The Impact of Lean Management Practices on Economic Sustainability in Services Sector

Abstract

Lean management is a significant weapon that can help firms within the fourth industrial revolution to find unique solutions to their own unique problems. On the other hand, there is a noticeable increase in the level of awareness of firms all over the world regarding their urgent need to achieve economic sustainability. This paper aims to build a model that best measures the impact of lean management practices on economic sustainability for service firms. For this purpose, a multiple case study is employed, exploratory and confirmatory factor analyses are utilized to develop valid and reliable measure of lean management, and Pearson’s correlation and regression analyses are employed to measure the impact of lean management on economic sustainability. The results provide evidence of the positive impact of lean management on economic sustainability. This paper contributes to the literature by developing a novel measure of lean management and by providing evidence of the positive impact of lean management on economic sustainability, as this relation is not well tested empirically, especially in emerging economies.

1. Introduction

In a globalized and digitalized world, firms are facing the challenges of high complexity and diversity in the production and operations environment. This complexity stems from the belief that the key reason of success for any firm within the fourth industrial revolution is its ability to produce personalized products for its customers at a rapid rate of change [1]. In this regard, many academics and practitioners have recently stated that lean management can play a role of paramount importance in facing the challenges of firms within the fourth industrial revolution era. They are convinced that lean philosophy, which focuses on customer value in a continuous improvement process, is a significant weapon to reduce the complexity of the production and operations environment that faces firms nowadays [2].

Consequently, firms in different economic sectors have implemented lean management, and this has enabled most of them to achieve better results and improve their competitiveness [3]. However, other firms were not able to achieve the results they expected from its implementation. This resulted in a disagreement between academics and practitioners regarding lean management. Some academics and practitioners are suspect of the success of lean management due to many failed implementations in different products and services [4]. One of the primary explanations behind the high rate of failure is that there is a disagreement among researchers on what belongs to lean and what does not belong to it. This means that there is a misunderstanding of lean management, and disparate views of its practices, benefits, or even its definition [2].

Recently, there has been an increasing interest in applying lean management practices in the services sector rather than in the traditional commodities sector [5,6]. This means that recently there are higher possibilities for applying lean management in service firms, as it is believed that providing services includes complex systems that have interconnected processes, and thus these firms are in need of lean management practices to reduce this complexity [7].

Additionally, the existing literature has not reached an agreement on whether lean management affects economic sustainability positively or negatively [3]. This may be because most of the existing studies in the literature were interested only in studying the impact of a subset of lean management tools and techniques, such as just-in-time, human resource management, and total quality management, on economic sustainability, which could not be sufficient or inclusive [3]. Therefore, this indicates that these papers neglect the impact of other significant lean management tools and techniques on economic sustainability, and it also indicates that different lean management tools and techniques have different impacts on the economic sustainability of firms [8].

On the other hand, most of the studies in the literature, which studied the interrelationships among lean management and economic sustainability, were interested only in measuring the effects of lean management on operational performance, including cost, quality, delivery, and speed [8,9,10]. This means that most of the literature focused only on the short-term impacts of lean management on operational performance, and only a few studies investigated the medium and long-term impacts of lean management on the economic sustainability of firms [4].

Thus, to overcome these gaps in the literature, this paper aims to measure the impact of lean management on the economic sustainability of firms. Lean management is defined and measured in this paper, not based on a subset of its tools and techniques, but rather based on the main practices that formulate the lean philosophy. Additionally, this paper also aims at reaching a model that best measures the impact of lean management practices on the economic sustainability of the firms working in the services sector, rather than the traditional commodities sector. Hence, the research objective of this paper can be stated as follows: “analyzing how lean management practices can affect economic sustainability, with more emphasis on service firms”. Based on this research objective, the following research questions can be raised:

• How can the lean management practices of service firms be defined and measured?
• What is the interrelationship between lean management and the economic sustainability of these firms?
• How can lean management help these firms to compete within the fourth industrial revolution?

This paper contributes to the literature of operations management first by identifying a set of operational practices of lean management of the service firms, and by developing valid and reliable measures of these practices. This analysis will enable academics and practitioners to measure the extent of implementation of lean management practices in these firms. Second, this paper fills the existing gap in the literature through providing evidence of the empirical interrelationships between lean management and economic sustainability in the services sector. This contribution will help firms’ managers and other stakeholders in understanding how they can achieve the results they expected from implementing lean management practices within the fourth industrial revolution.

The rest of this paper is organized as follows. Section 2 presents an appropriate literature review. Section 3 describes the methods employed to reach a model that best measures the impact of lean management practices on economic sustainability. Section 4 presents the results of this paper, and discusses their significance. Finally, Section 5 provides concluding remarks, and clarifies the implications of this paper, its limitations, and future directions.

2. Literature Review

This paper is concerned with understanding the dynamics between lean management and the economic sustainability of firms. Therefore, this section is divided into three sub-sections. The Section 2.1 provides a review of the lean management literature. Then, the Section 2.2 presents a review of the economic sustainability literature. Finally, the Section 2.3 provides a review of the literature that studied the dynamics between lean management and economic sustainability.

2.1. Lean Management

The literature of lean management indicates that lean management has progressed from the stage of prescription, where researchers prescribe the lean tools and techniques, to a stage of deeper understanding, where researchers identify the needed requirements and success factors of lean management [4]. Starting from the origins, the roots of lean go back to the Japanese company Toyota, and its founder Sakichi Toyoda. The origins of the Toyota Production System (TPS) start at the beginning of the twentieth century. The TPS was built on two main pillars. First, the Jidoka, which means the application of a fault detection sensor that enables the producer to reduce the number of defects. Second, the just-in-time system (JIT), which refers to the need to be able to create a fast and flexible process of production based on the clients’ desires [1].

Later, in 2001, James P. Womack and Daniel T. Jones published “Lean Thinking: Banish Waste and Create Wealth in Your Corporation”, in which they precisely defined the foundations of the lean philosophy. They admitted that lean manufacturing is the successor of the TPS, as it adopts the two pillars of the TPS plus five other principles that they added for better results for firms. These five extra principles include determining the product’s value in the eyes of client, identifying the value stream for the product, providing a fast and undisturbed value stream, allowing clients to elicit the value from the producer, and striving for excellence [9,11].

It is important to notice that lean manufacturing differs from lean management in its focus, since the focus of lean manufacturing is the production process only, while the focus of lean management extends to other aspects of management [11]. Thus, one of the needed requirements and success factors of lean management is the human resource management aspects [12]. This means that the manager who applies the lean management principles has to consider providing the employees a positive atmosphere in the workplace, setting both long-term and short-term objectives for the employees, and constructing multiple communication channels among employees and management [11].

Other needed human resource aspects that enable the firm to apply the lean management principles effectively include the following strategies. The firm has to depend more on internal motivators for employees and less on traditional external motivators, construct a “suggestion system” as an instrument to involve employees in solving the firm problems, and continuously provide employees with opportunities for self-development. It is also expected for lean leaders to be a good model for their employees and to inspire them to have the values of respect, creativity, and dedication to their work [11].

Recently, the lean management thinking has been heavily adopted in other areas in addition to the traditional production and manufacturing areas. It is believed that hospitals, cities, and software are complex systems that have interconnected processes, and thus they are in need of lean management to reduce this complexity [7]. This transmission of the lean management thinking to the services sector can be interpreted by the argument that lean philosophy benefits any service, in which three conditions are satisfied. The first condition implies that the firm can identify, map, and redesign its processes. The second condition is that customers pull the final service, i.e., they are not pushed by the firm. The third condition is that the aim of the firm is to minimize any kind of loss, which means, from the point of view of lean management, any process that adds no value to the final customers [6].

Based on the previous argument, lean management is defined, as “A systematic approach to identify and eliminate waste through continuous improvement; flowing the product at the pull of the customer in pursuit of perfection.” [13], p. 2. In addition, it is stated that: “Lean is not/should not be about implementing a set of tools. Rather, we are told it must revolve around creating a lean or continuous-improvement culture, people-focused leaders, and raising lean literacy.” [5], p. 369.

The lean philosophy is based on the slogan “Do More with Less”, which means using the lowest amount of resources to produce the highest amount of efficiency and quality. This is done by focusing on customer value, waste elimination, and continuous improvement. These concepts are the three cornerstones of the lean philosophy, which complement each other [7]. The focus of any firm that understands the lean philosophy is the customer value, i.e., what the consumer is willing to pay for. Thus, this firm tries to achieve a continuous uninterrupted flow of the activities that add value to the end customer. This means that this firm has a target of minimizing and eliminating any activity or process that has no value from the point of view of the customer. In lean terms, this means that this firm has a target of minimizing waste. In order for this firm to achieve this target, it has to improve its processes continuously and seek to achieve perfection [6].

Additionally, the firms’ management have to be aware of the vital role played by human resources in enabling their firms to achieve desirable results after adopting lean management. This means that managers have to explore the right and appropriate way of managing employees, in order to have employees who are highly committed to lean thinking and who have a high degree of involvement and engagement in lean management implementation [3,14].

As a result, firms’ management and employees will have the ability to understand the essence of the lean philosophy, and not only a subset of lean tools and techniques. If they succeed in this task, they will be able to find unique and different solutions for the unique problems and challenges which face their firms within the fourth industrial revolution. Therefore, this explains the reason for the failure of many firms at realizing the benefits of lean management. The reason is that these firms do not understand the essence of the lean philosophy, and thus they cannot practice it. Lean management is not a pre-defined box of lean tools and techniques; rather it is a set of practices, which are built upon a set of principles, which are inspired by the lean philosophy [13].

Hence, lean practices can be regarded as the main cornerstone of defining which firms are applying the lean philosophy, and which firms are not actually applying it. Lean management practices represent the journey that firms have to get through to discover how they can utilize lean management philosophy to find unique solutions to their own unique problems. That is why it has been found that many auto firms are talking about lean initiatives, but only a small percentage of these firms are actually applying lean initiatives in their processes [3]. On the other hand, many firms in the industrial and service sectors are practicing lean management, without even knowing that they are doing so, i.e., without knowing the name of the lean tool or technique that they are using or applying within their production and operations processes [7].

2.2. Economic Sustainability

There is an increasing interest in the concept of sustainability from international, national, and business organizations all over the world. In addition, there have been several attempts by academics and practitioners to implement, measure, and evaluate this concept. It is worth noting that the macro level of sustainability (international and national sustainable development goals) has been studied more intensively than the micro level of sustainability (business sustainability) [15]. There are different perspectives among sustainability researchers of what business sustainability means. These perspectives include sustaining results over time, being environmentally friendly, having economically feasible solutions in the long term, taking the social aspects into considerations, and other perspectives [3].

In general, sustainability can be defined at the business level, as “Meeting the needs of a firm’s direct and indirect stakeholders, without compromising its ability to meet the needs of future stakeholders also.” [3], p. 4385. This definition of sustainability means that firms have to achieve a sort of dynamic balance between the needs and targets at the present and future state. Nowadays, there are no longer any chances for firms all over the world to ignore the impact of their activities and operations on the surrounding environment and community [15]. Another definition of business sustainability that aims at achieving a more inclusive and holistic nature of sustainability states that sustainability is “The balanced and systematic integration of intra and intergenerational economic, social, and environmental performance.” [16], p. 759.

These arguments of business sustainability imply that the traditional interest of firms, which focuses on only the economic impact of their operations on their shareholders and customers, with the isolation of any other impacts is no longer accepted. This goes back first to the complexity and the inter-linkages between several different variables at the same time that our world has recently been going through. The second reason goes back to the increased awareness of firms and societies regarding the reality that no business can be done on a dead planet [3]. Thus, many firms’ managers all over the world nowadays are aware that they need to produce sustainable goods and services, which implies that they need a combination of new technologies and production techniques, new management operations and practices, and new definitions for their business models [17]. Firms’ managers are also aware that they do not have only one group of stakeholders whose interests they have to achieve. Alternatively, they have multiple stakeholders, including the traditional stakeholders (shareholders and debt-holders), employees and workers, society, and the environment. Thus, they have to maximize the synergy and minimize the tradeoffs between their conflicting interests [17].

In order for firms’ managers to succeed in achieving economic sustainability, they have to be aware that the main goal of their firms has been changed. The main goal of firms historically was profit maximization, and recently this goal has been replaced with value maximization. Value maximization means creating value for all the stakeholders (including society and the environment), and minimizing dis-value for all of them. In other words, value maximization means that the scope of firm management now has changed from firm-centric to network-centric [17]. Value was normally understood as monetary value, but this is not accepted from the perspective of economic sustainability. Sustainable value requires a comprehensive view of both value captured and value uncaptured for all the multiple stakeholders of the firm. Firms have to look for business opportunities that create economic value for the firm and for society and the environment. This can be translated into a business model that focus on maximizing sustainable value, not monetary value only [18].

Hence, the main focus of economic sustainability for the firm is its maximization of financial benefits for its internal and external stakeholders [3]. In particular, economic sustainability criteria are used to assess and evaluate the financial health of firms in both the short term and the long term. The firm financial health includes its financial stability, its financial results, and its ability to survive in the market, given the rapid changes [15]. In addition, economic sustainability can be translated into a sustainable business competitiveness, which means the ability of the firm to provide its customers with a service package, which the customers regard to be better than the service package provided by other competitors, which also provides profit for the firm. The advantages that are provided by the service package have to be adaptable to any changes in the internal or external environment of the firm in the future [19].

2.3. The Dynamics between Lean Management and Economic Sustainability

Since 2005, there has been a noticeable upward trend in the literature of the studies that are interested in linking lean management and business sustainability [20]. However, it is noted that most of these studies are either theoretical papers or literature review articles [4,21]. This indicates the lack of practicality of the studies that investigated the link between lean management and business sustainability. One of the reasons for this lack of practical studies in this area may be the difficulty of the integration of the business sustainability pillars in one practical study [14,22]. Another reason is that the efforts of academics, who are interested in this area, are still directed to theory building, rather than applications [20].

The literature proposes different explanations of theoretical and empirical interrelationships between lean management and economic sustainability. One of these explanations proposed that economic sustainability can be viewed as the economic value gained or created through adopting lean thinking. This indicates that economic sustainability can be seen as the ability of the firm to achieve its financial objectives in the short and long term through employing lean management practices [14].

Alternatively, other explanations are directed at analyzing the impact of one of the main practices of lean management, namely waste elimination, on economic sustainability. Waste elimination focuses on eliminating all non-value-added activities from the customer’s point of view, as these activities only consume resources, and thus they are economically inefficient over the long term. Following this logic, one expects that applying waste elimination will reduce operational costs, increase profitability, enhance operational excellence, and thus affect economic sustainability positively [3,10]. Moreover, the literature highlighted the critical role of lean thinking and continuous improvement culture inside firms in order to achieve sustained economic results. In addition, the commitment of firms’ employees and managers to the lean practices is also regarded as a key reason for achieving economic sustainability [3].

However, the literature has not reached an agreement on whether lean management affects economic sustainability positively or negatively. Lean management may affect economic sustainability positively through increasing workers’ engagement, reducing the number of defects, eliminating unneeded production, and enhancing workflow flexibility [10,14]. On the other hand, some lean management techniques, such as just-in-time, may not be compatible with economic sustainability, as they may affect operational costs negatively [14]. Another scenario expected that lean management strategies could lead to pleasing impacts on firm sustainability only in the short term, as these impacts tend to deteriorate in the long term [23]. This scenario can be interpreted by the idea that waste elimination practices may have fruitful impacts on cost savings and efficiency improvements for the firm in the short term, but after that only small problems remain, and solving them in turn produces small efficiency gains [23].

This contradicting evidence of the impact of lean management on economic sustainability can be explained by the following arguments. One of these arguments is that some studies only investigated the impact of a subset of lean management tools and practices, such as just-in-time, human resource management, and total quality management, on the financial performance of the firm [8]. This means that these studies neglect studying the impact of other significant lean management tools and practices, which may have different impacts on the economic sustainability of the firm [8]. Moreover, this means that these studies focus only on the short-term impacts of lean management on economic sustainability, and hence, they neglect investigating the medium and long-term impacts [3].

Therefore, it can be stated that the studies of the interrelations between lean management and economic sustainability cannot be inclusive or sufficient [3,8]. Additionally, it can be concluded that firms are expected to succeed in achieving sustainable economic results if they implement various lean management practices simultaneously. While some firms may see this complexity as one of the difficulties of lean management, other firms can see it as a source of competitive advantage which cannot be easily imitated by other firms [4]. Figure 1 shows the conceptual framework, which summarizes the dynamics between lean management and economic sustainability, based upon the literature.

3. Methods

In this paper, a multiple case study is used to reach a model that best measures the impact of lean management practices on the economic sustainability of the firms. Case studies are regarded as suitable when researchers want to obtain deeper insights from the study participants, where values, perceptions, attitudes, and behaviors play the main role in the study [24].

3.1. Case Description

This paper employed a multiple case study with three listed firms that have been working mainly in the information technology and communication services sector in Egypt for at least the previous 7 years, precisely from 2015 to 2021. The firms which satisfy these characteristics are Fawry for Banking Technology and Electronic Payments, Raya Contact Center, and Telecom Egypt [25].

There are three main reasons behind believing that these firms represent an appropriate case study for this paper. First, service firms have recently become more interested in adopting lean management [5,6,7]. Second, lean management practices are better tested in a rapidly changing environment to be able to measure the ability of these practices to enable firms to compete in the fourth industrial revolution [2]. Therefore, firms in the information technology and communication services sector satisfy this condition. Third, large listed firms are believed to be more suitable than small and medium ones in the case study. The suitability of the large firms is related first to the belief that lean management requires a large potential of firms to implement it, i.e., considerable resources, plentiful assets, and a knowledgeable and experienced management [26]. Second, measuring economic sustainability required collecting secondary data about firms used in the case study, and these are available only for large firms which are listed in the exchange market.

3.2. Data Collection

3.2.1. Survey Questionnaire

For the lean management variable, data were collected using a survey questionnaire. Purposive sampling was employed to examine the study questions in depth. Selected employees had to be familiar with the operations function of their firms, and thus they could help in obtaining information regarding the lean management practices of their firms. Therefore, the personnel involved in the survey at each firm of the case study were working as managing directors, operations managers, and executives.

The survey consisted of four sections. First, there is a short introduction about the research problem. Then, section one and two in the survey are concerned with measuring the extent of implementation of lean management practices in the firm. A five-point Likert-scale is used in section one to indicate the extent of implementation of a number of qualitative lean management practices at each firm. The scale ranged from 1 to 5, where 1 = no implementation; 2 = little implementation; 3 = some implementation; 4 = extensive implementation; and 5 = complete implementation. In section two in the survey, the actual percentage of implementation of a number of quantitative lean management practices is measured at each firm. The percentage of implementation ranged from 1 to 5, where 1 = less than 20%; 2 = from 20% to less than 40%; 3 = from 40% to less than 60%; 4 = from 60% to less than 80%; and 5 = more than 80%. Section three included personal data about the respondents, including job title, department, gender, age, level of education, and years of experience. In addition, the background information about the firms included in the case study were collected before surveying the respondents of each firm. This information includes the firm’s total assets, number of employees, year of establishment, firm ownership, year of listing in the Egyptian Exchange, type of firm organizational structure, and firm purpose.

Regarding the sample size, Equation (1) was used to calculate the total recommended sample size, based on the total population size [27]:

𝑛 = (𝑝 (100 − 𝑝) 𝑧²)/𝐸²,

(1)

where n is the required sample size, p is the population proportion, z is the value from the table of probabilities of the standard normal distribution for the desired confidence level (e.g., z = 1.96 for 95% confidence), and E is the margin of error. It is worth noting that the size of the entire population was 1037 respondents, and the size of the entire sample was 281 respondents. This recommended sample size was calculated, based on Equation (1), at a 95% confidence level, 50% population proportion, and 5% margin of error.

Additionally, the number of operations managers and executives at each firm involved in this study was estimated based on a contact list from LinkedIn, since LinkedIn was selected as the primary source for developing a respondent profile. Then, the number of survey respondents at each firm involved in this study was determined based on the proportionate stratified random sampling technique [27], using Equation (2):

n_h = (N_h/N) × n,

(2)

where n_h is the sample size for the hth stratum, N_h is the population size for the hth stratum, N is the size of the entire population, and n is the size of the entire sample.

Table 1. Sample size.

Firm	Number of Operations Managers and Executives	Recommended Sample Size
Fawry for Banking Technology and Electronic Payments	110	(110/1037) × 281 = 30
Raya Contact Center	287	(287/1037) × 281 = 78
Telecom Egypt	640	(640/1037) × 281 = 173
Total	Population Size = 1037	Sample Size = 281

Source: Calculated by the authors using Equations (1) and (2).

shows the size of the entire population, the size of the entire sample, and the number of survey respondents at each firm involved in this study.

3.2.2. Secondary Data

For the economic sustainability variable, secondary data were collected from the Egyptian Exchange database, which reports financial information about the firms that are listed in it. It is worth noting that previous literature showed that it takes time for the firm to capture beneficial impacts from lean management practices [8]. Therefore, this paper measured economic sustainability for the three firms included in the case study over a seven-year period, precisely from 2015 to 2021. The reason behind using secondary data to measure the economic sustainability variable was to avoid the common method bias that takes place when data about both the independent variable and the dependent variable are collected using the same source of data collection [8]. Therefore, while data regarding the lean management variable were collected using a survey questionnaire, data regarding the economic sustainability variable were collected using secondary data.

3.3. Measurement

3.3.1. Dimensions of Lean Management Practices

Based on the review of the literature, there is a need to develop a valid and reliable scale to measure the dimensions of lean management for service firms. To develop such measures, a comprehensive multi-step approach was applied in the development and validation process [28]. The proposed dimensions of the lean management practices are illustrated in Figure 2. These dimensions consisted of a cycle of four practices that complement each other, in addition to two success factors. The four practices are defining customer value, value stream mapping, waste elimination, and continuous improvement. In addition, the two success factors needed to facilitate the implementation of lean management are top management commitment and employees’ commitment to lean thinking.

First, in order for the firm to apply the lean philosophy, it has to define the concept of value for its customers [1]. Then, it has to chart a chain of processes flow of the service value in the eyes of the end customers (value stream mapping); then, the firm has to eliminate all the non-value-added activities from the value stream (waste elimination) [6,7]. Fourth, the firm that applies lean management philosophy has to focus on achieving continuous improvement of its processes [1]. Moreover, there are two important cornerstones and success factors of lean management philosophy, namely the top management commitment and the employees’ commitment to lean thinking [5,12,14].

The first practice of lean management is defining customer value, which is not an easy task for any firm, as it is important for the firm to take into consideration that not every customer expects the same value. Value is what the customer wants and is willing to pay for. Therefore, in order for the firm to be able to create value for its customers, it has to answer two questions: Who is my customer? Moreover, what are his/her needs and preferences? Then, the firm will be able to create value for its customer [2]. It is worth noting that many times, customers may not know their wants, and here firms have to use some techniques and analytics to discover what the customers find valuable [29].

Second, to measure the dimension of value stream mapping, it is important to know whether the firm is charting its processes, which are tied to its customer value. Based on lean thinking, there are four processes for the firm, namely the processes of operation, inspection, transport, and storage [5]. However, as this paper is applied to the service sector, rather than the product sector, the firm processes will be reduced to only the processes of operation and inspection. Moreover, the charting of the firm processes has to be set mostly by those who know the most about the processes, namely those who are familiar with the operations function of their firms. This charting has to be done in accordance with the firm strategy or the management goals. In addition, the firm goals have to be dynamic ones, as these goals are constantly changing with the changing needs and requirements of the customer [5].

The third practice of lean management is waste elimination, which represents the main aim behind value stream mapping, since visualizing the processes flow enables the firm to identify the major wastes that exist in its processes flow [9]. To measure the waste elimination dimension, it is important to know first whether the firm is examining its processes flow to label them as either value adding, or non-value-adding activities. Then, the firm has to treat all the non-value-adding activities as sources of waste, which should be eliminated [5]. Based on lean thinking, there are seven sources of waste, namely wastes of transport, inventory, motion, waiting, over-processing, over-production, and defects [13]. However, as this paper is applied to the services sector, rather than the product sector, the sources of waste will be reduced to only three sources, namely the wastes of waiting, over-processing, and defects. Moreover, waste identification has to be related more to operators, who are engaged in and aware of the processes of their firms [5].

The fourth practice of lean management is continuous improvement. To measure the continuous improvement dimension, it is important to know first whether the firm has a continuous improvement culture, and second whether the firm is focusing on monitoring and evaluating the previous practices of lean management, in order to realize any deviation from the customer value [2]. In addition, it is important to realize whether the firm is facilitating and encouraging its employees’ involvement in continuously identifying wastes and redesign processes to reduce those wastes [30], and to realize whether firms are encouraging their customers to notify them about the sources of waste through creating multiple communication channels with their customers [1].

Additionally, to measure the first success factor of lean thinking, mentioned in Figure 2, namely the top management commitment, it is vital to define the roles that should be played by the manager who is committed to lean management thinking. These roles include building a positive atmosphere at the workplace and constructing multiple communication channels among employees. In addition to motivating his/her employees by depending more on internal motivators than external ones, the manager must provide his/her employees with continuous opportunities for self-development and be a good model for their employees by inspiring them to have the values of respect, innovation, and dedication to their work [11,14].

The second success factor of lean thinking is the employees’ commitment. The employees are regarded to be highly committed to lean thinking if the firm has a high degree of employee involvement and engagement in lean management practices. This is achieved first if the employees are well informed about the aims and practices of their firms behind implementing lean thinking. Second, it is achieved if the firm has an employee-driven problem-solving approach. Third, it is achieved if the firm has a flat, less hierarchical organizational structure, as this organizational structure leads to more employee engagement in the continuous improvement process [3,14].

3.3.2. Instrument Development

An initial list, including the items used to measure each dimension of lean management practices, was identified based on reviewing the literature. This initial list was then tested with academics and practitioners to assess their face and content validity. The academics and practitioners gave positive remarks on the proposed scale, and they believed that the questionnaire was acceptable for the pilot-testing stage. After that, the final developed scale was subjected to an exploratory factor analysis to test the proposed survey instrument, and then it was subjected to a confirmatory factor analysis to assess its convergent and discriminant validity. As is shown in Figure 3, the main construct of the proposed survey instrument is lean management practices. This main construct is measured using six operational constructs, namely defining customer value, value stream mapping, waste elimination, continuous improvement, top management commitment, and employees’ commitment. Each one of these operational constructs is measured using a number of operational measures. The initial list of the proposed survey instrument consisted of 37 items to reflect a comprehensive set of lean management practices, as shown in Appendix A.

It is believed that the researchers who conducted the pilot study became better informed and prepared to face the challenges that might arise in the data collection stage of the study. In addition, they became more confident in the instruments they used [24]. Hence, using a pilot study had the potential of raising the reliability of the research results, and subsequently raising the quality of the research as a whole. The pilot study covered the three firms representing the case study, which are Fawry for Banking Technology and Electronic Payments, Raya Contact Center, and Telecom Egypt. The sample used for the pilot study consisted of 30 respondents, of which 10 respondents from each firm participated in the pilot-testing stage.

3.3.3. Dimensions of Economic Sustainability

The economic sustainability variable was measured using two dimensions, namely financial performance and firm competitiveness. These two dimensions were chosen to measure economic sustainability as they complement each other by capturing both direct and indirect economic impacts of the firm [15]. While financial performance captures the direct economic impacts of the firm, namely the impacts of waste elimination and value creation on the firm performance [8], firm competitiveness captures the indirect impacts of the firm, namely the advantages attained by the firm from exploiting its human and organizational assets, compared to its competitors [31].

To measure financial performance, profitability growth ratio was used, as profitability growth is the ratio of earnings before interest, taxes, depreciation, and amortization (EBITDA) to net sales. It is believed that profitability growth is an appropriate measure of financial performance, as it informs on the ability of a firm to create value for its customers by increasing its operational efficiency, which is consistent with the goal of lean management philosophy [8].

On the other hand, firm competitiveness was measured in terms of both employee productivity and revenue per fixed assets, as employee productivity is the ratio of total revenues to the total number of employees of the firm, while the revenue per fixed assets is the ratio of total revenues to fixed assets of the firm [32]. It is believed these two measures of firm competitiveness complement each other and are as regarded appropriate measures of firm competitiveness. From one side, the employee productivity informs on the ability of a firm to create value for its customers by increasing its employees’ productivity through employees’ involvement, development, and motivation, which are regarded as cornerstones of lean management philosophy. On the other side, revenue per fixed assets informs on the ability of a firm to create value for its customers by changing its policy, particularly the ability of the firm’s assets to adapt to the actual market conditions, which is also consistent with the lean management philosophy [11].

3.4. Statistical Analysis

In order to measure the impact of lean management practices on economic sustainability, Pearson’s correlation analysis and linear regression analysis were employed [8]. Pearson’s correlation analysis was employed to measure the association between lean management practices and economic sustainability. Pearson correlation coefficients were calculated to determine the strength and direction of the relationship between the two variables [33]. Then, linear regression analysis was employed to measure the effect of lean management practices on economic sustainability using the partial least squares (PLS) approach. In the PLS estimation procedure, all the residual variances are minimized jointly; however, it remains partial, since no total residual variance is set up for optimization [34].

4. Results and Discussion

4.1. Background Information

Table 2. Background information about firms involved in the case study.

Firm	Firm Total Assets in 2020	Number of Employees	Year of Establishment	Firm Ownership	Listing Year in the Egyptian Exchange	Organizational Structure	Firm Purpose
Fawry for Banking Technology and Electronic Payments, Giza, Egypt	EGP 2.43 billion	3000	2008	Public company	Starting 2019	Hierarchical structure	Fawry is focused on data processing and outsourced services.
Raya Contact Center, Cairo, Egypt	EGP 5.89 billion	5500	2001	Public company	Starting 2015	Flat structure	Raya is focused on data processing and outsourced services.
Telecom Egypt, Giza, Egypt	EGP 84.44 billion	53,332	1998	Public company	Starting 1999	Hierarchical structure	Telecom Egypt is focused on integrated telecommunication services.

Source: [35].

presents the background information about the firms comprising the case study, regarding the value of total assets, the number of employees, the year of establishment, firm ownership, listing year in the Egyptian Exchange, organizational structure, and firm purpose.

4.2. Exploratory Factor Analysis

The exploratory factor analysis was conducted using the SPSS V. 28.0.1 software, and based on the data collected from the pilot study. The SPSS software is created by IBM Corporation, New York, NY, USA. It was conducted to examine the links between the observed indicators and the constructs. The analysis was conducted without knowing from the beginning the number of existing factors and the pattern of factor loadings. To decide the number of existing factors and the pattern of factor loadings, the principal component analysis was conducted. In addition, the Promax rotation method was used, as the factors were assumed to be correlated. The principal component analysis was run with eigenvalues exceeding one and a maximum of 25 iterations for convergence [36].

As is shown in

Table 3. Exploratory factor analysis and reliability analysis for waste elimination.

Item	Mean	SD	Loadings	CITC	CAID	Cronbach’s Alpha	Eigenvalue	Percentage of Variance Explained
WE1	3.37	1.033	0.795	0.818	0.848	0.890	1.78	6.86%
WE2	3.53	1.306	0.648	0.648	0.893
WE3	3.3	1.055	0.599	0.783	0.856
WE4	3.5	1.042	0.699	0.764	0.860
WE5	2.53	1.074	0.849	0.690	0.876

SD = standard deviation; CITC = corrected item-total correlation; CAID = Cronbach’s alpha if item deleted.

,

Table 4. Exploratory factor analysis and reliability analysis for employees’ engagement in continuous improvement process.

Item	Mean	SD	Loadings	CITC	CAID	Cronbach’s Alpha	Eigenvalue	Percentage of Variance Explained
EECIP1	2.3	1.317	0.912	0.891	0.969	0.972	15.32	58.93%
EECIP2	2.07	1.23	0.899	0.904	0.968
EECIP3	2.5	1.225	0.738	0.894	0.969
EECIP4	2.7	1.264	0.746	0.855	0.969
EECIP5	2.67	1.422	0.922	0.907	0.968
EECIP6	3	1.39	0.909	0.891	0.969
EECIP7	2.43	1.305	0.624	0.704	0.973
EECIP8	2.77	1.251	0.909	0.861	0.969
EECIP9	3.03	1.066	0.895	0.838	0.970
EECIP10	2.83	1.02	0.721	0.830	0.970
EECIP11	2.43	0.898	0.656	0.790	0.971
EECIP12	3.37	1.129	0.794	0.801	0.971
EECIP13	2.43	1.073	0.794	0.820	0.970

SD = standard deviation; CITC = corrected item-total correlation; CAID = Cronbach’s alpha if item deleted.

,

Table 5. Exploratory factor analysis and reliability analysis for customer value.

Item	Mean	SD	Loadings	CITC	CAID	Cronbach’s Alpha	Eigenvalue	Percentage of Variance Explained
CV1	3.67	0.959	0.749	0.905	0.949	0.961	3.43	13.19%
CV2	3.47	1.042	0.927	0.934	0.944
CV3	3.5	0.974	0.814	0.914	0.947
CV4	3.43	1.006	0.972	0.924	0.945
CV5	3.47	0.973	0.599	0.772	0.970

SD = standard deviation; CITC = corrected item-total correlation; CAID = Cronbach’s alpha if item deleted.

and

Table 6. Exploratory factor analysis and reliability analysis for flexibility toward customer needs.

Item	Mean	SD	Loadings	CITC	CAID	Cronbach’s Alpha	Eigenvalue	Percentage of Variance Explained
FTCN1	3.63	1.066	0.878	0.877	0.777	0.889	1.319	5.07%
FTCN2	3.83	1.02	0.638	0.821	0.830
FTCN3	2.9	1.47	0.621	0.733	0.943

SD = standard deviation; CITC = corrected item-total correlation; CAID = Cronbach’s alpha if item deleted.

, four components were verified using the principle component analysis. These four components accounted for 84.05% of the total variance, and they were reached by the application of the Kaiser criterion’s “eigenvalue-greater-than-one” rule. The recommended cut-off factor loading of 0.60 was used to guarantee the practical significance of each factor [36]. The analysis was repeated several times, and 11 items from the initial list shown in Appendix A were removed due to their low factor loadings and their cross loading. The modified dimensions of the lean management practices, after conducting the exploratory factor analysis, are illustrated in Figure 4. These dimensions are consistent with the findings found in the literature [1,3,12,14].

Based on the results of the exploratory factor analysis, the lean management practices were measured using four operational constructs, namely customer value, waste elimination, employees’ engagement in the continuous improvement process, and flexibility toward customer needs. First, in order for the firm to apply the lean philosophy, it has to define the concept of value for its customers, and then it has to chart a chain of processes flow of the service value in the eyes of the end customers (customer value). The second dimension is related to eliminating all the non-value-added activities from the value stream (waste elimination). The third dimension is related to the exerted efforts made by the firm management to engage its employees in improving the firm processes on a continuous basis (employees’ engagement in the continuous improvement process). The fourth dimension of lean management is flexibility toward customer needs, as the customer’s needs are rapidly changing within the fourth industrial revolution era. Each one of these operational constructs was measured using a number of operational measures. The list of the modified survey instrument consists of 26 items to reflect a comprehensive set of lean management practices, as shown in Figure 5, and in full detail in Appendix B.

Table 3, Table 4, Table 5 and Table 6 shows the contribution of each factor of the four dimensions of the lean management practices, based upon the exploratory factor analysis results. It is noticed that the dimension of employees’ engagement in the continuous improvement process had the highest contribution to the total variance, as alone it contributed 58.93% of the total variation, as shown in Table 4. Then, the dimension of customer value came in the second place, as it contributed 13.19%, as shown in Table 5. The dimension of waste elimination came in the third place, as it contributed 6.86%, as shown in Table 3, while the dimension of flexibility toward customer needs took the last place, as it contributed 5.07%, as shown in Table 6. Furthermore, a reliability test using Cronbach’s alpha was conducted to measure the internal consistency of the items in the survey instrument. The result of Cronbach’s alpha demonstrated an alpha of 0.7 and above (see Table 3, Table 4, Table 5 and Table 6), which is acceptable and indicates good reliability [36].

4.3. Confirmatory Factor Analysis

After the data purification and data reduction were completed, as described in the exploratory factor analysis stage, the dimensions and psychometric properties of the scales were verified using confirmatory factor analysis [37]. The remaining 26 items were subject to a series of further statistical validation testing using the partial least squares (PLS) approach. SmartPLS V. 3.2.7 software, by SmartPLS GmbH in Hamburg, Germany, is used. The confirmatory factor analysis was conducted based on the data collected from the whole sample of the case study. Initial contact with the respondents was made using the questionnaire survey. LinkedIn was used to contact operations managers and executives at each firm involved in this study. After the initial contact was made, it was followed with two reminders, each sent a week apart [28].

The assessment of the measurement model in PLS-SEM is shown in Figure 6. The measurement model, based upon the confirmatory factor analysis, supports the resulted dimensions of the exploratory factor analysis. Figure 6 shows the factor loadings of the four dimensions of lean management, namely customer value, waste elimination, employees’ engagement in the continuous improvement process, and flexibility toward customer needs. Each one of these operational constructs was measured using a number of operational measures. The list of the final survey instrument consisted of 26 items to reflect a comprehensive set of lean management practices, as shown in Appendix B. The analysis was then followed by statistical validation testing, which included evaluating internal consistency reliability, convergent validity, and discriminant validity.

4.3.1. Internal Consistency Reliability

The most commonly used measures of the internal consistency reliability are Cronbach’s alpha and composite reliability. These two alternative measures examine the average correlation between all the items that belong to one construct. If the value of any of these measures is within 0.5 to 0.7, this can be regarded as an acceptable level of internal consistency. Moreover, if the value of any of these measures is more than 0.7, this can be regarded as a good level of internal consistency [36]. Despite its wide usage, there are many limitations of Cronbach’s alpha, such as assigning all indicators equal outer loadings, and the influence of the number of indicators on its calculation [38]. Therefore, it is more accurate to use an alternative measure of internal consistency, which is composite reliability. Composite reliability measures the internal consistency, while taking into consideration that each indicator has a different outer loading [38]. Thus, the reliability of each construct is assessed using SmartPLS.

Table 7. Reliability of measurement model analysis.

Construct	CA	CR
Customer Value	0.739	0.827
Waste Elimination	0.662	0.779
Employees’ Engagement in Continuous Improvement Process	0.87	0.893
Flexibility toward Customer Needs	0.50	0.746

CA = Cronbach’s alpha; CR = composite reliability.

shows that all the constructs, based upon Cronbach’s alpha, had a reliability score of more than 0.5. In addition, all the constructs, based upon composite reliability, had a reliability score of more than 0.7. These findings provide evidence of the high reliability and sufficient internal consistency of the constructs.

4.3.2. Convergent Validity

The average variance extracted (AVE) and the outer loading are common methods to measure the convergent validity [36].

Table 8. Average variance extracted (AVE) of the constructs of lean management.

Construct	Customer Value	Waste Elimination	Employees’ Engagement in Continuous Improvement Process	Flexibility toward Customer Needs
AVE	0.49	0.423	0.40	0.495

shows the values of the AVE of the four constructs of lean management. The AVE of a construct should be 0.50 or higher to be considered significant. However, if the values of composite reliability are greater than 0.6, AVE values of 0.4 or more are also acceptable [38]. As is shown in Table 8, the convergent validity, based upon the values of the AVE, is regarded to be acceptable, as the composite reliability values were greater than 0.7, as shown in Table 7.

Additionally, outer loading in SmartPLS is another measure of convergent validity.

Table 9. Items loading of the constructs of lean management.

Item	Customer Value (CV)	Waste Elimination (WE)	Employees’ Engagement in Continuous Improvement Process (EECIP)	Flexibility toward Customer Needs (FTCN)
CV1	0.694
CV2	0.745
CV3	0.73
CV4	0.628
CV5	0.696
WE1		0.612
WE2		0.411
WE3		0.748
WE4		0.68
WE5		0.742
EECIP1			0.652
EECIP2			0.720
EECIP3			0.668
EECIP4			0.619
EECIP5			0.695
EECIP6			0.654
EECIP7			0.624
EECIP8			0.439
EECIP9			0.639
EECIP10			0.582
EECIP11			0.633
EECIP12			0.574
EECIP13			0.619
FTCN1				0.706
FTCN2				0.718
FTCN3				0.686

shows the items loading of the four constructs of lean management. The needed outer loading is 0.7. However, if the outer loading is between 0.4 and 0.7, it is advised to analyze the influence of deleting this indicator on the measures of internal consistency reliability, to decide whether it is better to delete or retain this item. If deleting this indicator does not result in increasing the values of the measures of internal consistency reliability above the threshold, it is better to retain the indicator [37]. As a result, all the items were retained, since all the items loading of the four constructs were above the threshold of 0.4, with a good reliability and validity of the selected constructs as shown in Table 7 and Table 8.

4.3.3. Discriminant Validity

The most commonly used measures of discriminant validity are the Fornell–Larcker criterion and the heterotrait–monotrait (HTMT) ratio [39,40].

Table 10. Fornell–Larcker criterion.

Construct	CV	EECIP	FTCN	WE
Customer Value (CV)	0.7
Employees’ Engagement in Continuous Improvement Process (EECIP)	0.601	0.628
Flexibility toward Customer Needs (FTCN)	0.443	0.569	0.704
Waste Elimination (WE)	0.484	0.55	0.536	0.65

shows that the Fornell–Larcker criterion was established, as the square root of the average variance extracted of each construct was higher than any of the construct’s correlations with other constructs [39].

Table 11. Heterotrait–monotrait (HTMT) ratio.

Construct	CV	EECIP	FTCN
Employees’ Engagement in Continuous Improvement Process (EECIP)	0.744
Flexibility toward Customer Needs (FTCN)	0.723	0.868
Waste Elimination (WE)	0.66	0.673	0.877

shows the heterotrait–monotrait (HTMT) ratio values for the four constructs of lean management. The HTMT value should be lower than 0.9, to ensure that the discriminant validity is established [40]. As a result, the discriminant validity was established, since all of the constructs had HTMT values less than the defined threshold.

4.4. Descriptive Statistics

Figure 7 portrays the mean values of the lean management variable as a whole, and the mean values of the four dimensions representing the lean management practices across each firm involved in the case study. These lean management practices are customer value, waste elimination, employees’ engagement in the continuous improvement process, and flexibility toward customer needs. It can be observed from Figure 7 that Fawry has the highest mean concerning customer value and waste elimination, while Raya has the highest mean concerning employees’ engagement in the continuous improvement process and flexibility toward customer needs. Regarding the mean value of the lean management variable as a whole, Raya occupies the first place, while Telecom Egypt comes in the second place, and Fawry occupies the last place among the three firms.

On the other hand, Figure 8 portrays the mean values of the economic sustainability variable as a whole, and the mean values of the two constructs composing economic sustainability across each firm involved in the case study. These economic sustainability constructs are financial performance and firm competitiveness, while financial performance is measured in terms of profitability growth and firm competitiveness is measured in terms of both employee productivity and revenue per fixed assets. It can be noticed from Figure 8 that Telecom Egypt has the highest mean concerning profitability growth and employee productivity, while Raya has the highest mean concerning revenue per fixed assets. Regarding the mean value of the economic sustainability variable as a whole, Telecom Egypt occupies the first place, while Fawry comes in the second place, and Raya occupies the last place among the three firms.

4.5. Pearson’s Correlation Analysis

The Pearson’s correlation analysis was conducted using the SPSS V. 28.0.1 software. The SPSS software is created by IBM Corporation, New York, NY, USA.

Table 12. Pearson’s correlation coefficients.

Pearson Correlation Coefficients		Customer Value	Waste Elimination	Employees’ Engagement in Continuous Improvement Process	Flexibility toward Customer Needs	Profitability Growth	Employee Productivity	Revenue per Fixed Assets	Lean Management Practices	Economic Sustainability
Customer Value	Pearson Correlation	1	0.994 **	0.987 **	0.956 **	0.101	0.634 **	−0.329	0.996 **	0.634 **
	Sig. (2-tailed)		0.000	0.000	0.000	0.663	0.002	0.145	0.000	0.002
	N	21	21	21	21	21	21	21	21	21
Waste Elimination	Pearson Correlation	0.994 **	1	0.968 **	0.927 **	0.118	0.667 **	−0.343	0.983 **	0.667 **
	Sig. (2-tailed)	0.000		0.000	0.000	0.610	0.001	0.128	0.000	0.001
	N	21	21	21	21	21	21	21	21	21
Employees’ Engagement in Continuous Improvement Process	Pearson Correlation	0.987 **	0.968 **	1	0.971 **	0.133	0.596 **	−0.284	0.997 **	0.596 **
	Sig. (2-tailed)	0.000	0.000		0.000	0.565	0.004	0.212	0.000	0.004
	N	21	21	21	21	21	21	21	21	21
Flexibility toward Customer Needs	Pearson Correlation	0.956 **	0.927 **	0.971 **	1	0.008	0.463 *	−0.241	0.973 **	0.463 *
	Sig. (2-tailed)	0.000	0.000	0.000		0.974	0.035	0.292	0.000	0.035
	N	21	21	21	21	21	21	21	21	21
Profitability Growth	Pearson Correlation	0.101	0.118	0.133	0.008	1	0.540 *	−0.098	0.106	0.540 *
	Sig. (2-tailed)	0.663	0.610	0.565	0.974		0.011	0.674	0.646	0.011
	N	21	21	21	21	21	21	21	21	21
Employee Productivity	Pearson Correlation	0.634 **	0.667 **	0.596 **	0.463 *	0.540 *	1	−0.671 **	0.604 **	1.000 **
	Sig. (2-tailed)	0.002	0.001	0.004	0.035	0.011		0.001	0.004	0.000
	N	21	21	21	21	21	21	21	21	21
Revenue per Fixed Assets	Pearson Correlation	−0.329	−0.343	−0.284	−0.241	−0.098	−0.671 **	1	−0.302	−0.671 **
	Sig. (2-tailed)	0.145	0.128	0.212	0.292	0.674	0.001		0.184	0.001
	N	21	21	21	21	21	21	21	21	21
Lean Management Practices	Pearson Correlation	0.996 **	0.983 **	0.997 **	0.973 **	0.106	0.604 **	−0.302	1	0.604 **
	Sig. (2-tailed)	0.000	0.000	0.000	0.000	0.646	0.004	0.184		0.004
	N	21	21	21	21	21	21	21	21	21
Economic Sustainability	Pearson Correlation	0.634 **	0.667 **	0.596 **	0.463 *	0.540 *	1.000 **	−0.671 **	0.604 **	1
	Sig. (2-tailed)	0.002	0.001	0.004	0.035	0.011	0.000	0.001	0.004
	N	21	21	21	21	21	21	21	21	21

* Correlation is significant at the 0.05 level (2-tailed). ** Correlation is significant at the 0.01 level (2-tailed).

shows the Pearson’s correlation coefficients between all the variables under consideration. On the one side, the coefficients were calculated between the two main variables of the paper, namely lean management practices and economic sustainability. On the other side, the coefficients were calculated between the constructs comprising lean management, namely customer value, waste elimination, employees’ engagement in the continuous improvement process, and flexibility toward customer needs as well as the constructs comprising economic sustainability, namely profitability growth, employee productivity, and revenue per fixed assets. As a rule of thumb, the correlation coefficient indicates weak correlation if it ranges between 0.10 and 0.39, moderate correlation if it ranges between 0.40 and 0.69, and strong correlation if it is 0.7 or above [33].

Therefore, it can be concluded from Table 12 that there is a significant moderate positive relationship between the two main variables under consideration, namely lean management practices and economic sustainability (r = 0.604, p < 0.01). Moreover, there are significant moderate positive relationships between economic sustainability from one side, and the four constructs composing lean management from the other side, namely customer value (r = 0.634, p < 0.01), waste elimination (r = 0.667, p < 0.001), employees’ engagement in the continuous improvement process (r = 0.596, p < 0.01), and flexibility toward customer needs (r = 0.463, p < 0.05). Additionally, there is a significant moderate positive relationship between lean management practices from one side, and one of the constructs composing economic sustainability from the other side, namely employee productivity (r = 0.604, p < 0.01), while there are insignificant relationships between lean management practices from one side, and the other two constructs composing economic sustainability from the other side, namely profitability growth (r = 0.106, p > 0.05) and revenue per fixed assets (r = −0.302, p > 0.05).

Thus, the significant positive moderate correlations between economic sustainability from one side, and lean management and its constructs on the other side, provide evidence of the noticeable positive existing relation between lean management and economic sustainability. It is worth noting that waste elimination has the highest positive correlation with economic sustainability, compared to the other constructs of lean management, which supports that waste elimination reduces operational costs, increases profitability, enhances operational excellence, and thus affects economic sustainability positively [3,10]. On the other hand, the significant moderate positive correlation between lean management and one of the constructs of economic sustainability, namely employee productivity, reflects the role of lean management in encouraging employees’ involvement, development, and motivation, which enhances employee productivity [11]. While the insignificant correlations between lean management and two of the constructs of economic sustainability, namely profitability growth and revenue per fixed assets, means that there is inconclusive evidence about the significance of the association among these variables [33].

4.6. Linear Regression Analysis

Table 13. Linear regression analysis estimates.

Hypothesis	Unstandardized Coefficients	Standardized Coefficients	t-Value	p-Value	R Square
H1: Lean Management Practices → Economic Sustainability	10,459.572	0.604	3.305	0.004	0.365
H2: Customer Value → Economic Sustainability	12,269.010	0.634	3.573	0.002	0.402
H3: Waste Elimination → Economic Sustainability	15,520.181	0.667	3.901	0.001	0.445
H4: Employees’ Engagement in Continuous Improvement Process → Economic Sustainability	5633.578	0.596	3.233	0.004	0.355
H5: Flexibility toward Customer Needs → Economic Sustainability	14,080.481	0.463	2.276	0.035	0.214

shows the estimates of the linear regression analysis. The first hypothesis measures the effect of lean management practices, as a whole, on economic sustainability. Then, the other four hypotheses measure the effect of each construct comprising lean management, namely customer value, waste elimination, employees’ engagement in the continuous improvement process, and flexibility toward customer needs, on economic sustainability. It can be concluded from Table 13 that lean management practices, as a whole, have a statistically significant positive effect on economic sustainability (as β = 0.604, t = 3.305, p < 0.01), with 37% variance explained, so that the first hypothesis is accepted. In addition, the other four hypotheses, which measure the effect of each construct comprising lean management on economic sustainability, are also accepted, as follows.

According to the results of H2, customer value has a statistically significant positive effect on economic sustainability (as β = 0.634, t = 3.573, p < 0.01), with 40% variance explained. Then, according to H3, waste elimination has a statistically significant positive effect on economic sustainability (as β = 0.667, t = 3.901, p < 0.01), with 45% variance explained. Furthermore, according to H4, employees’ engagement in the continuous improvement process has a statistically significant positive effect on economic sustainability (as β = 0.596, t = 3.233, p < 0.01), with 36% variance explained. Finally, according to H5, flexibility toward customer needs has a statistically significant positive effect on economic sustainability (as β = 0.463, t = 2.276, p < 0.05), with 21% variance explained. These results provide evidence of the significant positive effect of lean management on economic sustainability [34].

Based on the coefficient of determination (R square), as reported in Table 13, the variation in economic sustainability is highly explained by waste elimination. Then, customer value and employees’ engagement in the continuous improvement process occupy the second and third rank, respectively, in their explanation power of economic sustainability. Finally, flexibility toward customer needs has the lowest explanation power of economic sustainability compared to the other three constructs of lean management [33,34].

4.7. Results Generalization

Results generalization refers to checking whether the findings of the case study are applicable to the population from which the case study was chosen, or to other populations. This condition is satisfied in case study research when the causes that lead to certain outcomes in a particular case setting will have similar outcomes in other settings [41]. Despite the common belief that case study findings are not readily generalizable to other populations, this belief has been dramatically challenged with the critical realist view that advocates the generalizability of case study findings on the population from which the case study was chosen, or on other populations that have similar characteristics [41]. Since this paper employed a multiple case study with three listed firms that are working mainly in the information technology and communication services sector in Egypt, it is believed that the results of this case study are applicable to the population from which the case study was chosen, and to other populations in other countries and regions of the globe.

In addition to the previous argument, there is another reason behind believing that the results of the employed case study of this paper are generalizable to other countries and regions of the globe: two out of the three firms included in the case study of this paper, namely Raya Contact Center and Telecom Egypt, are not only working in Egypt, but also have operations and subsidiaries in other countries, as follows. Raya Contact Center operates in six countries around the world, namely the USA, Egypt, Poland, Saudi Arabia, Bahrain, and the UAE [42]. Telecom Egypt has subsidiaries operating across the British Islands, Western Europe, Northern Africa, and the Middle East [35].

5. Conclusions

This paper proposed a model that enables academics and practitioners to measure the impact of lean management practices on the economic sustainability of service firms, especially in emerging economies. The first step in building this model was choosing an appropriate case study. In this regard, large firms working in the information technology and communication services sector in Egypt were believed to represent an appropriate case study for this paper. The second step was collecting data regarding the lean management variable using a survey questionnaire, while collecting data regarding the economic sustainability variable using secondary data. The third step in building this model was deciding the relevant instruments to measure both lean management and economic sustainability. Regarding the lean management variable, it appeared through reviewing the literature that there is an urgent need to develop a valid and reliable scale to measure the dimensions of lean management for service firms. To develop such measures, a comprehensive multi-step approach was applied. Then, the developed measures of lean management were subjected to an exploratory factor analysis to test the proposed survey instrument, and they were subjected to a confirmatory factor analysis to assess their convergent and discriminatory validity. On the other hand, the economic sustainability variable was measured using two dimensions, namely financial performance and firm competitiveness. The final step to reach such a model was selecting suitable data analysis techniques. Pearson’s correlation analysis was first employed to measure the association between the lean management practices and economic sustainability. Then, linear regression analysis was employed to measure the effect of lean management practices on economic sustainability using the partial least squares (PLS) approach.

Consequently, the results of the comprehensive multi-step approach employed to develop valid and reliable measures of lean management suggest that lean management practices can be defined and measured in the services sector using four operational constructs, namely customer value, waste elimination, employees’ engagement in the continuous improvement process, and flexibility toward customer needs. On the other hand, the results of the proposed model of this paper support that there is a significant strong positive relationship between lean management practices and economic sustainability, based on the Pearson’s correlation analysis results. Additionally, the linear regression analysis results provide evidence that lean management practices, as a whole, have a statistically significant positive effect on economic sustainability.

5.1. Theoretical Implications

Most of the existing studies in the literature of operations management were only interested in studying a subset of lean management tools and practices, which could not be sufficient or inclusive [5,8]. Thus, to overcome this gap in the existing literature, this paper contributes to the literature by defining and measuring lean management, not based on a subset of its tools and techniques, but based on the main practices that formulate the lean philosophy. Moreover, there is an increasing interest recently in applying lean management practices in the services sector rather than in the traditional commodities sector. This goes back to the belief that the services sector consists of complex systems that have interconnected processes, and thus they are in need of lean management practices to reduce this complexity [5,6,7]. Thus, to fulfil this need in the existing literature, this paper contributes to the literature by identifying a set of operational practices of lean management in service firms, and by developing valid and reliable measures of these practices.

5.2. Practical Implications

This paper has significant practical implications. First, it helps firms’ managers and other stakeholders in understanding the reasons behind the disagreement among academics and practitioners regarding lean management, and its impact on economic sustainability. Some academics and practitioners are suspect of the success of lean management practices due to many failed implementations in different products and services, while other academics and practitioners are convinced that lean philosophy is a significant weapon to reduce the complexity of the production environment that faces firms nowadays within the fourth industrial revolution era [1]. The primary reason behind this disagreement is the absence of a complete and clear picture in the literature of what belongs to lean and what does not belong to it. This means that there is a misunderstanding of lean management and disparate views of its practices, benefits, or even its definition [12]. In this regard, this paper helps firms’ managers and other stakeholders in understanding the needed requirements and success factors of lean management, especially for service firms, which enable them to achieve the results they expect from implementing the lean management within the fourth industrial revolution. Moreover, the comprehensive set of lean management practices of the measurement model of this paper enables academics and practitioners to measure the extent of the implementation of lean management practices in services firms.

On the other hand, this paper mainly contributes to the literature by narrowing the existing gap, which emerged as a result of the lack of empirical evidence of the interrelationship between lean management and economic sustainability, especially for service firms, as this paper provides empirical evidence of the significant positive impact of lean management practices on the economic sustainability of these firms, especially in emerging economies. It is worth noting that the results of the case study of this paper can be generalized to other countries and regions of the globe.

5.3. Limitations and Future Directions

Some of the limitations of this paper are identified. This paper employs a multiple case study, which consists of large firms in the information technology and communication services sector which are listed in the Egyptian Exchange. While this case study represents the appropriate case study for this paper, based on the empirical research gap, other lean management practices may be left out. Firms that are working in other sectors within the services sector, such as public administration, health care, and education, are not part of the case study employed in this paper. In addition, regarding the size of the firms included in the case study, large firms were believed to be more suitable than small and medium ones. This goes back to the belief that lean management requires a large potential to implement it [26]. However, the inclusion of some small and medium firms in the case study may reveal additional practices of lean management for service firms.

Therefore, future research efforts could be directed to cover these limitations. This will enable academics and practitioners to identify a more comprehensive list of lean management practices of service firms. In addition, this will enable testing the proposed measurement scales of lean management from this paper in a wider and more comprehensive context. Other future research efforts could be exerted in investigating the empirical evidence of the interrelationship between lean management practices and business sustainability, as a holistic concept, which integrates the three pillars of business sustainability, namely economic, social, and environmental sustainability, since it is believed that firms have better achieved business sustainability through implementing lean management practices when the concept of business sustainability is targeted within a holistic perspective [20].