajda.fosner@gea‐college.si Andrej Dobrovoljc GEA College, Ljubljana, Slovenia andrej.dobrovoljc@gmail.com Tomaž Poznič GEA College, Ljubljana, Slovenia tomaz.poznic1@gmail.com Abstract The main theme of this article is the collection, preparation, and improvement of user requirements. The research relies on a case study of a complex ERP project from an international organisation. We proceed from the fact that the development of an individual ERP solution often goes beyond just a single project. Often, the development of the ERP solution continues even after the completion of the individual project. In particular, the article addresses the user re‐ quirements and their quality with regard to the requirements engineering process and change management. We dis‐ cuss the characteristics of adaptive (e.g., agile) and predictive approaches, as well as how they affect the quality of user requirements. We emphasise that it is important for team members to be aware of the substantial impact that well‐defined user requirements have on the success of the project. Although we argue that the number of change re‐ quests should not be taken as an indicator of project success, we discuss the factors that influence the number of changes during the project and the additional work after the project is completed. We identified two strategies that address the excessive number of requests for changes and additional work. The project team should give more atten‐ tion to the preparation of high‐quality requirements and, most of all, to enhancing their formalised testing and veri‐ fication processes. Managing changes, especially changes in user requirements, is challenging and critical to project success. Companies should constantly optimise requirements analysis based on lessons learned from previous projects and ensure that past lessons are applied company‐wide in future projects. Keywords: Change Management, User Requirements, Requirements Analysis, Requirements Engineering, ERP Project Success, Enterprise System Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 71 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 72 Laura Fink, Ajda Fošner, Andrej Dobrovoljc, Tomaž Poznič: Requirements Change Management: A Case Study of an Enterprise System Implementation Project 1 INTRODUCTION Agile methodologies have spread in software de‐ velopment with the aim of improving the capabilities of software development teams since 2001. Agile methodologies, along with other adaptive method‐ ologies (PMI, 2021), when compared to predictive methodologies, are supposed to enable both quick responses to changes and new demands and ensure that the implemented system does not become rapidly outdated or fail to be implemented in reality (Gonzalez‐Barahona et al., 2017). Agile stands for the readiness to embrace change throughout a project. In an agile setting, not only requirements but also the end product, service, or what is considered accept‐ able release may change (PMI, 2021; 2017). The predictive approach, which is diametrically opposed to adaptive practices, obviously fueled the expansion of adaptive practices. The predictive, also known as traditional, approach emphasises the im‐ portance of thorough planning in early project phases, with nearly any changes in requirements and functionalities in later stages, while adaptive approaches, along with the agile approach, foresee changes in requirements throughout the project and rely on flexible plans and an almost immediate response to changes (IPMA, 2018; PMI, 2021, 2017). Successful projects, particularly in software devel‐ opment, have popularised agile approaches to the point where they are applied without much consid‐ eration, even in projects that are less suitable for such approaches than software development pro‐ jects. Therefore, it is vital to emphasize that the op‐ timal approach needs to be selected with careful consideration of factors such as the characteristics of the product, service, or result; the project; and the organization (PMI, 2021; Fink, 2017). Since it is rare to find a project that is perfectly suited for ei‐ ther a fully predictive or fully adaptive approach, many projects necessitate the application of hybrid approaches. Hybrid approaches provide the oppor‐ tunity to apply the unique best‐fitting combination (PMI, 2021; Wysocki, 2019) of predictive and adap‐ tive approaches to the project at hand. Businesses invest heavily in the renovation of business processes to adhere not only to increased ef‐ ficiency but also to the quality of their procedures and final solutions. The context of this research includes 72 two fundamentally different, or even opposing, busi‐ ness cultures. The pharmaceutical industry (Scherer, 2000), characterised by carefully planned long‐term drug development, strict control, and rigorous regu‐ latory requirements for the approval of products, dif‐ fers substantially from the software development industry (Tukel and Rom, 1998; Damian and Zowghi, 2003), awash with new technology, pressured by rapid development, short product life cycles, continuous improvements, and constant updates. Fundamentally different business environments (Iivari and Huisman, 2007) inevitably constitute differences in operations, procedures, and working styles. The context mentioned is the source of fresh views and perspectives on the central theme of this research, which focuses on change management in developing enterprise systems and enterprise re‐ source planning (ERP) implementation projects. Ac‐ cording to Copola Azenha et al. (2021, p. 90), the literature lacks practically oriented evidence that could enrich the discourse regarding hybrid project management approaches fitted to “distinct organisa‐ tional cultures, specific processes, customer contrac‐ tual requirements, and project specificities.” Further, Theunissen et al. (2022) explain that minimal require‐ ments’ documentation, which might arise from im‐ plementing agile methodology, does not always contribute to the success of software development. They suggest that the quantity and quality of require‐ ments’ documentation should be increased. In our study, we are interested in what activities could contribute to improving the processes of user requirements analysis and, in particular, the user re‐ quirements’ change management process in ERP ini‐ tiatives. The purpose of this study is to investigate how changes in requirements affect project success, as well as to identify the appropriate design of busi‐ ness processes and actions that facilitate rather than restrict the development of a software solution in the best way possible. More concretely, we address not only the questions regarding the choice of pro‐ ject methodology in the context of partnerships, which are based on fundamentally different business cultures, but we also focus on the quality of user re‐ quirements and question how constant modifica‐ tions of user requirements compared to more fixed requirements influence the course of action. Finally, we also discuss the ever‐present issue of factors that Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 73 influence the number of additional improvements required after implementation, especially in connec‐ tion with the precise definition of user requirements at the beginning of implementation. The challenge of achieving the best balance (Ramesh et al., 2010; Rasheed et al., 2021; Mockus et al., 2003) between thorough planning early on in the project and additions to initial planning, for ex‐ ample, at the start of each iteration, is a pivotal point that requires attention in each project and context at hand. Specifically, thorough planning in the early pro‐ ject phases strives to address requirements holisti‐ cally, prevent major unnecessary changes later in the project, and prevent successive requests for changes after the project’s completion. On the other hand, in‐ corporating later additions to the initial planning al‐ lows for increased flexibility and prompt response to stakeholder feedback, requirement changes, and emerging market trends. This balancing, along with team coordination (Bick et al., 2017), can bring long‐ term benefits for ERP implementation success. 2 THEORETICAL BACKGROUND Implementation of ERP solutions is inevitably linked to challenges in the requirements engineer‐ ing process. One could hardly find a software devel‐ opment project where requirements were not an issue. According to Sawyer et al. (1997), some of the ever‐present major challenges in requirements en‐ gineering include inconsistent and incomplete re‐ quirements, requirements not reflecting the actual user need, the expensive introduction of any changes after requirements have been agreed upon, and misunderstandings of requirements between team members. The challenges mentioned mostly relate to a traditional point of view, which empha‐ sises the importance of solidly defining the founda‐ tions in the early stages of the project, to the extent that the project results allow. The scientific discourse in which flexibility be‐ comes the cornerstone is based on the well‐known adage that “the only constant is change,” or, in other words, “changes are constant.” Thereafter, scientific discourse on the efficiency of software development projects emphasised the need for the coexistence of both predictive and adaptive (e.g., agile) ap‐ proaches, which assume flexibility in the founda‐ tions of the project throughout the entire course of the project. The challenges in requirements engi‐ neering, in particular the trade‐off between pre‐ cisely defining requirements early on in the software development process and using agile methods that pre‐assume requirements to change in later project phases, tackle not only the scientific community but also communities of practice such as RESG (n.d.), IREB (n.d.), and INCOSE (n.d.), as well as project management associations such as IPMA and PMI. The present study is the continuation of our previous research on the importance of user re‐ quirements for the success of ERP implementation (Fink et al., 2024), but apart from the previous study, it addresses entirely other research questions focusing on changes in requirements. We further divide the review of relevant studies into several parts. We begin with some basic char‐ acteristics and concepts in ERP initiative manage‐ ment and continue to discuss the differences between adaptive (e.g., agile) and predictive project management approaches. Finally, we include a re‐ view of previous studies that looked at the require‐ ments engineering process and how to handle changes to user requirements. 2.1 ERP system implementation projects Organisations strive to increase their efficiency by organising their work into projects that have a clear scope, deadline, and budget. ERP projects, in comparison to other types of projects, require high investments and are usually quite risky. The com‐ mon goal of ERP systems is to optimise and mod‐ ernise business processes. ERP projects can include existing comprehensive software solutions on the market, open‐source programme solutions, the de‐ velopment of a new comprehensive software solu‐ tion, or a combination of these. It is not uncommon that the development of a solution goes beyond just one project since ERP system development is usu‐ ally not limited to a single initial investment in the ERP system but is an ongoing endeavour aimed at improving business processes. Often, the outcomes of the previous ERP projects include the new re‐ quirements that form the foundations for the next ERP development project. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 73 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 74 Laura Fink, Ajda Fošner, Andrej Dobrovoljc, Tomaž Poznič: Requirements Change Management: A Case Study of an Enterprise System Implementation Project As with other types of projects, ERP projects should meet their goals within a limited duration and with limited resources. The success of the pro‐ ject can be judged according to various factors, which do not only include the achievement of the quality of the implementation, the deadline, and the forecast, but rather the success is evaluated on the basis of factors such as customer satisfaction, user satisfaction, frequency of use of the final solu‐ tion, and last but not least, the benefit of the project is also evaluated from the impact it has on opera‐ tions, efficiency, and, last but not least, on the com‐ pany’s strategy and long‐term development (Fink, 2017). Among numerous success factors on soft‐ ware development projects (Kronbichler et al., 2009; Sudhakar, 2012), proper planning, appropri‐ ate change management mechanisms, and efficient coordination importantly contribute to the success‐ ful delivery of software solutions. The optimal project life‐cycle, organisation, and project management are often tied to the charac‐ teristics and the level of complexity (San Cristóbal et al., 2018) of the final solution, the type of indi‐ vidual project tasks (Baccarini, 1996; Dasović et al., 2020), and the uncertainty regarding requirements (PMI, 2017). The project’s complexity is primarily determined by the project’s value, the number of stakeholders and team members, the project dura‐ tion, and the project’s technological innovativeness and uniqueness. ERP projects are usually complex and risky. The development of a single solution is usually ongoing and surpasses a single project. For that reason, it is of utmost importance that the pro‐ cesses are designed in such a way that the lessons learned can be applied to follow‐up projects (Shanks, 2000). In that sense, knowledge manage‐ ment (Mirić et al., 2020) plays an important role. ERP projects, whether performed based on pre‐ dictive, adaptive, or hybrid methodologies, include phases such as requirement analysis, conceptual de‐ sign, code development, verification and testing, and installation (Kronbichler et al., 2009; Falkowski et al., 1998). Nevertheless, there are several ways that ERP projects are implemented. Matende and Ogao (2013, p. 522), for example, suggest that re‐ quirement analysis comes after “system configura‐ tion, customisation, data capture, conversion, and rollout.” Aloini et al. (2007), in comparison, suggest 74 that strategic planning, requirements analysis, and selection of software are performed during the con‐ ceptual phase; software deployment, integration, testing, and stabilisation are performed during the implementation phase; and maintenance, upgrad‐ ing, new release management, and evolution are performed during the post‐implementation phase. 2.2 Adaptive, predictive and hybrid project management approaches Takeuchi and Nonaka (1986), who first named Scrum, nowadays one of the most popular hybrid approaches (PMI, 2021; 2017), described decades ago that successful companies manage their devel‐ opment processes differently. From that point on, the discourse on how project and process method‐ ologies contribute to efficiency flourished among the scientific community. Many authors, among them PMI (2021; 2017), IMPA (2018), Royce (2009, 2011), and Wysocki, R. K. (2011), contributed to these discussions. It is not a coincidence that agile methodologies quickly expanded and further devel‐ oped in none other industry but in the software de‐ velopment and product development industries. Agile approaches, which belong to a group of adaptive approaches that use iterative and incre‐ mental approaches (PMI, 2021), are characterized by frequent stakeholder feedback. The adaptive ap‐ proaches, which fundamentally differ from the pre‐ dictive, also known as traditional approaches, merely focus on responding to needs as they arise and reacting rapidly to changes in requirements as they occur. They are preferred when requirements are highly uncertain (PMI, 2021) and when it is nec‐ essary to embrace and integrate changes due to feedback, new market developments, or new tech‐ nology developments. These approaches are characterised by their shorter life‐cycle phases (Royce, 1987; Al‐Saqqa et al., 2020), iterative planning, and evolving require‐ ments compared to traditional comprehensive up‐ front planning (PMI, 2017). In an agile environment, many activities, for ex‐ ample, development and testing, are performed concurrently, whereas in a traditional setting, test‐ ing is usually a separate project phase. As we indi‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 75 cated in the introduction, agile is all about the readi‐ ness to embrace change throughout a project. Not only requirements may change, but also the end product, service, or what is considered acceptable release (PMI, 2021; 2017). changes, while shortcomings, such as risk anticipa‐ tion and a lack of fixed planning that could prevent major unnecessary changes, unexpected costs due to late changes, or additional work in later stages, are frequently overlooked. Whether at the organisational level (Hernaus et al., 2020) or at the project level, agility encompasses somewhat similar guiding principles, such as facili‐ tating responses to change and viewing changes as opportunities (Zhang and Sharifi, 2000). Similarly, the identification of risks is performed throughout a project (Lunesu et al., 2021) compared to the pre‐ dictive approach, where it is mostly performed dur‐ ing the planning phase. Further, agile and adaptive software development is based on customer in‐ volvement and feedback throughout the project, compared to the predictive approach, where cus‐ tomers’ input is concentrated at the start and at the end of the project. Moreover, documentation in an agile setting is focused on the essentials (Behutiye et al., 2022) compared to a traditional setting where documentation includes detailed plans and exten‐ sive requirements’ documentation. The adaptive (e.g., agile) approach is also based on regular re‐ view, while the predictive approach is based on timeline tracking. Finally, adaptive and agile teams (Zainal et al., 2020) are often self‐organising, cross‐ functional teams with a high degree of autonomy, while teams in traditional settings have a hierarchi‐ cal team structure with specialised roles. PMI (2017) and many other previous studies, among which Wysocki (2020) and Fink (2017) pre‐ viously recognised the need to tailor specific ap‐ proaches to particular project attributes. Actually, many software development projects require hybrid approaches that include a unique blend of adaptive and predictive characteristics. The optimal set of predictive and adaptive components (Karlström and Runeson, 2005, 2006; Davis, 2012; Fink, 2017; PMI, 2021; Wysocki, 2023) needs to be determined for the project and context at hand. Factors such as de‐ gree of innovation, requirements certainty, scope stability, ease of change, delivery options, risk, safety requirements, regulations (product, service, or result), stakeholders, schedule constraints, fund‐ ing availability (project), organizational structure, culture, organizational capability, project team size, and location (organization) should be considered (PMI, 2021). The optimisation and fine‐tuning of the combination of approaches resulted in many hybrid approaches (e.g., Žužek et al., 2020) that, by nature, combine the characteristics of predictive and adap‐ tive (e.g., agile) approaches (PMI, 2017). Predictive approaches have a long tradition, whereas adaptive approaches emerged later. The agile manifesto, agile values, and agile principles (Agile manifesto, 2001) have triggered further de‐ velopment and expansion of numerous agile ap‐ proaches, as well as hybrid approaches, which are known to integrate the characteristics of both adap‐ tive and predictive approaches (PMI, 2021; Wysocki, 2019). The adoption of specific hybrid project life‐ cycles and specific hybrid approaches such as Scrum (Schwaber, 1997), Kanban, extreme programming, Scrumban, Crystal methods, and others (Abrahams‐ son et al., 2017; Edison et al., 2022; Alqudah and Razali, 2016), has become widespread (PMI, 2017). The popularity of agile approaches has con‐ tributed to a desire to highlight the benefits of agile approaches, such as their flexibility in responding to The expectations about the change in require‐ ments (PMI, 2017) are an important factor to con‐ sider when developing the best‐suited project life cycle. While iteration‐ or incremental‐based agile approaches coincide with hidden and misunder‐ stood requirements, merely iterative or incremental approaches assume that feedback in between en‐ ables better further planning of the project (PMI, 2017). The agile approaches are therefore more suitable for projects where there is high uncertainty regarding requirements and it is expected that re‐ quirements “will change based on customer feed‐ back” (PMI, 2017). The predictive approaches, on the other hand, are suitable for low‐risk serial pro‐ jects and projects requiring substantial investment. They focus on the fact that the cost of change (PMI, 2021) increases exponentially throughout the pro‐ ject duration. Simply put, the cost of introducing a change increases the later it occurs. Predictive methods are more appropriate in cases where fail‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 75 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 76 Laura Fink, Ajda Fošner, Andrej Dobrovoljc, Tomaž Poznič: Requirements Change Management: A Case Study of an Enterprise System Implementation Project ure to integrate key parameters, assumptions, and premises related to requirements beforehand or in the early phases would lead to substantial draw‐ backs. Failure to do so could result in severe irre‐ versible consequences, such as unexpected repair costs, the need to remove previously completed work, a chain reaction of additional changes, adjust‐ ments, rework, and additional work, or even jeop‐ ardize the system’s long‐term operation. 2.3 The requirements engineering process Since the user requirements represent the foundation for an ERP project, they are important not only for the choice of the type of solution but in general for the development of the solution itself. In particular, in an agile setting, the requirements are often underspecified, un‐clear, and missing and are the subject of emerging refinement. On the con‐ trary, in a stable setting where requirements are perfectly clear, there is no need to introduce agile components. Therefore, the characteristics of the requirements themselves are also important for de‐ termining the set of agile components that should be applied (PMI, 2017) to a particular project. Requirements engineering is a challenging pro‐ cess that, according to ISO (2018) standards, results in “requirements for system and software products throughout the life‐cycle.” This can include their initial definition, analysis, specification, validation (Atoum et al., 2021), priori‐ tisation (Regnell et al., 2001), requirements man‐ agement, and system modelling (Sommerville, 2009). A widely used taxonomy (Laplante and Kassab, 2022) categorises requirements into user re‐ quirements, system requirements, and design spec‐ ifications (Sommerville, 2005), based on their level. Essential for acceptance testing, user requirements often include conceptual papers and user stories. They outline the specific functionality that the sys‐ tem should offer to users. They describe desired sys‐ tem behaviour in a manner that is comprehensible to the business user, from their perspective. System requirements, often referred to as func‐ tional specifications or technical annexes, are essen‐ tial for conducting integration testing (Laplante and Kassab, 2022). These requirements outline the be‐ 76 haviour of a system, typically in relation to functions that have been previously defined in user require‐ ments. Design specifications, derived from system requirements, are essential for conducting unit test‐ ing (Laplante and Kassab, 2022). A frequently used taxonomy categorises re‐ quirements into functional, nonfunctional, and domain requirements, depending on their speci‐ fication types. Functional requirements delineate the specific services that the system is expected to offer and its corresponding responses to the in‐ puts it receives (Laplante and Kassab, 2022, p. 6). High‐level functional requirements align with the user’s needs, whereas detailed functional require‐ ments align with the system’s requirements (La‐ plante and Kassab, 2022). The system is defined not only by its function‐ alities but also by its nonfunctional behaviour. The NFRs (Non‐Functional Requirements) (Laplante and Kassab, 2022; Rahy and Bass, 2022; Behutiye et al., 2020, 2022; Jarzebowicz and Weichbroth, 2021; and Karhapää, 2021) encompass a range of issues including security, reliability, dependability, reusability, maintainability, performance, usability, testability, interoperability, and constraints. Do‐ main requirements encompass several aspects, such as introducing new functional requirements (FR), imposing limitations on existing FR, or deter‐ mining the specific functions inside a given appli‐ cation domain (Laplante and Kassab, 2022). Requirements are multi‐layered and are reliant on the characteristics of the product and the source of requirements (Chemuturi, 2012; Regnell et. al., 2001; ReqView, n.d.). The identification of the higher‐level requirements leads to the approval of a project in the first place (Matende and Ogao, 2013). More detailed requirements’ documentation and lower‐level requirements can be gathered and analysed throughout the entire project duration and even after the project’s completion. Different tech‐ niques for conducting the requirements analysis (Köse, 2019; Nuseibeh et al., 1994; McGraw and Harbison, 2020) are more in line with either adap‐ tive (e.g., agile) or predictive methodologies, or a combination of those. As the project management processes shall be suited to the project characteris‐ tics (PMI, 2017), so should the appropriate tech‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 77 nique for requirements analysis (Guillemette et al., 2021). The complexity of the project itself is impor‐ tant for the complexity of the requirements engi‐ neering process. Nevertheless, it is meaningful that Theunissen et al. (2022), who investigate practical applications of agile methodologies, suggest there is a need for increasing the quantity and quality of requirements’ documentation. In the process of requirements engineering, a team should certainly consider that requirements need to be aligned, communicated, and prioritised (Rengell et al., 2001). Any miscommunication or misalignment can seriously jeopardise the achieve‐ ment of the goals, so it is necessary to pay a lot of attention to the fact that the requirements are com‐ municated in a way that everyone understands them equally (Robertson & Robertson, 2012). 2.4 Change management The ever‐changing nature of work and the rapid technological changes made practitioners and re‐ searchers realise that projects in which project goals are not clearly defined and the project activities are uncertain require approaches that, in their nature, pre‐assume greater flexibility and embrace changes. The matrix of Wysocki (2011, 2014) and the Stacey complexity model (Stacey et al., 2000; PMI, 2017) support this notion by showing that the level of un‐ certainty greatly affects how the project should be approached. Despite the differences between pro‐ ject methodologies, any project and requirements engineering process must include a change control process, which ensures that any additions are “iden‐ tified, documented, approved, or rejected” (PMI, 2021), as well as change management, “a compre‐ hensive, cyclic, and structured approach” (PMI, 2017, p. 164) that embraces practices, skills, and techniques for transforming people, groups, activi‐ ties, projects, or organisations to another state. Whether in a predictive or agile setting (L’ecuyer and Ahmed, 2016), where change is the only constant, it is important to evaluate the added value and an‐ ticipated investment associated with changes to be implemented. An efficient change control system (PMI, 2021), which sifts through meaningful changes through a formal approval process, ensures that the acquired value outweighs the resources, ef‐ fort, and costs invested. Besides, it also ensures that “scope creep” (PMI, 2021) is avoided, especially in predictive settings, meaning that additions to scope or requirements should result in adjustments to the schedule, budget, and resources. Adequate plan‐ ning and adequate risk anticipation can prevent overload of changes and hectic schedules, as well as planning of the activities that are likely to change during the course of the project. Efficient planning, change management, and coordination are consid‐ ered important success factors. In particular, agile approaches often closely in‐ tertwine with concepts of change management and are fundamentally based on requirements’ uncer‐ tainty and the technical degree of uncertainty (PMI, 2017). Agile methodologies begin with less‐defined requirements and include more iterations of shorter duration, each of which begins with a requirements analysis. In agile projects, even the project scope may be subject to change. During subsequent iter‐ ations, changes and details are added. Predictive approaches to managing projects are based on quite the opposite: a clear definition of project goals, project activities, and, to the greatest degree possible, the elimination of all unknowns. Predictive approaches devote more attention to re‐ quirements analysis, detailed planning, and antici‐ pation of risks and changes during the initial phases. This does not mean, however, that the predictive methodology does not foresee the possibility of in‐ troducing changes during the project, including “fre‐ quent reviews, change control mechanisms, and replanning between development phases” (PMI, 2021), but it does so in a clearly defined setting with a relatively stable scope. The changes, especially those introduced in later project phases, can drastically increase dura‐ tion, waste resources, and compromise the scope of any project. Though in some projects, particularly those led predominately based on predictive ap‐ proaches, it might be impossible or extremely costly to introduce changes after the work has already been performed. However, requirements’ docu‐ mentation can be subject to change even in pre‐ dominately traditionally led projects. This is particularly true for complex and high‐risk projects such as ERP. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 77 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 78 Laura Fink, Ajda Fošner, Andrej Dobrovoljc, Tomaž Poznič: Requirements Change Management: A Case Study of an Enterprise System Implementation Project Project teams must decide how much time to devote to the requirements engineering process during the early stages of the project. In this regard, agile and iterative practices rely on shorter incre‐ ments through which partial but continuous im‐ provement of user requirements gradually evolves. The changing nature of work and the rapid pace of technological change stimulate a high demand to change and upgrade more detailed user require‐ ments on a regular basis (Al‐Ghamdi and Saleem, 2018). Predictive methodologies, on the other hand, are founded on a clear and precise description of user requirements during the project’s early stages. In predictive methodologies, user requirement anal‐ ysis is typically developed in greater detail and fi‐ nalised earlier in the initial project phases. More attention is devoted to immutably determining key requirements, coordinating the understanding of key requirements among team members, and defin‐ ing the specialisation of team roles. First research question (RQ1): How does the appro‐ priate combination of adaptive (e.g., agile) and pre‐ dictive waterfall methodologies affect the quality of requirements’ documentation and the final outcome of an ERP system implementation project? However, even in predominantly traditionally led projects, the user requirements can be subject to change (IPMA, 2016), and on the other hand, even in predominantly agile‐led projects, the need for clearer definition, documentation (Theunissen et al., 2022), and communication of user requirements exists. Even experienced teams find it difficult to ac‐ curately state all of the requirements prior to the start of the project and to capture all user experi‐ ences and user stories in advance. This would ne‐ cessitate the participation of a large number of users, which is not only difficult to coordinate but mostly time‐consuming. As a result, understanding that changes during projects can improve project outcomes, that changes should be seen as enhance‐ ments and additions rather than corrections of past errors, and that incorporating change management processes benefits projects is critical for any project, regardless if it is predominately applying predictive or adaptive (e.g., agile) methodologies. 3 RESEARCH QUESTIONS We divide research questions into two parts: 1.) the requirements engineering process and 2.) change management. Second research question (RQ2): How does the level of awareness in the organisation and project management about the importance of quality user requirements contribute to project success? 3.2 Change management We investigate whether the fact that changes to user requirements’ documentation are intro‐ duced only during the first phases of the project rather than throughout the entire duration of the project affects the project’s final outcome. We are particularly interested in whether change requests contribute to project success. 3.1 The requirements engineering process User requirements’ documentation can be cre‐ ated using a variety of methodologies, best practices, and industry recommendations. We’re curious about how the project management methodology influ‐ ences user requirements’ analysis. What are the char‐ acteristics of the requirements’ gathering and analysis process? The company’s internal regulations fre‐ quently determine the choice of a particular method‐ ology and modifications to it. We want to inquire if the methodology used to gather and analyse user re‐ quirements affects the quality of the requirements’ documentation and the final project outcome. 78 Third research question (RQ3): Do constant modifi‐ cations and improvements to user requirements’ documentation throughout the project, as opposed to fixed or static requirements, increase the likeli‐ hood of meeting project goals? When the project’s scope, goals, and high‐level requirements are lightly defined, it not only impacts the volume of changes to tasks within the project but also the volume of tasks that must be performed after the project’s completion or during the post‐im‐ plementation phase. Especially in an agile environ‐ Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 79 ment, this can lead to an excessive volume of change requests during the project and additional improve‐ ments requested after implementation. Fourth research question (RQ4): What strategies may a project team employ to address an excessive volume of change requests during the project and additional improvements requested after the com‐ pletion of an ERP system implementation project? 4 RESEARCH METHODOLOGY As is common in IS and software engineering re‐ search (Runeson and Höst, 2009), an exploratory case study methodology is applied. The ERP system imple‐ mentation project was meticulously chosen via judg‐ mental sampling. The main reason for applying judgmental sampling is that the unique insights can be rightfully presented by important project stake‐ holders with specialised, unique expertise. Since ERP implementation projects are often unique, complex, and risky, information asymmetry is often prevalent, meaning that only decision‐makers with direct in‐ volvement may be able to provide nuanced insights relevant to the research. Judgmental sampling en‐ ables a deeper and more comprehensive understand‐ ing of the complexity, the associated risk, and the dynamics of changing requirements in an ERP pro‐ ject. To avoid the possible shortcomings of judgmen‐ tal sampling, we carefully selected the interviewee, a project manager who has a wide perspective, is a decision‐maker, and has an overview of the entire project. A project manager who works for a large, in‐ ternational company and has rich experience in lead‐ ing projects for the development and improvement of enterprise system solutions was the best suited person to provide us with the insights. The research questions were derived from the research gaps that were found during the literature review. The measurement instrument was specified in advance. We applied three different types of data collection methods: collecting information through a semi‐structured interview based on open ques‐ tions, collecting further details about the key project characteristics through a short survey, and forming the study itself through an extensive literature re‐ view. The primary data are qualitative in nature and were obtained at a particular time. The interviewee and interviewers made an oral agreement outlining the confidentiality requirements. Two researchers conducted a one‐hour interview with the project manager. Open‐ended questions were used to elicit specific data. To minimise the impact of prior expe‐ riences or assumptions of individual researchers, all research participants carefully chose and prepared the questions in advance. After the interview, we prepared and reviewed the transcripts to identify and select the findings, and we organised a discus‐ sion about the theoretical and practical ramifications of the research questions. The recommendations (Runeson and Höst, 2009; O’Brien et al., 2014) and examples (Karlström and Runeson, 2006; Andersson and Runeson, 2007) for reporting qualitative re‐ search, as well as the recommendations for inter‐ view question preparation and qualitative interview strategies (Harvard, n.d.), are followed as closely as possible in the preparation of the qualitative re‐ search. Throughout the paper, we support the dis‐ cussion and conclusions with quotes. With that, we enhance our comprehension of prevalent practices and methodologies applied in ERP projects that fa‐ cilitate the achievement of higher‐quality UR. When assessing the validity of the study, it is rea‐ sonable to consider that this research primarily rep‐ resents the viewpoints of a customer of an ERP system. We did not interview other project stakehold‐ ers, such as the software company, internal and ex‐ ternal team members, supervisors, or users. We did not collect archival data like process models or speci‐ fications. However, by carefully selecting the intervie‐ wee, we partially addressed reactivity, researcher bias, and respondent bias, which, according to the Lin‐ coln and Guba model (Robson, 2002; Karlström and Runeson, 2006), represent possible threats to validity. Since it is challenging to ensure the validity of findings based on judgmental sampling, our research also in‐ cludes limitations such as limited generalizability, chal‐ lenging assessment of representativeness, and challenging validation of results. 5 CASE STUDY In our particular case study, the estimated cost of the upgrade ERP system implementation project ranged from 5 to 10 million euros. After 18 months, the initial solutions went live. Although Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 79 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 80 Laura Fink, Ajda Fošner, Andrej Dobrovoljc, Tomaž Poznič: Requirements Change Management: A Case Study of an Enterprise System Implementation Project the schedule and the use of other resources di‐ verged from the original plan, the system’s suc‐ cessful implementation was not in any way jeopardised. Both the project’s deadline and bud‐ get were met. Different modules, or subsystems, make up ERP systems. As shown in our case study, the modernization, renovation, and reengineering of important business processes in an enterprise system is a complex project requiring a sizable in‐ vestment and the involvement of numerous stake‐ holders. The final solution had an impact on more than 1000 business users, and the internal core project team consisted of 20 to 25 individuals. The project involved a large number of external parties, including about five different businesses and addi‐ tional independent contractors. The primary objectives of the project were to streamline, modernise, standardise, and improve the intricate process of product release. The deci‐ sion to release a product must be made after gath‐ ering a lot of data and checking a lot of control points. The objective of the project was to make it possible for data to be automatically gathered from various systems and sources and displayed on a dashboard. Decision‐making is made easier and more quickly when information is accessible at a glance in one place. The project was successful in terms of user adoption and satisfaction. The internal staff is very pleased with the software solution. While ac‐ knowledging that there is still room for improve‐ ment, the project manager is generally pleased with the solution, the collaboration with external contractors, and the collaboration within the inter‐ nal team, as well as with the professional compe‐ tence, technical expertise, and process knowledge of the internal staff. The successful implementa‐ tion of an ERP system allowed us to identify good practices and criteria leading to success, as well as strategies to overcome challenges ERP projects might face. These are the reasons that led us to choose this project as a case study. In the continu‐ ation of the study, we provide further insight about the particular project methodology and require‐ ments change management by supporting the dis‐ cussion around the research questions with quotes. 80 5.1 The requirements engineering process The project team, under the leadership of the customer of the ERP system, adjusted project man‐ agement methodology to the specific character of the project (RQ1). Although it followed the com‐ pany’s general guidelines for project management methodology, it developed specific project method‐ ology for the project. The validation plan specified the specific methodology. The customer, on the one hand, put an emphasis on executing a lot of the planning activities before the project started, which is typical of predictive approaches. The project, on the other hand, was organised in iterations, or rolling waves, which means that activities within work packages were defined in greater detail as the project progressed. The project team combined pre‐ dictive and adaptive methodologies but did not use ordinary sprints, scrums, or strictly predictive ap‐ proaches. A clear scope and thorough specification of business requirements defined in the early pro‐ ject phases contributed greatly to the overall suc‐ cessful implementation of the solution. “The three main project packages, design, build, and testing, were performed more or less in paral‐ lel,” says the project manager. “The activities were intertwined. This flexible approach was defined in the validation plan from the very beginning.” The planning process and requirements analy‐ sis included several rolling waves. Additional plans were developed after the first wave. A roadmap of a product release process with steps was an impor‐ tant input. Some approaches in the very early stages of cus‐ tom development, for example, included require‐ ments that were then reviewed and signed off on before being handed over to the developers to de‐ velop the software. The requirements for the portion of the project that included standard solutions were not signed off on. Instead, they reviewed and signed off on the solution after it had been tested and ap‐ proved informally. Furthermore, while the project was based on some high‐level documents, the team did not wait for all tasks to be completed and com‐ pared the API documentation to proceed. Instead, the activities were carried out simultaneously. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 81 Another aspect that we investigated was the level of awareness about the importance of quality user requirements (RQ2). The project manager stressed several times during an interview that the business requirements are a starting point and that it is crucial that IT and other experts understand the needs of the users. It is very important that the IT team members understand the requirements of the business team members, which are the primary drivers. Regardless of the context or type of project, understanding business requirements is a good place to start. 5.2 Change management Our research supports the notion that manag‐ ing changes, particularly changes in requirements, is the biggest challenge of ERP projects that strive for a high degree of user adoption and, on average, satisfied users (RQ3). In our specific case study, the project manager emphasises that the customer’s “expectation was never that the implemented system would repre‐ sent the final solution.” The high number of change requests to further improve the process during the project implemen‐ tation and after the system implementation was of‐ ficially completed is a reality that the customer acknowledged from the elaboration of the project onwards. In the future, they want to further im‐ prove and develop the product release process. The team gained important experience, which they made good use of during the post‐implementation improvement of the processes. The high number of change requests in no way threatened the success‐ ful implementation of the system. Nevertheless, the manager acknowledges that the number of change requests could be decreased to some degree sooner. They consider the process to be a living or‐ ganism that can always be improved. The general scope of the project and high‐level requirements were clearly determined early on, but after the conceptual design phase, an updated ver‐ sion of the user requirements’ documentation was prepared. Throughout the entire project, they strived to optimise the requirements, and they con‐ tinue to do so even during the post‐implementation phase. After the detailed design documentation and development, the system demos were performed. During system demos, they sometimes realised that “the requirements should be rephrased or that some important thing needs to be added.” The collabora‐ tion between IT and business team members was very close, and discussions about the updates took place almost throughout the entire project. “The change requests were quite intense. In cer‐ tain areas, the solution and the timeline have changed substantially,” said the manager. The project changes made during the course of the project had an impact on the scope, the timeline, and the use of resources. However, each change was carefully approved and in‐ troduced in a controlled manner. For example, the sys‐ tem integration issue that occurred later in the project automatically triggered the need to add changes to the high‐level requirements’ documentation. The changes to the documentation were added up until the testing phase. Even after implementation, there are still requests for changes. As a consequence of the changed timeline, the system integration was late, and some projects that were performed in parallel on other systems had to be temporarily stopped. Never‐ theless, the successful implementation of the system was in no way compromised. According to the manager, the IT team may also be the one to initiate changing user requirements, not just the business part of the team. Especially when IT professionals recognise that some solutions may have a negative impact on end users or work better in an‐ other way. In that case, the team comes together to discuss how user requirements can be adjusted to im‐ prove the impact on the end user. In such a case, the team needs to work together to discuss these changes. Depending on the size of the impact of a change, the business change manager then coordi‐ nated the discussion and gathered feedback about the impact of user requirement changes. In the event of a change, users are notified and asked to provide feedback within a week. Communication with end users was also intense during requirements analysis and pilots in partner companies. The business process owners gathered user stories and feedback from the end users. During the pilots, one or two members from each pilot site joined the core team. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 81 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 82 Laura Fink, Ajda Fošner, Andrej Dobrovoljc, Tomaž Poznič: Requirements Change Management: A Case Study of an Enterprise System Implementation Project A change request was usually first coordinated between the person who started the change and the company’s project management. After internal alignment, the project manager started to negotiate the change with the software company. With each request for a change, the agreed‐upon project scope could be delayed and/or cost more than orig‐ inally planned. So, compromises had to be made so that extra requests for changes didn’t cause big changes to the agreed‐upon project scope but rep‐ resented small improvements to the quality of the processes. Some change requests were put on hold and added to the backlog for implementation within the next releases of the software since delaying the project was not an option. It was crucial to develop a suitable business solution by the agreed‐upon deadline so that businesses could gain benefits as soon as possible and the project would not get can‐ celled. Because of this, everyone agreed that further software releases would include more process op‐ timisation. The project manager adds that, of course, the process “has to be further improved and enhanced based on feedback” obtained during the post‐imple‐ mentation phase. Furthermore, each product re‐ lease represents an opportunity to find new ways to improve the process. The fact that the require‐ ments are constantly optimised and gathered is im‐ portant for future projects as well. On the other hand, the project managers clearly stated that some change requests during the project as well as additional works requested after project completion could be avoided and addressed earlier on during the project (RQ4). This proves that it is challenging to find the right balance between predictive and adaptive approaches to planning, even in otherwise successful ERP system implemen‐ tation projects. According to the assessment of the project manager, the project faced too many change requests. The users who are invited to provide feed‐ back on partial solutions were reluctant to speak out or to provide comments on the solutions that were developed. Therefore, the team readily imple‐ mented some improvements to avoid as many change requests during the project and the post‐im‐ plementation phase of this or other projects. It be‐ came clear that the testing procedure contributed to the change management project and that the 82 manager realised that improving testing and, in par‐ ticular, the validation process could yield even more favourable results. “We plan to perform the rollouts at other sites. We have improved and will continue to improve the validation process. We formalised the process of validating the functionalities by introducing checkpoints. They must accept the solution from the start. That way, we can be certain that they are completely satisfied with the solution pro‐ vided for each functionality. During the post‐im‐ plementation phase, we began collecting and evaluating their major pain points. That is some‐ thing we are still working on. We intend to im‐ prove the system and add improvements so that users can truly benefit from the new system.” 6 DISCUSSION The paper addresses the requirements engi‐ neering process and change management, which we further discuss considering both the theoretical and practical ramifications. We round off the discus‐ sion with limitations and future research. 6.1 Theoretical contributions The presented case study is an excellent exam‐ ple of high customer involvement in the develop‐ ment of an ERP system. The customer was not only fully involved throughout the project but also took on the leadership and coordinated project partners and activities. In our case study, there was no issue with lack of customer involvement, their inability, or non‐alignment that was observed by Ramesh et al. (2010) on some other agile‐based software de‐ velopment projects. Having a competent customer who is able to monitor the course of the project proved to be an important success factor. In large part, the customer determined not just the team culture but also the project methodology. The pro‐ ject team established its own unique approach to project methodology that was derived partly from the customer company’s project management stan‐ dards and involved a blend of predictive and adap‐ tive methodologies. This had an effect on the quality of the requirements’ documentation and the final Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 83 outcome. A unique combination of predictive and adaptive elements was applied to address the needs of the project, the characteristics of the final system, and the characteristics of all involved organisations to the best degree possible (RQ1). This has worked well since it addressed the requirements of the company, an international organisation working on large‐scale projects, the characteristics of the par‐ ticular process and the ERP system itself, as well as the requirements of the pharmaceutical industry and its standards. It is also in line with the chal‐ lenges that often arise when applying agile method‐ ologies to large software development projects (Alqudah and Razali, 2016). Further, the case study presented is also an excellent example of how two fundamentally different business cultures, the phar‐ maceutical and IT sectors, can effectively work to‐ gether, given that a customer takes the lead in how the project should be approached. The literature shows both theoretical ERP im‐ plementation models and standardised ERP imple‐ mentation steps applied in practice (Lutovac and Manjolov, 2012), as well as examples of how agile methodologies were incorporated into ERP imple‐ mentations (Nagpal, 2015; Kraljić & Kraljić, 2020; Kraljić et al., 2014) and large software development (Alqudah and Razali, 2016). However, the majority of prior research predominantly focuses on the per‐ spective of software companies, such as SAP, Oracle, or others, with limited consideration given to the viewpoints of customers of ERP systems. The case study confirms the existing findings re‐ garding the importance of selecting the right blend of predictive and adaptive methodologies for managing projects that is best suited for a particular project. The project teams are constantly choosing between the thoroughness of an initial plan and the additions to the initial plan that they are willing to make later in the project (Rasheed et al., 2021). On the one hand, it is known that it is more difficult, challenging, and time‐consuming to introduce changes later during the project. On the other hand, teams under time pres‐ sure want to begin developing solutions as soon as possible. Moreover, to further improve and develop the plan, the team would require more information, which can only be obtained once the development phase has already started. As a result, project phases frequently run concurrently. Though the lack of time should not compromise the quality, perfecting and fine‐tuning the initial plan in the initial project phases or before the start of the project takes valuable time. Plan additions and details can be added later during projects. The compromise between thoroughly preparing the plan as early as possible and the num‐ ber of additions to be added later is frequently con‐ text‐specific. The characteristics of the project and of the project activities can be crucial for determining the best combination of predictive and adaptive ap‐ proaches in a concrete project. Predictive and adap‐ tive approaches have certain advantages and disadvantages. Even if adaptive approaches regard changes as opportunities, it might be hard, if not im‐ possible, to introduce some major changes to the scope of the project later in the project due to many reasons, such as financial ones. Finally, we can draw the conclusion that both the internal company’s pro‐ ject management regulation and the project specifics have an impact on project methodology. Additionally, we can conclude that it is, regardless of the methodology applied, very important that the high‐level requirements are agreed upon in advance, before the start of the project. The presented case study showcases this. A clearly defined scope and high‐level business requirements guaranteed the suc‐ cess of the project, which was enhanced by the active involvement and assertiveness of users in activities such as requirements’ collection, analysis, testing, and verification. Similarly, even when changes to require‐ ments are allowed in later project phases, as is typical for agile approaches, it is crucial for the project team to be aware of the importance of high‐quality busi‐ ness requirements (RQ2), and any miscommunication between members of the IT and business teams should be resolved as soon as possible to ensure that requirements are properly documented. The rationale behind this may lie in the fact that, in any case, there is a high risk of requirements chang‐ ing in ERP projects (Sudhakar, 2012). This is due to sev‐ eral reasons, such as the fact that the implementation of enterprise systems typically results in a substantial shift and transformation in the execution of pro‐ cesses, and it in general entails the modernization of processes. Furthermore, since information technology supports processes that behave as living organisms and adhere to the tenet that you lose it if you don’t use it, they must constantly adapt and advance. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 83 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 84 Laura Fink, Ajda Fošner, Andrej Dobrovoljc, Tomaž Poznič: Requirements Change Management: A Case Study of an Enterprise System Implementation Project Change management is critical in ERP projects not only during the conceptualization and imple‐ mentation phases but also after the project has been completed, during the post‐implementation phase. Change management on an ERP project is in‐ extricably linked to ongoing requirements analysis. The efficient change management process associ‐ ated with requirements is critical for improving the system and information quality, especially in com‐ plex projects such as ERP projects with a large num‐ ber of high‐ and low‐level requirements and a large number of stakeholders. implementation project (RQ4): high‐quality require‐ ments and, most of all, a formalised testing and ver‐ ification process. We further expand on these very practically‐oriented strategies in terms of their prac‐ tical implications. Based on the case study presented, we can con‐ clude that the companies should constantly opti‐ mise their requirements analysis based on lessons learned from previous projects and ensure that past lessons are applied company‐wide in future projects (Al‐Ghamdi and Saleem, 2018). The willingness of a customer to invest in further upgrades can speak about the success of the project, since customers who do not see benefits in the new system would be unwilling to undertake further upgrades (Markus et al., 2000). As a result, we find that modifications and improvements to user requirements’ documen‐ tation throughout the project can increase the like‐ lihood of meeting project goals (RQ3), prevent possible unnecessary changes, and incorporate some work that would otherwise be performed out‐ side the project either as additional work or within the new project. The testing, and specifically the val‐ idation process, was shown to have an important impact on the change management process. En‐ hancing the testing and its early introduction may further improve the already positive results. First, customer involvement, monitoring, and possibly leadership of ERP system implementation are highly advised. Then, the specific project methodology that includes a blend of predictive and adaptive methodologies should be determined by the project team, based on the characteristics mainly of the customer’s organisation where the ERP system is to be implemented, but also on the characteristics of other project stakeholders, the specific processes, and the ERP system itself. The volume of change requests during the pro‐ ject and post‐implementation is not always an indi‐ cator of project success, but sometimes quite the contrary. Nonetheless, by actively involving all pro‐ ject participants throughout the project, many un‐ necessary post‐implementation changes can be avoided. Project members, particularly business par‐ ticipants, shall actively participate in the process of defining and reviewing business requirements. Over‐ all, we identified two strategies, which the case study exemplifies and a project team employed to address an excessive volume of change requests dur‐ ing the project and additional improvements re‐ quested after the completion of an ERP system 84 6.2 Practical implications Before we further elaborate on the aforemen‐ tioned strategies, let us summarise several further key findings that are of importance with respect to the practical implementation of future ERP systems. Frequently, important factors such as project at‐ tributes, project tasks, customer and stakeholder or‐ ganisation, and key team members are insufficiently considered in practice when determining the most suitable project life cycle. However, these factors are crucial in determining the appropriate approach to project management. Not all sizes fit all. As the lead‐ ership style should adapt not only to the situation but also to the personal characteristics of the fol‐ lower and leader (Griffith et al., 2018) and the re‐ search methodology to its purpose (Runeson and Höst, 2009), so should the project methodology to its project. Customers of an ERP system should not get caught in a trap by expecting that the software company will take the lead in proposing the method‐ ology best suited to their software solutions. As observed in our case study, the customer took charge of the implementation process, led the main development initiatives, and controlled the course of events. Unless the customer is active and alerts the software company of the necessary ad‐ justments, the course of events can go in the wrong direction. The role that customers play in the ERP implementation project can be crucial for its suc‐ cess. When the customer is actively resolving the Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 85 problems that arise on the project together with the software company, has the majority of the thread in his hands, is the one who has constant control and preview of the implementation, holds a decisive role, and makes key decisions in agreement with the software company, the ERP implementation project is much more likely to be successful. A well‐defined scope and comprehensive high‐ level requirements, as well as the active participa‐ tion and assertiveness of users in activities such as requirements’ gathering, analysis, testing, and ver‐ ification, can further improve the project’s outcome. In practice, however, the initial requirements and final result may deviate. It may happen that high‐ level requirements approved initially by the cus‐ tomer do not include the whole scope they should, or that the customer confirms a too‐complex solu‐ tion or an add‐on that brings little benefit compared to the additional work it requires and the substan‐ tial increase in complexity of the overall model. In such cases, the early inclusion of testing might be particularly beneficial. Early testing, based on a clear list of testing activities derived from the require‐ ments list, might assure prompt alerts about the things that should be included in the requirements but were not or about things that are just redundant since they bring too little benefit. To address an excessive volume of change re‐ quests during the project and additional improve‐ ments requested after the completion of an ERP system implementation project (RQ4), project teams should give more attention to the preparation of high‐ quality requirements and, most of all, to enhancing their formalised testing and verification processes. High‐quality requirements: Even when agile ap‐ proaches are applied, it might be challenging to im‐ plement changes after the key building blocks of the system have already been determined and the archi‐ tecture of the enterprise system is set. Therefore, it might be risky to start the development before all key building blocks are determined and included in the initial plan. Further, due to time constraints, the test‐ ing of partial solutions against the requirements might be limited. Similarly, the opportunities for fine‐tuning and preparing a more user‐friendly solution might not be fully realised due to time pressure. Therefore, we advise that at least high‐level requirements are clear to all stakeholders in advance and that awareness about high‐quality requirements is raised. Formalised testing and verification processes: In the absence of formalised testing and verification processes intro‐ duced early on, the development might continue too long in the wrong direction, and many opportunities for improvement and fine‐tuning during the develop‐ ment phase might be missed. Feedback on partial so‐ lutions is crucial since it ensures an appropriate course of development. Therefore, formalising the testing and verification processes could contribute to reduc‐ ing the number of changes in later stages, after the implementation of the solutions. 6.3 Limitations and future research ERP implementation teams should carefully ex‐ amine what is best suited for the project at hand rather than applying a methodology similar to those adapted by organisations that have previously suc‐ cessfully implemented ERP systems. It needs to be mentioned that, besides the selected project and the project manager, additional relevant projects or pro‐ ject team members were not included in our sample. Even if the exploratory study enables qualitative, in‐ depth insight into the dynamics of a particular case study, it is possible that parts of the conclusions are only valid for the particular project. As mentioned previously, it is challenging to ensure validity, gener‐ alizability, or representativeness based on judgmen‐ tal sampling. 7 CONCLUSION This case study‐based qualitative research inves‐ tigates the requirements engineering process and the requirements’ change management process in an ERP system implementation project. In relation to the requirements engineering process, we investigate the use of adaptive (e.g., agile) methodologies versus tra‐ ditional, predictive waterfall methodologies and the importance of user requirements in an ERP project. The project team constantly chooses between the thoroughness of an initial plan and the additions they are willing to make later in the project. Agile method‐ ologies offer both benefits and drawbacks, but even in these projects, it may be challenging to implement substantial changes to the initial project’s scope. The characteristics of the project and project activities Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 85 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 86 Laura Fink, Ajda Fošner, Andrej Dobrovoljc, Tomaž Poznič: Requirements Change Management: A Case Study of an Enterprise System Implementation Project can determine the best combination of adaptive (e.g., agile) and predictive approaches for a concrete project. Further, we assert that the level of awareness in the organisation and project management about the importance of quality user requirements con‐ tributes to project success. ERP projects that aim to optimise and mod‐ ernise business processes are complex and require constant change management to improve system and information quality. We compare constant mod‐ ifications versus fixed requirements and address the strategies that influence the volume of change re‐ quests during and after the system’s implementa‐ tion. Managing changes, particularly those in user requirements, is the biggest challenge for ERP pro‐ jects that strive for a high degree of user adoption and satisfaction. In the case study, the project man‐ ager acknowledges that the customer’s expectation was never that the implemented system would rep‐ resent the final solution. Moreover, a clearly defined scope and well‐articulated business requirements ensured the project’s success. User participation and outspokenness during requirements gathering, analysis, testing, and verification are important fac‐ tors that contribute to the effectiveness of the pro‐ cess. The factors that influence the number of change requests during the project and the post‐im‐ plementation phase include awareness about the importance of high‐quality requirements and for‐ malised testing and verification processes. Without formalised testing and verification processes, devel‐ opment may continue in the wrong direction, which causes additional change requests in later stages. Though the number of change requests during post‐ implementation is not always an indicator of project success, by actively involving all project participants throughout the project, many unnecessary post‐im‐ plementation changes can be avoided. EXTENDED SUMMARY/IZVLEČEK Članek obravnava zbiranje, pripravo in razvoj uporabniških zahtev. Raziskava sloni na študiji primera kompleksnega ERP projekta v mednarodni korporaciji. Izhajamo iz dejstva, da razvoj posamezne ERP rešitve pogosto presega en sam projekt. Pogosto se razvoj ERP rešitev nadaljuje tudi po zaključku posameznega projekta. Osredotočamo se na zahteve uporabnikov in njihovo kakovost predvsem iz vidika procesa inženiringa zahtev in iz vidika managementa sprememb. Razpravljamo o značilnostih adaptivnih (e.g., agilnih) in predikativnih pristopov ter o vplivu teh na kakovost uporab‐ niških zahtev. Poudarjamo, da je pomembno, da se člani tima zavedajo pomembnega vpliva, ki ga imajo dobro opredeljene uporabniške zahteve za uspeh projekta. Čeprav trdimo, da število zahtevkov za spremembe ne bi smeli pojmovati kot kazalnik uspeha projekta, razpravljamo o dejavnikih, ki vpli‐ vajo na število sprememb tekom projekta in na dodatno delo po zaključku projekta. Prepoznali smo dve strategiji s katerimi lahko vplivamo na preveliko število zahtevkov za spremembe in dodatna dela. Projektni tim bi moral več pozornosti posvetiti pripravi visokokakovostnih uporabniških zahtev in predvsem izboljšanju formaliziranih procesov testiranja in verifikacije rešitev. Obvladovanje spre‐ memb, zlasti sprememb uporabniških zahtev, je bistveno za uspeh projekta. 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Agile‐con‐ current hybrid: A framework for concurrent product development using Scrum. Concurrent Engineering, 28(4), 255‐264. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 89 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 90 90 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 91 Vol. 13, No. 2, 91‐92 doi:10.17708/DRMJ.2024.v13n02 MANAGING PARADOXES IN AND ACROSS ORGANIZATIONS 7th International Conference on Management and Organization: MANAGING PARADOXES IN AND ACROSS ORGANIZATIONS Belgrade, Serbia (June 20‐21, 2024) Conference recap The 7th International Conference on Manage‐ ment and Organization, themed “Managing Para‐ doxes in and Across Organizations,” took place in Belgrade, Serbia, on June 20‐21, 2024. This esteemed gathering brought together leading academics, re‐ searchers, and professionals from across the globe to explore the intricate and multifaceted nature of or‐ ganizational paradoxes. The conference opened with a vibrant registration and networking session, setting a dynamic tone as participants mingled over coffee, fostering connections that would enrich discussions throughout the event. The opening ceremony in the historic Professors’ Hall saw organizers’ representa‐ tives, including Žaklina Stojanović, Miha Škerlavaj, Matej Černe, Ana Aleksić Mirić, and Tomislav Her‐ naus, set the stage for the engaging sessions to come. Day one featured insightful keynote presenta‐ tions, each addressing key aspects of paradoxes in the organizational context. Alexander D. Stajković captivated the audience with his exploration of paradoxes as drivers of social change and their po‐ tential to empower women leaders, particularly during crises. Arnold Bakker followed with an en‐ gaging discussion on job demands‐resources theory, examining the delicate balance between organiza‐ tional pressures and the resources available to em‐ ployees. Rounding out the morning session, Jelena Zikic delved into the evolution of career structures, highlighting the shift from traditional hierarchical careers to more fluid, nomadic trajectories, prompt‐ ing reflection on the implications of these changes for organizational and individual identity. After a lively lunch and a spirited football match between Slovenia and Serbia, which concluded in a 1:1 draw, participants reconvened for the afternoon sessions. Methodological workshops led by Ivana Milošević and Ivan Zupic offered attendees hands‐ on experience with qualitative research methodolo‐ gies and computational text analysis. These sessions provided valuable insights into the tools and tech‐ niques that can enhance research in the field of management and organizational studies. The first day wrapped up with a delightful dinner, allowing attendees to continue their discussions in a more relaxed setting, while further building relationships and exchanging ideas. Day two began on a refreshing note with a morning exercise session led by Tamara Stankovic, which incorporated positive affirmations to inspire participants for the day ahead. The plenary sessions Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 91 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 92 7th International Conference on Management and Organization: Managing Paradoxes in and Across Organizations featured esteemed speakers who examined para‐ doxes through diverse lenses. Miguel Pina e Cunha’s keynote, titled “Organizational Paradox: An Emo‐ tions View,” explored how emotions intersect with organizational paradoxes, emphasizing the nuanced role of emotional dynamics in shaping organiza‐ tional behavior. Medhanie Gaim offered another compelling session with “Exploring the Transcen‐ dent and the Dark Side of Organizational Para‐ doxes,” which illuminated the often‐overlooked challenges and opportunities within paradoxical or‐ ganizational dynamics. energy brought the conference to life. The event concluded on a hopeful note, as participants looked forward to future gatherings and continued collabo‐ ration in the quest to unravel the mysteries of man‐ aging paradoxes within and across organizations. A special Academy of Management Community Session added an extra dimension to the confer‐ ence, as AOM President Sharon A. Alvarez, CFO Marko Vukosavovic, and Ambassador Milorad Novicevic led a discussion on future directions within the management community. This session provided an invaluable opportunity for attendees to engage directly with leaders in the field, gaining in‐ sights into the evolving landscape of management and organizational research. The conference concluded with an awards cer‐ emony led by Nicola Cangialosi from the student awards committee, alongside Predrag Bjelić, Chair‐ man of the Doctoral Studies Committee at the Uni‐ versity of Belgrade, and SAM President Metka Tekavčič. Recognizing the achievements of emerging scholars, the Best Student Paper Award was pre‐ sented to Sara Melkić for her outstanding research. Additionally, Lorena Pikl received the award for Best Scholarly Impact, Maša Košak for Best Conceptual Relevance, and Jure Andolšek for Best Empirical Ex‐ ecution. These awards celebrated the innovative contributions of young researchers, underscoring the conference’s commitment to fostering new tal‐ ent within the management field. Reflecting on two days filled with rigorous aca‐ demic discourse, collaborative networking, and an enthusiastic exchange of ideas, the conference suc‐ ceeded in deepening participants’ understanding of the complexities of organizational paradoxes. Atten‐ dees departed with a renewed sense of purpose, in‐ spired to further explore the dynamic interplay between paradoxes and organizational life. The or‐ ganizers expressed heartfelt gratitude to all speakers, participants, and volunteers, whose dedication and 92 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 93 AUTHOR GUIDELINES 1. GENERAL INFORMATION All articles submitted to the Dynamic Relationships Management Journal are double‐blind reviewed. The manuscript should submitted via e‐mail to the editor (matej.cerne@ef.uni‐lj.si). Send two files: one that contains author contact information along with the text, references, tables, figures, and exhibits; and one where author contact information will be deleted. Authors should keep an exact, extra copy of the manuscript for future reference. 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Authors should provide a summary, which will be published in Slovene (for foreign authors, translation will be provided by editors). Manuscripts that report quantitative analyses of data should typically include descriptive statistics, correlation matrices, the results of statistical tests and so forth. If these items are not included in the manuscript, they should be reported in a separate technical appendix. Authors of manuscripts that report data dependent results also must make available, upon request, exact information regarding their proce‐ dures and stimuli (excluding data). If we receive files that do not conform to the above requirements, we will inform the author(s) and we will not begin the review process until we receive the corrected files. The author(s) submitting the manuscript for review should clearly indicate to the editor the relation of the manuscript under review to any other manuscripts currently under review, in press or recently pub‐ lished by the authors. The editor may ask the authors to submit copies of such related papers to the Editorial Board. 2. GENERAL INSTRUCTIONS 1. First page: Name of author(s) and title; author(s) footnote, including present positions, complete ad‐ dress, telephone number, fax number, email address, and any acknowledgment of financial or technical assistance. 2. Second page: Title of paper (without author's name) and an abstract of no more than 250 words sub‐ stantively summarizing the article. Also include up to six keywords that describe your paper for indexing and for web searches in your manuscript. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 93 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 94 Author Guidelines 3. Next: Text alignment justified with major headings and subheadings flush with the left margin. The in‐ troduction should state clearly the objective of the paper as well as the motivation and the context of the research. The literature review should be limited to the articles, books and other items that have a direct bearing on the topic being addressed. In empirical papers, details of the empirical section tests should not be included in the paper itself. The conclusion should summarize key findings and state their importance to the field. Footnotes should be kept to an absolute minimum and must be placed at the foot of the page to which they refer. They should not be used for citing references. 4. Then: Tables, numbered consecutively, each on a separate page. If tables appear in an appendix, they should be numbered separately and consecutively, as in Table A‐1, A‐2, and so on. 5. Next: Figures, numbered consecutively, each placed on a separate page. If tables appear in an appendix, they should be numbered separately, as in Figure A‐1, A‐2, etc. 6. After conclusion: Longer summary (1‐2 pp, depending on length of article) in Slovenian language (for foreign authors, translation will be provided by editors). 7. Last: References, typed in alphabetical order by author's last name and in APA style. 3. TABLES 1. The table number and title should be centered and placed above the table. 2. Source(s) should also be provided and centered below the table: i.e. Mabey & Gooderham, The impact of management development on perceptions of organizational performance in European firms, 2005: 136. 3. Designate units (e.g., %, $) in column headings. 4. Align all decimals. 5. Refer to tables in the text by number only. Do not refer to tables by "above," "below," and "preceding." 6. If possible, combine closely related tables. 7. Clearly indicate positions of tables within the text on the page where they are introduced: e.g. Table 1 about here. 8. Measures of statistical significance should be reported within the table. 4. FIGURES, PHOTOGRAPHS AND CAMERA‐READY ARTWORK 1. For graphs, label both vertical and horizontal axes. The ordinate label should be centered above the ordinate axis; the abscissa label should be placed beneath the abscissa. 2. Place all calibration tics inside the axis lines, with the values outside the axis lines. 3. The figure number and title should be typed on separate lines, centered and placed above the figure. 4. When appropriate, source(s) should also be provided and centered below the figure (see example under the Tables section). 5. Clearly indicate positions of figures within the text on the page where they are introduced. 94 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 95 6. Once a manuscript has been accepted for publication, complex tables and all figures must be submitted both electronically and as camera‐ready (hard) copy. Do not embed figures in the Word file; instead, submit them separately in the program in which they were created (i.e., PDF, PowerPoint, Excel). 7. Lettering should be large enough to be read easily with 50% reduction. 8. Any art not done on a computer graphics program should be professionally drafted in India ink. 9. Do not submit photographs or camera‐ready art until your manuscript has been accepted. If the pho‐ tograph or artwork is completed, submit copies. 5. MATHEMATICAL NOTATION 1. Mathematical notation must be clear and understandable. Since not all journal readers are mathe‐ matically proficient, the authors should ensure that the text (i.e., words) also conveys the meaning ex‐ pressed by the mathematical notation. We recommend that extensive mathematical notation (e.g., proofs) should be provided in a separate technical appendix. 2. Equations should be centered on the page. Equations should be numbered; type the number in paren‐ theses flush with the left margin. If equations are too wide to fit in a single column, indicate appropriate breaks. Unusual symbols and Greek letters should be identified by a note. 6. REFERENCE CITATIONS WITHIN THE TEXT Cite all references at the appropriate point in the text by the surname of the author(s), year of publi‐ cation, and pagination where necessary. Pagination (without 'p.' or 'pp.') to give the source of a quotation or to indicate a passage of special relevance, follows the year of publication and is preceded by a colon, i.e. Parsons (1974: 238). Page numbers should be given full out, i.e. 212‐230 not 212‐30. When providing quotes, these should be in italics. In general, references to published works must be cited in text according to the guidelines for APA style (for more information see the DRMJ website). 7. REFERENCE LIST STYLE 1. Single Author: Last name first, followed by author initials. Berndt, T. J. (2002). Friendship quality and social development. Current Directions in Psychological Science, 11, 7‐10. 2. Two Authors: List by their last names and initials. Use the ampersand instead of “and.” Wegener, D. T., & Petty, R. E. (1994). Mood management across affective states: The hedonic contin‐ gency hypothesis. Journal of Personality & Social Psychology, 66, 1034‐1048. 3. Three to Six Authors: List by last names and initials; commas separate author names, while the last author name is preceded again by ampersand. Kernis, M. H., Cornell, D. P., Sun, C. R., Berry, A., & Harlow, T. (1993). There’s more to self‐esteem than whether it is high or low: The importance of stability of self‐esteem. Journal of Personality and Social Psychology, 65, 1190‐1204. Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024 95 DRMJ vol13 no02 2024 (print).qxp_Prelom 6. 11. 24 11:53 Page 96 Author Guidelines 4. Organization as Author American Psychological Association. (2003). 5. Unknown Author Merriam‐Webster’s collegiate dictionary (10th ed.).(1993). Springfield, MA: Merriam‐Webster. 6. Two or More Works by the Same Author: Use the author’s name for all entries and list the entries by the year (earliest comes first). Berndt, T. J. (1981). Berndt, T. J. (1999). References that have the same first author and different second and/or third authors are arranged alphabetically by the last name of the second author, or the last name of the third if the first and second authors are the same. For other examples, see the DRMJ website. 96 Dynamic Relationships Management Journal, Vol. 13, No. 2, November 2024