Organizational Readiness for Change and Design using Galbraith's STAR Model: A Case Study of Digitalization at a Small and Medium Enterprise (SME)

International Journal of Current Science Research and Review ISSN: 2581-8341 Volume 08 Issue 12 December 2025 DOI: 10.47191/ijcsrr/V8-i12-28, Impact Factor: 8.048 IJCSRR @ 2025 www.ijcsrr.org 6176 *Corresponding Author: Jansen Liu Volume 08 Issue 12 December 2025 Available at: www.ijcsrr.org Page No. 6176-6187 Organizational Readiness for Change and Design using Galbraith's STAR Model: A Case Study of Digitalization at a Small and Medium Enterprise (SME) Jansen Liu1, Achmad Fajar Hendarman2 1,2 School of Business and Management, Bandung Institute of Technology, Bandung, Indonesia ABSTRACT: This study investigates the organizational readiness for digitalization within a Small and Medium Enterprise (SME) in the Indonesian apparel sector, specifically CV XYZ, which faces sales stagnation due to its reliance on traditional offline channels. Utilizing a qualitative methodology, the research employs in-depth interviews and Focus Group Discussions (FGDs) with key stakeholders to assess readiness and identify necessary organizational design interventions. The theoretical analysis is grounded in Weiner’s theory of organizational readiness and Galbraith’s Star Model. The findings reveal a critical dichotomy in the firm’s readiness: while the organization exhibits high change valence—driven by a strategic recognition of e-commerce as essential for market expansion—it suffers from low change efficacy due to significant gaps in technical competencies and digital literacy. The application of Galbraith’s Star Model highlights specific misalignments, particularly in structure and leadership, which currently hinder digital agility. The study concludes that to successfully implement digitalization, the organization must move beyond mere asset acquisition to focus on capability building. Strategic recommendations include the implementation of "structural differentiation" to create a distinct online marketing division, the appointment of a specialized digital manager to bridge the leadership gap, and a prioritized investment in tiered human capital training over immediate financial incentives. These insights provide a practical framework for SMEs transitioning from traditional operations to digitally enabled business models. KEYWORDS: Digitalization, Organizational Readiness for Change, Organization Design, Galbraith's STAR Model, Small and Medium Enterprise (SME) I. INTRODUCTION The Indonesian apparel sector represents a significant economic pillar, contributing IDR 203.95 trillion to the national GDP in 2023 (BPS, 2024). Driven by the fundamental nature of consumer demand, the market is projected to sustain an annual revenue growth rate of approximately 4% (Statista Consumer Market Insights, 2024). Complementing this, the manufacturing sector has demonstrated consistent growth in value-added output, indicating a robust industrial expansion. Despite this favorable external environment, CV XYZ faces significant internal challenges characterized by sales stagnation. Preliminary data analysis reveals that between 2021 and 2024, the company achieved an average annual sales growth of only 3.9% (shown in Figure 1), prompting the owners to seek strategies for revitalizing performance. Figure 1. Sales of CV XYZ International Journal of Current Science Research and Review ISSN: 2581-8341 Volume 08 Issue 12 December 2025 DOI: 10.47191/ijcsrr/V8-i12-28, Impact Factor: 8.048 IJCSRR @ 2025 www.ijcsrr.org 6177 *Corresponding Author: Jansen Liu Volume 08 Issue 12 December 2025 Available at: www.ijcsrr.org Page No. 6176-6187 This stagnation is largely attributed to the firm's continued reliance on a traditional, offline-centric business model. CV XYZ currently operates without any presence on e-commerce marketplaces, social media, or dedicated websites, limiting its distribution channels to physical store visits and direct messaging via WhatsApp. Consequently, promotional activities are restricted to localized word-of-mouth and physical signage, resulting in a severely limited distributional scope. This contrasts sharply with the broader market trend, where e-commerce penetration in Indonesia is projected to reach 34.84% by 2029 (Statista, 2025), offering substantial opportunities for market expansion. To leverage this opportunity, CV XYZ aims to implement a digitalization strategy to enhance brand awareness and create additional customer value. However, the organization is currently hindered by a significant capability gap; neither the owner nor the employees possess the necessary skills or experience to manage digital platforms. As digitalization requires not only technological assets but also the development of new competencies and leadership capabilities (Kohnke, 2016), it is critical to assess the organization's readiness to transition from a manual operation to a digitally enabled enterprise. Research Questions 1. What is the current level of organizational readiness for digitalization at CV XYZ? 2. What factors in organization design that can support digitalization at CV XYZ? Research Objectives 1. To assess the current level of organizational readiness for digitalization at CV XYZ. 2. To assess factors in organization design that can support of digitalization at CV XYZ. The outcomes of the research may or may not be applicable for other types of digitalization. Furthermore, the data collection for this research is limited to the employees and owners of CV XYZ. Therefore, the findings of the research may be context-specific to CV XYZ and may not be applicable to other organizations or industries. II. THEORETICAL FOUNDATION A. Definition of Digitalization According to Verhoef et al. (2021), there are three phases of digital transformation: digitization, digitalization, and digital transformation. Digitization is the process of converting analog information into a digital format, such as binary code, which enables its storage, processing, and transmission by computers. Digitization streamlines internal and external documentation, but it typically does not alter a firm's core value-creation activities. Digitalization refers to the use of digital technologies to fundamentally alter existing business processes. Unlike digitization, firms can apply digital technologies to optimize processes, improve coordination, and enhance customer value and user experiences. Therefore, it is not only focus on cost savings, but also process improvements that can deliver additional value for customers. The last phase is digital transformation. Digital transformation represents the most comprehensive phase of digital change, signifying a company-wide shift that results in the creation of new business models. To start digital transformation, firms can start from digitization and digitalization first to gradually transform their traditional business into a digital one (Verhoef et al., 2021). Therefore, it is a sequential process if a firm hasn't done a digitization or digitalization process in the first place. B. Organizational Readiness for Change Weiner (2009) conceptualizes organizational readiness for change as a multi-level construct defined by the shared resolve of organizational members to implement a change (change commitment) and their shared belief in their collective capability to do so (change efficacy). As a "shared team property," readiness requires high within-group consensus; without sufficient agreement, the construct does not effectively exist. Theoretically, this framework draws upon Bandura’s (1977) Social Cognitive Theory and Vroom’s (1964) Expectancy Theory. Bandura posits that efficacy determines effort and persistence, while Vroom suggests that motivation is driven by the conscious valuation of outcomes (valence) and the belief that effort leads to performance (expectancy). International Journal of Current Science Research and Review ISSN: 2581-8341 Volume 08 Issue 12 December 2025 DOI: 10.47191/ijcsrr/V8-i12-28, Impact Factor: 8.048 IJCSRR @ 2025 www.ijcsrr.org 6178 *Corresponding Author: Jansen Liu Volume 08 Issue 12 December 2025 Available at: www.ijcsrr.org Page No. 6176-6187 Figure 2. Determinants and Outcomes of Organizational Readiness for Change (Weiner, 2009) Applying these theories, Weiner identifies change valence and change efficacy as the primary determinants of readiness. Change valence refers to the degree to which members collectively value the impending change, often distinguishing between "want to" versus "have to" motives. Conversely, change efficacy is a cognitive appraisal of the organization's ability to handle task demands, resource availability, and situational factors (Gist & Mitchell, 1992). While contextual factors like organizational culture influence these perceptions, high readiness is the proximal antecedent to effective implementation, fostering pro-social behaviors necessary for complex organizational transformations. C. Galbraith's Star Model Jay Galbraith's Star Model is a framework used for organizational design (Galbraith, n.d.). It asserts that an organization's effectiveness depends on the alignment of five key areas that managers can control: Strategy, Structure, Processes, Rewards, and People. The core idea is that for a company to successfully execute its strategy, all five elements must be consistent and work together harmoniously to shape employee behavior, which in turn drives performance and culture. Figure 3. Galbraith's Star Model (Galbraith, n.d.) Galbraith’s Star Model asserts that Strategy serves as the foundational element and primary guiding force for organizational design. It functions as the organization's "formula for winning," delineating its objectives, market positioning, and sources of competitive advantage. Consequently, the strategic direction establishes the essential criteria for selecting the most appropriate organizational form, dictating the configuration of all subsequent design choices. International Journal of Current Science Research and Review ISSN: 2581-8341 Volume 08 Issue 12 December 2025 DOI: 10.47191/ijcsrr/V8-i12-28, Impact Factor: 8.048 IJCSRR @ 2025 www.ijcsrr.org 6179 *Corresponding Author: Jansen Liu Volume 08 Issue 12 December 2025 Available at: www.ijcsrr.org Page No. 6176-6187 The execution of the strategy is supported by four manageable components: Structure, Processes, People, and Rewards. Structure defines the distribution of power and authority, covering aspects such as specialization and centralization. Processes constitute the organization's "physiology," governing the vertical and horizontal flow of information and decision-making. Simultaneously, the People component focuses on cultivating specific skills and mindsets through human resource policies, while the Rewards system aligns employee motivation with organizational goals through various compensation and recognition mechanisms. III. CONCEPTUAL FRAMEWORK Figure 4. Conceptual Framework The conceptual framework, illustrated in Figure 4, anchors this study within the spectrum of digital change defined by Verhoef et al. (2021). The research specifically focuses on "digitalization"—leveraging digital platforms to enhance customer value— acknowledging that while the firm has achieved basic digitization, it is not yet prepared for comprehensive digital transformation. To evaluate this transitional capacity, the study applies Weiner’s (2009) theory of organizational readiness, examining the distinct constructs of change valence and change efficacy as they are influenced by internal contextual factors. The analytical goal is to systematically identify organizational barriers inhibiting the implementation of e-commerce and social media. Following the diagnosis of these challenges through the readiness lens, the study employs Galbraith's Star Model to structure the subsequent organizational design. This approach ensures that the developed initiatives are not merely technical solutions, but are strategically aligned to resolve the specific readiness gaps identified within CV XYZ. IV. RESEARCH METHODOLOGY A. Research Design This chapter delineates the methodological strategies employed for data collection, analysis, and interpretation, as visually summarized in the research design framework (Figure 5). The process commences with the identification and valuation of the critical business issue to establish the study's significance. Subsequently, a comprehensive literature review is conducted to synthesize relevant theories, which serves as the foundation for the study's conceptual framework. Guided by this framework, the study adopts a qualitative methodology utilizing in-depth interviews with key stakeholders to gather primary data. The collected data undergoes thematic analysis to assess organizational readiness for digitalization. This analytical process is iterative; should the initial analysis fail to yield distinct general themes, the data collection phase is repeated until theoretical saturation is achieved, thereby ensuring the validity of the proposed strategic initiatives. International Journal of Current Science Research and Review ISSN: 2581-8341 Volume 08 Issue 12 December 2025 DOI: 10.47191/ijcsrr/V8-i12-28, Impact Factor: 8.048 IJCSRR @ 2025 www.ijcsrr.org 6180 *Corresponding Author: Jansen Liu Volume 08 Issue 12 December 2025 Available at: www.ijcsrr.org Page No. 6176-6187 Figure 5. Research Design Framework Finally, from the results based on the analysis of the in-depth interview, focus group discussion was conducted to assess factors regarding organization design to support the implementation of digitalization in CV XYZ. The goal of focus group discussion was to gather feedback and knowledge regarding the implementation initiatives of digitalization in CV XYZ based on the STAR model framework. From that feedback, the researcher could develop recommendations from those insights. B. Data Collection Method This study employs a qualitative methodology utilizing semi-structured interviews and Focus Group Discussions (FGDs) to gather primary data. As described by Longhurst (2009), this approach balances predetermined inquiry with conversational flexibility, allowing for the comprehensive exploration of complex behavioral and experiential nuances. Participants are selected from four distinct organizational roles—owner, accounting, shop staff, and warehouse staff—to ensure the data reflects diverse operational environments, ranging from administrative offices to frontline retail locations. The determination of sample size is grounded in the concept of "theme saturation," which prioritizes the identification of common thematic patterns over exhaustive conceptual depth. Given the organization's small, homogeneous population of 15 employees, this research targets a sample size of eight participants. This aligns with empirical evidence from Guest et al. (2006) and Hagaman & Wutich (2017), who posit that for cohesive groups sharing a common context, significant metathemes can be identified with as few as six to sixteen interviews. Consequently, the study proceeds with an initial cohort of eight interviewees selected to represent all functional positions within CV XYZ. However, the research design remains iterative; should the analysis fail to yield a general theme or reach saturation within this sample, the protocol allows for the recruitment of additional participants until data redundancy is established. International Journal of Current Science Research and Review ISSN: 2581-8341 Volume 08 Issue 12 December 2025 DOI: 10.47191/ijcsrr/V8-i12-28, Impact Factor: 8.048 IJCSRR @ 2025 www.ijcsrr.org 6181 *Corresponding Author: Jansen Liu Volume 08 Issue 12 December 2025 Available at: www.ijcsrr.org Page No. 6176-6187 Table 1. Interview Topics and Questions Sr. No. Questions Organizational Context Can you explain the culture of the organization in the context of learning or applying something new? Can you explain your past experience in the context of using digital platform? Can you explain the current organization structure and its impact? Can you explain the current organization resource and assets and its effect to your job? Can you explain the current leadership situation in CV XYZ? Change Valence (Change Commitment) Do you feel that digitalization is important to do in CV XYZ? Do you feel that digitalization can bring bigger benefits to CV XYZ? Do you believe that digitalization will make things better? How committed are you when you must implement digitalization? Do you want to implement digitalization? Change Efficacy How long do you think that it will take to implement digitalization in CV XYZ? What will it take to implement digitalization change effectively? Do you think that we have the equipment to implement digitalization effectively? Do you think that we have the skills and expertise to implement digitalization effectively? Do you think that we have the time to implement digitalization effectively? The questions are used as a guidance when doing semi-structured interviews. However, more questions can be asked to explore more insights based on the interviewees' answers. The questions are develop based on a measure called Organizational Readiness for Implementing Change (ORIC) by Shea et al. (2014). There are some adjustments to fit the organization's situation and context. From the analysis of organizational readiness based on the in-depth interview, an initial initiative was made to tackle challenges. The initiative itself should be tested once more before developing the final initiative by doing FGD. Focus groups have been shown to be an effective way to obtain a diverse range of information and may be used to gather information in a social context (Massey, 2011). The objective is to reach redundancy or theoretical saturation, which means no new insights are being presented (Krueger et al., 2015). There would be 2 focus groups with 3 members each ranging from each department since CV XYZ was a small organization. The objective is not reaching consensus or agreement, but instead discovering valuable insight such as experiences and opinions (Krueger et al., 2015). Therefore, participants would be asked about their opinions about the initiatives made for implementing digitalization in CV XYZ. The FGD topics and questions could be seen in Table 2. International Journal of Current Science Research and Review ISSN: 2581-8341 Volume 08 Issue 12 December 2025 DOI: 10.47191/ijcsrr/V8-i12-28, Impact Factor: 8.048 IJCSRR @ 2025 www.ijcsrr.org 6182 *Corresponding Author: Jansen Liu Volume 08 Issue 12 December 2025 Available at: www.ijcsrr.org Page No. 6176-6187 Table 2. FGD Topics and Questions Sr. No. Questions Strategy Does this strategic direction give us a clear advantage against our competitors? Is the vision of the digitalization program clear, compelling, and inspiring to you? How could we make it resonate more strongly with every employee? Structure What are your thoughts the new functional structure? What are the potential benefits and challenges of implementing this in our current organizational chart? Do you foresee any potential conflicts or communication bottlenecks between these new proposed structures and our existing teams and departments? How can we ensure smooth collaboration? Process Looking at the proposed process changes, which one do you believe would have the most significant positive impact on your efficiency and daily work? Why? What are the biggest barriers to adopt these new processes and digital tools? How can we make the transition smoother? Rewards How effective do you think these rewards would be in motivating employees to learn new skills and contribute to digital initiatives? People Does the proposed training plan address the most critical digital skill gaps you see in the organization right now? Are there any important areas it overlooks? What are your thoughts on the training program? How can we ensure it truly helps in developing our internal talent? C. Data Analysis Method This research employs a thematic analysis approach to interpret qualitative data gathered from Focus Group Discussions (FGDs). As defined by Lester et al. (2020), this method utilizes a nonlinear, iterative process to generate descriptive statements that address the research questions. The analytical procedure begins with data preparation, specifically the verbatim transcription of all audio recordings. This ensures an accurate record of the conversation, allowing for initial memoing and familiarization with the data prior to formal coding. The analysis follows a systematic coding strategy to synthesize the data. A multi-stage process is utilized, beginning with "open coding" to assign descriptive meaning to specific phrases, followed by aggregating these codes into broader categories and themes. This inductive process is essential for identifying patterns related to the organization's readiness for digitalization. Consequently, the emerging themes are designed to support the development of concrete initiatives for implementing e-commerce and social media at CV XYZ. To structure the findings, the study integrates a deductive analysis guided by Galbraith’s Star Model. While the initial coding is data-driven, the synthesis maps these codes against the model's five core components: Strategy, Structure, Processes, Rewards, and People. This hybrid approach ensures that the interpretation remains theoretically grounded and directly aligned with the research framework, facilitating a critical assessment of the organization’s digital transformation potential. V. FINDINGS AND DISCUSSION A. In-Depth Interview After the in-depth interview of 1 owner and 7 employees in CV XYZ, a coding phase and thematic analysis had been conducted. The transcripts were coded and codes were categorized into themes. The themes followed the topics that were discussed earlier. The result of the analysis can be seen in Table 3. From the analysis, the context of the organization was clearly defined. For example, leadership situation, culture, experiences, and structure of the organization. On the other hand, change valence and commitment were also discovered thus giving the current level of organizational readiness to change in the context of digitalization. There were challenges discovered during the analysis and could be a solid foundation for proposing business solutions afterwards International Journal of Current Science Research and Review ISSN: 2581-8341 Volume 08 Issue 12 December 2025 DOI: 10.47191/ijcsrr/V8-i12-28, Impact Factor: 8.048 IJCSRR @ 2025 www.ijcsrr.org 6183 *Corresponding Author: Jansen Liu Volume 08 Issue 12 December 2025 Available at: www.ijcsrr.org Page No. 6176-6187 Table 3. Thematic Analysis of In-Depth Interview Sr. No. Themes Codes Some Quoted Segments1 Culture Employees and owner usually share knowledge only about product, but no digital knowledge sharing culture Share product knowledge between employees; Giving input to owner about product "Everyday we share information about products or customers" "Employees sometimes give feedback about new product to owner" Past Experience in Digital Tools/Platform The employees have been using simple digital tools but no experience in using more complex tools (e.g. phone for messaging customers, computer for making invoice, printer for printing order) Use computer for making invoice and printing; Can use handphone for daily uses "We use phone for promoting products via WhatsApp to customers" "We print orders from customers with computer and printer" Digital tools can make work more effective Making invoice with computer can speed up work compared to before using it; Employees don't have to remember all products' name and price by using computer "If we use printer and phone, we can just print the order, check the ordered goods and be simpler" "By using system, staffs can know the name of the product and the price" Organization Structure There are some informal departments inside the sales team that divide some people for a same type of product Employees divided according to product type; Some employees have more knowledge about certain product type "One type of product is being handled by some staffs" "More experienced employees handle more complex product type like spare part, but new employees handle simpler one like size tag" No clear assignation of roles and responsibility, therefore employees can blame each other Employees can blame each other; No responsibilities assignation of job "Sometimes employees can blame each other" "We don't know who responsible for what" Leadership Autocratic leadership where the owner decides every decision making and only give instructions to employees Employees wait for instructions from boss; Owner give instructions to employees "We are given instructions to do some jobs" "Employees just follow our (owner) instructions" Change Valence (Change Commitment) There are perceptions that digitalization is required nowadays Digitalized system can reduce fraud; Online channel can expand the market; Customers can know the catalogue "If we use digitalized system for checking products, no one will do fraud and can be safer" "By using online channel, we could grab more areas, if we only operate like this, we only operate in Bandung" "If we add product to Shopee or Tokopedia, people from far away can buy right away" International Journal of Current Science Research and Review ISSN: 2581-8341 Volume 08 Issue 12 December 2025 DOI: 10.47191/ijcsrr/V8-i12-28, Impact Factor: 8.048 IJCSRR @ 2025 www.ijcsrr.org 6184 *Corresponding Author: Jansen Liu Volume 08 Issue 12 December 2025 Available at: www.ijcsrr.org Page No. 6176-6187 Sr. No. Themes Codes Some Quoted Segments1 Employees are committed to learn new skills for digitalization Learning new skills are needed; Have to adapt with the current digital world "Nowadays it is important because people are using online channels" "We have to commit to learn new things" Change Valence Not all employees are trained and familiar with digital skills Not all employees familiar computer; Employees don't have experience with ecommerce "Some employees are familiar with tools like computer, but other employees are not familiar" "Not all employees use computer or phone for daily work" "I don't understand how to use Shopee for online selling" Training for digital skills takes time and a lot of effort Training needs time; Learning should be done step-by-step "Training will take time because not everyone is familiar with social media or the process of online selling" "Learning can start step-by-step" 1All quoted segments were translated to English from the informants' original Indonesian words The thematic analysis identifies high change valence as the primary enabler for CV XYZ's digital transformation. Stakeholders perceive digitalization as a strategic imperative for market expansion and fraud mitigation, rather than a vague concept. This strong motivation is reinforced by a collaborative organizational culture characterized by open communication and existing proficiency with basic administrative software. Consequently, the workforce’s positive association between digital tools and operational efficiency provides a foundational baseline for adopting more complex systems. However, significant structural and leadership barriers threaten the initiative's success. The current leadership style is characterized as autocratic and centralized, which inhibits the employee empowerment and adaptability required for digital agility. This is compounded by an undefined organizational structure lacking clear roles and responsibilities, creating a risk of internal conflict and low accountability. Furthermore, the organization lacks a distinct digital culture; the absence of mechanisms for digital knowledge transfer or external training suggests the firm is currently ill-equipped to support a learning-based transition. Finally, the findings reveal a critical discrepancy between change commitment and change efficacy. While the willingness to adopt new technologies is high, the workforce lacks the specific technical competencies required for e-commerce and social media management. The analysis indicates that without a structured, incremental training intervention to bridge this skills gap, the project faces a high risk of stagnation due to workforce capability limitations rather than a lack of motivation. B. Focus Groups Discussion After doing in-depth interview, focus groups were conducted to assess factors in organization design that can support of digitalization. The focus groups were conducted in 2 groups, consisting of 3 members per group. Therefore, there were 6 members in total for the focus groups, consisting of the owner and employees from various positions. The thematic analysis of the focus groups could be seen in Table 4.