Fit of technical and socio subsystems in lean context, and its impact on operational performance indicators1

Dávid Losonci (david.losonci@uni-corvinus.hu) Corvinus University of Budapest, Department of Logistics and Supply Chain Management Fővám tér 8., Budapest, H-1093

Abstract
This study following socio-technical approach of lean production seeks to clarify (1) how the use of lean production practices influences socio subsystem, and (2) how different matches of work organization and production organization (i.e., production systems) influence operational performances. According to the results, implementation of lean production practices enhances the extension of HRM best practices. However, this association is quite weak. Considering (2) the study presents clear evidences that ‘lean’ production organization and ‘formalized’/’empowered’ work organization lead to superior performance. However, their excellence is not unique: same work organizations integrated with process-focus production organization leads to the same operational outcomes. Keywords: lean production, human resource management, operational performance, IMSS

1. Introduction Lean production has become a focal point in operations management research (OM) in the last decades (Slack et al., 2004; Pilkington and Fitzgerald, 2006). The academic interest reflects that organizations have recognized its potential. Many firms implement lean production to enhance competitiveness, but the majority of them reports disappointed results (Anand et al., 2009; LEI 2004). One of the challenges companies face is to create the supporting infrastructure, using this term in a broad sense (Koenigsaecker, 2005; Womack and Jones, 2003). A major concern is to build social subsystem or work organization that fits lean production. The organizational logic of lean production leads to fundamental changes in human resources (HR) policy as well (MacDuffie, 1995; Liker, 2004; Sugimori et al., 1977). The set of human resource management (HRM) practices (e.g., team work, quality circles, problem solving groups, job rotation etc.) associated with lean production is well documented, at least conceptually. However, the use of and the operational performance effects of these HRM practices are rarely in focus of empirical works (Forza, 1996; Macduffie, 1995; Ahmad et al., 2003), or the findings are ambiguous. In contrast, quality management’s knowledge is more valid on the potential synergy between HR and TQM (Bayo-Moriones and Merino-Díaz de Cerio, 2001; Jiménez-Jiménez and Martínez-Costa, 2009). In spite of its importance in OM, even today, lacks a clear picture of lean production’s social side. This topic is also deemphasized in human resource management. This study follows multidisciplinary research direction, highlighted by Ahmad and Schroeder (2003) and Birdi et al. (2008), and using socio-technical approach of lean production aims to answer: (1)
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The participation in the conference is supported by TÁMOP-4.2.1/B-09/01/KMR-2010-0005

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In other words..1. In this study the presence and the extent of lean production practices lead to different production organizations.3.whether technical and human subsystems of lean production evolve together. After the introduction the paper is organized as follows. and Table 1) Operationalization and classification of production and work organizations (Section 4. Similarly. From OM. related to socio side. Section 5 contains the results. lean Work organizations: traditional.mix flexibility . is determined by production elements. theoretically technical and socio subsystems evolve integrated.2.delivery speed .e.unit manufacturing cost . Literature review and hypotheses 2. and especially from lean production point of view.product quality and reliability . and 2. Figure 1 – Structure of the study The production and work organization are integrated in every production system. the presence and the extent of HR practices lead to different work organizations. process-focus.product customization ability . formalized.2. empowered Emphasis General Production system Technical subsystem: Production elements Patterns of practices in lean context Lean production system Technical subsystem: Lean production practices Patterns of production and work organizations Lean production system Production organizations: Based on the extent of lean production elements Operational impact of fit of production and work organization in lean context Socio subsystem: Human resource elements Socio subsystem: Best practices in human resource management Work organizations: Based on the extent of best practices in human resource management . changes in the production organization will be followed by changes in the work organization. (2) the second subsystem.manufacturing lead time . and hypotheses are also formulated here. leading to a work organization that fits lean 2 .) Hypothesis 1 in Section 5. in Section 3 the database is described. So. In this view (lean) production system consists of two subsystems: (1) the first subsystem.1.inventory turnover Research steps Defining elements in literature review (Section 2. and each of them represents a consistent set of related practices. different production systems) influence operational performance indicators. related to technical side. Hypothesis 2 in Section 5. and in Section 4 lean production’s technical and social subsystems are operationalized.volumen flexibility . implementing and deepening lean production practices lead to lean production organization. Theoretical framework Empirical work Fit of production and work organization in lean context Lean production system Production organizations: beginner.2. and paper is closed with conclusions and limitations (Section 6). is determined by HR practices and called work organization.1. so it is called production organization. These changes are followed by the intensification and extension of HRM practices. and 4.labor productibvity . and (2) how different matches of work organization and production organization (i.manufacturing conformance . (This structure with related research steps is summarized in Figure 1). Then. Socio-technical view of (lean) production system The study is based on the concept of ‘functional fit’ and considers the socio-technical approach of lean production. Section 2 introduces the theoretical framework. 2.

and job enrichment. OM literature suggests that a well defined set of HRM practices (high commitment work practices. reviewing the literature a number of concerns reveal: the number of empirical studies confirming this relationship is limited. these firms use HRM best practices to a greater extent. As noted. and findings are ambiguous. Forza (1996) finds that lean plants compared to traditional ones use more problem solving teams. (2) HRM alone can explain performance in modern manufacturing setting. Even studies supporting this view do not agree what HRM practices belong to lean production socio subsystem. (1996) emphasize that work organization in high performing automotive companies is in line with lean principles.3). However. Firms enhancing lean production organization use HRM best practices to a greater extent. He concludes that lean producers apply high-commitment HR practices and that firms with this integrated approach consistently outperform traditional mass producers. Based on the theoretical framework it is assumed that firms enhancing lean production organization will alter their work organization to fit that. these changes results in improved operational performance. Shah and Ward (2003) also support that HR practices (as HR ‘bundle’) contribute to operational performance in lean production. and (3) production practices result in performance improvement. (2004) presents that integrated manufacturing is positively associated with empowerment. Human resource practices in modern manufacturing systems MacDuffie (1995) is the first author who empirically supports the socio-technical approach of lean production. take employees’ suggestions more seriously. Wood (2000) explains that Japanese companies are more advanced in applying high commitment practices due to their JIT efforts. team work and skilled workforce. The studies argue differently: (1) HRM integrated with production contributes to operational performance. Oliver et al. Altogether. firms relying more heavily on lean production elements) leads to operational excellence.production and can be characterized by empowerment. 2005). but the HR authors usually present that HR practices result in significant performance improvements. The socio-technical approach of lean production also draws attention to the influence of HR practices regarding operational excellence. have more flexible workers and rely on quality feedback. 2. In the following paragraphs the study reviews HRM practices employed in lean environment (2.e. Patterson at el. Similar arguments pervade HRM literature (Wall and Wood. 2. According to Power and Sohal (2000) JIT firms are more focused on particular HRM management policies and see the human factors as critical to the success.. and Table 1) and it also touches upon the performance effects of lean production system (2.3. skill enhancement. Other authors do not find convincing differences between lean and traditional manufacturers’ HR practices. But there is no difference in supervisors’ role and empowerment between the groups. In other words.2. MacDuffie’s (1995) findings support that in lean production fit between socio and technical subsystem leads to operational excellence.2. Impact of human resource practices on operational performance in lean production In mainstream OM literature it is evident that lean production (i. Oliver et al. 3 . best practices in HRM) fit lean production (Table 1). Hypothesis 1. (1994) compares world class and ‘average’ automotive parts suppliers and reports no difference in work system and human resource management.

(1997) could not find significant relationship between JIT practices. (1996) Birdi etl al. and manufacturing performance. but according to them the relationship between HR practices and performance is not so clear in lean companies (e. The paper aims to analyze how production system impact operational performance. (1996) see interdependence between HR and production practices. (2004) also highlights that integrated manufacturing practices do not show relationship with company performance. human resource management practices. (1994) Oliver et al. (2008) MacDuffie (1995) Cua et al. suggestion system) Extensive training Compensation Selective of hiring X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Lean production practices (internal focused) Setup time reduction Reduction in lead time Inventory reduction Preventive maintenance Schedule flexibility Layout (cellular) Pull system. (1991) Shah and Ward (2003) Patterson et al. TQM. AMT) JIT. JIT. crossfunctional) Empowerment (decentralization of decision making. (2004) Ahmad et al. for example Oliver et al. SPC. and operational performance measures Huber and Brown (1991) de Menezes et al. alone. TPM Lean Lean Lean Lean Lean Lean X X X X X X Human resource management practices Reduces status distinction Employment security Job rotation Flexible workforce Extensive communication Teamwork (functional.g. outperform other manufacturers. (2003) Oliver et al. The study hypothesize that firms enhancing lean production organization and work organization.. Finally. (1997) Sources Ahmed et al. teamwork does not impact performance). JIT. kanban Quality management (TQM. In their work infrastructure by itself explains performance.Table 1 – Modern production management – manufacturing practices. (2010) Power and Sohal (2000) Sakakibara et al. Even those that have lean production 4 Lean X X X X X X JIT JIT JIT JIT Current study Lewis (2000) . group problem solving. Birdi et al. continuous improvement) AMT (computer based technology) X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Other authors argue that HR practices bear the real opportunity of improvements in integrated production systems. Sakakibara et al. IMS (TQM. (2001) Manufacturing programs Cellular man. AMT) IMS (TQM. alone the extent of empowerment predicts it. that best fits it. (2008) reaches to a similar conclusion: empowerment and training affect productivity and none of the operational practices show significant effect. Patterson et al.

their implementation and resulting performances in operations and related areas. trailers and semi-trailers office. This study grouped producers on the basis of their internal and technical lean tools. Shah and Ward. 2003) suggest that companies with more than 100 employees are more likely to implement lean production practices. television and communication equipment motor vehicles. Lean production practices and classification of production organizations In many cases the lean tool set also consists of practices managing external relations (customer. or companies with the most advanced work organization but less advanced lean production organization. (2001). Operationalization of variables and classification procedures 4. and make to order). Previous researches (Cua et al. According to this condition the paper only takes into consideration plants with more than 100 employees.1. The survey International Manufacturing Strategy Survey (IMSS) data are used for analyses. 2001. Process types.organization with less advanced work organization.) Hypothesis 2. batch production. supplier). Hill (1991) 421 Final sample fabricated metal products radio. Before testing hypotheses a homogenous set of firms was created. 1979. Shah and Ward (2003) 583 2. Number of employees. 1996. IMSS-V is a cross-sectional data bank and extends to 719 valid observations from 20 countries from 2009/2010.. Producers that combine lean production organization with the most advanced form of work organization (empowered) outperform other manufacturers. Plants based on two conditions were excluded from the original sample.g. Hill. accounting and computing machinery machinery and equipment electrical machinery and apparatus other transport equipment medical. the portion of make to order is less than 35 percent). Although lean production can be used in different production processes (e. mass production. Forza. but to avoid confusion caused by differences in their appropriate work organizations (Hayes and Wheelwright. applying all internal technical elements proposed by Shah 5 Total . This wider focus of production practices is also present in HR-related empirical works. 1991) the study is limited to those plants where the batch and mass production is dominant (i. IMSS is a global network of researchers with the objective to study international manufacturing strategies. 3. watches and clocks Industries Missing 23 N 123 87 15 62 29 25 34 23 398 Figure 2 – The original and the final sample 4. precision and optical instruments.Condition (number of employees) Cua et al. (The research is limited to study companies where the use of lean production practices is relevant. Forza (1996). Original sample 753 1. Condition (process types) Hayes and Whellwright (1979)..e. Altogether 421 plants remained in the final (Figure 2).. and product development.

91 (0.86 3. job rotation etc.810) production (e.g.489) Productive maintenance -0. Similarly to production practices many of the questions were single respond item (see Table 3).789) (1. 1998.695) improvement and control (e.and Ward (2007) (Table 2). (6) compensation.062) Flow 0.g.40 3.99171 0. undertaking programs for the improvement 2. quality circles. summarizing practices in researches following the socio-technical approach of lean production. the study classifies work organization of manufacturing firms based on the following HRM practices: (1) reduced status distinction (hierarchy). Means of three-cluster solution are presented in Table 2. The second group of firms is more conscious: process-oriented practices are more emphasized than those serving quality (process stability). ‘Lean’ group is highly committed in every aspect and rate quality and maintenance practices as the most important ones.890) (0. So. OM papers present a comprehensive list of HRM practices (e. the ‘process-focus’ (PF).938) (1.25 2. (3) flexible work force. and ‘empowered’ (L) 6 .828) (0.). even these sources reveal that these HRM practices mostly overlap with best practices in HRM (Pfeffer.) that fit lean principles. the ‘formalized’ (F). Three types of production organization is defined. It also should be noted that many of the questions were single respond item.90858 0. etc. confirms that usually HRM best practices are related to lean productions’ work organization.35916 time. and ‘lean’ (L) firms. reducing batches.764) of your equipment productivity (e. Table 1. The smooth pattern and low intensity of lean practices refers to the fact that ‘beginner’ companies do not assign importance to the implementation.38524 plant.58 (0. reorganize plant-within-a0. Legge.32490 restructuring manufacturing processes and 2. Means of three-cluster solution are presented in Table 5. The three groups of firms are the ‘traditional’ (T). The extent of process-oriented practices is at ‘lean’ companies’ level.).26 4. The vast majority of these papers are either theoretically or non-HR-focused empirical works.1. Number of employees (business unit) 1036 (2550) 1130 (2179) 3851 (1213) *Business units with more than 20000 employees are excluded. It seems that basics of lean concept are embedded in manufacturing firms’ daily operations.23 (0.g. However. problem solving groups. After standardization of variables K-means cluster method was chosen to classify. also known as high performance work systems (HPWS) model (earlier ‘high-commitment’).15413 -1. The high proportions of partially or fully involved firms reveal that lean concept is widely spread in batch and process context. (7) and extensive training.36 3. Three distinct forms of work organization are defined.90822 programs. The classification procedure is similar to the previous section (4.25 3. Each question was asked on a 1 to 5 Likert scale. 6 projects.26 4. quality improvement Types of production organization ProcessBeginner Lean focus (N=107) (N=153) (N=160) undertaking programs for quality 2.90 (0. (4) teamwork.495) -0.). -0. setup (0.88387 0. Table 2 –Types of production organizations (mean (standard deviation) standardized value) Variables in the questionnaire Lean production practices Controlled processes. HRM practices related to lean production and classification of work organizations As noted in the previous sections. L – Likert scale from 1 (no effort in the last three years) to 5 (high effort in the last three years) 4. etc.g.2. It is assumed that companies starting their lean journey had to make steps in these listed action programs that are central to lean production.085) streamlining (e.g.. cellular layout.75 Pull production and low layout to obtain process focus and 3.29670 Productive Maintenance programs).24139 setup -0. Total (0. (5) empowerment (decentralization of decision making).949) (0.06963 0. TQM (0. etc.93091 undertaking actions to implement pull 2.). (2) job rotation. 2006). The three groups of firms are the ‘beginner’ (B). using kanban systems. -0.

39 9.58) (11.42 23.99 (0.53 (0.94 (25.23 30.40019 -0.51) 0.944) 2.78718 -. 7 . deep involvement).01) (13.01132 -0.04102 -0.85) 2.17569 1.81) 2.69 (0. group problem solving.59924 -0.16 (3.g.872) 0.872) 0.03163 23.51) (16.42486 -0. Producers following the ‘empowered’ model utilize their high proportion of flexible workforce.02 39.48) (33.60) (37.40019 -0.90 22.13) 3. L2 – Likert scale from 1 (no involvement) to 5 (continuous.55 3.44191 2. and also emphasize cross-functional team work.37 How many hours of training per year are given to (29.62217 0.73 (1.146) 6. L4 – Likert scale from 1 (no effort in the last three years) to 5 (high effort in the last three years) 4.75) 3.firms.17998 64.37818 1316 (2653) 2539 (3696) 978 (2250) Number of employess (business unit)* *Business units with more than 20000 employees are excluded.83 (0. The significant positive impact of lean production on indicators listed in Table 4 is supported by empirical works.63) (28.77) (24.51) 0. execution and controll). ‘traditional’.87 (1.878) (0.43) Extensive training the regular workforce? (hours per employees) 0.53 (30. Table 5 reveals that almost half of the manufacturing firms.59332 -0.).40737 4.2. Table 3 – Types of work organization (mean (standard deviation) standardized value) HR practices Variables in the questionnaire How many organizational levels do you have (from plant manager to blue collar wokers)? Reduced status distinction How many employees are under the responsibility of one of your first line supervisors? (on average.19521 % of compensation) 1. employ practices to empower workforce.32) (25.16510 31.062) 0.06080 1.63662 2.76 (24. improvement teams) Types of work organization ‘Empowered’ ‘Formalized’ ‘Traditional’ (N=154) (N= 70) (N=197) 3. number of employees in fabrication) How many employees are under the responsibility of one of your first line supervisors? (on average.80 18. number of employees in assembly) Job rotation Flexible workforce How frequenlty do your production workers rotate between jobs or tasks? L1 How many of your production workers do you consider as being multi-skilled? (% of the production workers) What proportion of your total workforce works in teams? (in functional team %) What proportion of your total workforce works in teams? (in cross-functional team %) To what extent are employees involved in product or process improvement initiatives? L2 Teamwork (functional. autonomous teams) L4 Implementing continuous improvement programs trough systematic initiatives (e. training. suggestion system) To what extent is your workforce autonomous in performing tasks? L3 Increasing the level of delegation and knowledge of workforce (e.846) -0.02204 -0.02594 0.19) 0. especially in empowerment. planning.81 54. kaizen.02891 0.41 (25.05985 3.60431 -0.77) employees’ compensation is based on incentives?( (32.91 (0.41 18.78) 3.. training and job rotation.00 (0.16510 2.26) (24.02) -0.13) 0.3.02) (15.63814 4.40 (0.30 (0.40 30.39 (2. ‘Formalized’ firms highlights training. functional teamwork and compensation in work organization.g.858) (0. L3 – Likert scale from 1 (no autonomy.78 (0. cross-functional) Empowerment (decentralization of decision making.28334 -0.08) -0.917) 0. Operationalization of operational performance measures The study only considers a selected set of operational performance indicators..05) (68. apply HRM best practices at a moderate level.03777 0.91 (. only execution) to 5 high autonomy.61005 -0.38411 31.863) (0. This group lags behind the two other types.66 3.06 (11.09708 -0.27081 60. empowerment.24655 -.43) Compensation -0.02594 0.00923 -0.00 23. L1 – Likert scale from 1 (never) to 5 (very frequently).17704 35.83) 0.19709 2.16) (26.13 71.69238 0.71 72. Each question was asked on a 1 to 5 Likert scale (see Section 5.25319 24.56 (23.43 3.49) (26. what proportion of your shop-floor 9.93 (0.848) 0.39 On average.74 22.

7%) (100%) ‘Traditional’ 77 (72%) (39. At the other extreme end firms work with ‘beginner’ and ‘traditional’ models..g.0%) (34.1%) (43. McKone et al. However.3%) 24 (15. (1995). Results 5.1%) 153 (36.1.8%) 66 (43. applying lean production practices will enhance the extension of HRM practices.222) and contingency-coefficient (0. the ‘formalized’ model also presents outstanding results in some HR practices (e. can have 8 . Hypothesis 1 is supported. volume flexibility Delivery speed (flexibility) Manufacturing costs Lead time (flexibility) Reduced labor content Inventory turnover Variables in questionnaire Manufacturing conformance Product quality and reliability Product customization ability Volume flexibility Mix flexibility Delivery speed Unit manufacturing cost Manufacturing lead time Labor productivity Inventory turnover Sources: Crawford et al. Flynn et al. Goodman and Kruskal tau. Cua et al. (1996). so its fit is also conceivable. There is significant association between production and work organization.4%) (100%) ‘Formalized’ 10 (9. (2001) 5.5%) (51.284) is significant at 0. Sakakibara et al. and almost in third of ‘lean’ producers work is also organized traditionally. (Pearson Chi-Square (41.) In other words. The hypothesis indicates that the more companies emphasize lean production practices the closer they get to the ‘empowered’ setting.299) are both significant (at 0. training. compensation. not included in the study.5%) 160 (100%) (38. so other variables. (2001).4%) 70 (16.1%) (35%) 51 (33. MacDuffie et al.3%) (25.1%) 69 (43. Fit of production and work organization (Hypothesis 1) Hypothesis 1 assumes that firm’s production (technical) organization and work (socio) organization evolve together. The proportion of uncertainty in work organization that is explained by production organization is between 5 to 7 percent (considering the value of lambda.Table 4 – Operational performance indicators in lean production researches Operational performance indicators in the literature Product quality Flexibility (options) Reducing batch size. Table 5 reveals that the ‘traditional’ approach of work organization is very dominant in every type of production organization. These are rather low values. Huson and Dhanajay Nanda (1995).9%) (100%) Total 107 (100%) (25.05 levels) and indicate that the association is quite weak. altogether nine production systems are defined. The ‘empowered’ work organization is mostly embedded in those firms’ production systems that apply several or all lean production practices. Table 5 – Matching production organization and work organization: nine types of production systems Work organization Production organization ‘Beginner’ ‘Process-focus’ ‘Lean’ Total ‘Empowered’ 20 (18. (1988). ‘Beginner’ production organization is widely (more than 70%) integrated with this form.05 levels.4%) 420 Statistically speaking. The ‘formalized’ form follows the reverse direction than the ‘beginner’: enhancing lean production practices (does not) favors (‘beginner’) ‘formalized’ model. Cramer V (0.3%) 36 (23.1%) 67 (41. At one extreme end of the subsystems’ matches is the combination of ‘lean’ production organization and ‘empowered’ work organization.7%) (13.9%) (43. Based on the three distinct forms of production and work organization respectively.1%) 153 (100%) (36. (1997).9%) 197 (46. teamwork). Its share is slightly over 40% in these contexts.3%) (14. and uncertainty coefficient).

n.s. 0. Table 7. (5) much better 3. n. n.s.55 3.s. n.s.s.considerable impact.64 3. n. (LT) (PFT) Sign. 0.s. n. n. n.28 3.73 3. 0. 0.s. 0. As noted previously.s.s. ANOVA analysis was applied to assess the impact of production systems on operational performance.s. not significant n. n.s.s.84 3.s.s.040 significant difference at 0. n.68 3.s. 0.s.s.33 Likert scale – relative to our main competitor. n. n.55 3.47 3. This model does not differ from ‘process-focus’-‘formalized’ form. n. n. our perfomance is (1) much worse.79 3. ‘process -focus’ and ‘lean’). (LE) (PFF) Sign.63 3.s. 0. n.39 3.03 3. n.06 4. n.00 3.s. (3) equal. n.s.084 n.s.29 3.060 n.s. 0. ’beginner’ and ’lean’) does not lead to more significant results.s.s.39 4. this fact together with the relations of production systems depicted in Figure 3 (all arrows are directed to ‘lean’) suggest that ‘lean’9 .085 n.s.85 3. Fit of production and work organization (Hypothesis 2) Hypothesis 2 assumes that firms with ‘lean’ production organization and ‘empowered’ work organization outperform other production systems.032 0. n.74 4.s. (PFT) (PFE) n.33 3.s.63 3. 0.s.s.41 3. This form is not different from ‘process -focus’‘formalized’ production system.56 3.s.25 3.s.61 3.020 n.s. n. (LF) (PFT) Sign.s.s. n.045 n.68 3.s. n. Even. n.69 3.010 0. n. n.42 3.s.s.s.007 0.s. In statistical terms one can expect the same results from ‘process-focus’-‘formalized’ production system. ‘lean’-‘traditional’ production system only lags behind them in labor productivity and product customization ability. n. n. n. 0.38 3. n. (LT) (LE) Sign.s. ‘Lean’ production organization is effective both with ‘empowered’ and ‘formalized’ work organization.011 0. n. n. the study is limited to companies where lean production practices are relevant (i. ‘Process-focus’-‘empowered’ has only to improve few indicators: product quality and reliability (to reach ‘lean’ and ‘formalized’ and ‘lean’ and ‘empowered’).13 3.s. n.s.s. n. Our results (Table 6. Comparing types of production organization in pairs (’beginner’ and ’formalized’.s.014 n.042 0.062 0. n.054 n.s.s.s.s. n.33 Table 7 – Significant differences in operational performance indicators relative to main competitors Variables in questionnaire Manufacturing conformance Product quality and reliability Product customization ability Volume flexibility Mix flexibility Delivery speed Unit manufacturing cost Manufacturing lead time Labor productivity Inventory turnover Sign. (LT) (LF) Sign.059 n.41 3. 0. n.91 3. n.s. 0. n. n.67 3.s. n.2.64 3. 0.49 3. Clear performance gap exists if one compares ‘lean’‘formalized’ and ‘lean’-‘empowered’ production systems with production system that employs ‘process-focus’ production and ‘traditional’ work organization.45 3.037 n.s. n. 0. n.s.s. n. 0.081 n.s.s.38 3.s.060 n.s. n.74 3. n.015 0.e. 5. n.23 3.001 0.s.s.20 3. n.05 levels. (LE) (PFE) Sign.s.63 3.50 3. (LE) (PFT) Sign.s.s. n.085 n.s. significant difference at 0. n.67 3.s.s.76 3.64 3. n.05 n.78 3. (LF) (PFE) Sign.48 3.10 levels.s. n.s.013 n.s.74 3. n. n.s.s. n. n.53 3. n. n.003 0.s. n.s. and labor productivity (‘lean’ and ‘formalized’).51 3.54 3.s.61 3.20 3. n.35 3. n.s. n.60 3.s.77 3. and Figure 3) suggest that different production systems (distinct matches of production and work organization) lead to the same superior operational performance.034 0.s. Table 6 – Operational performance indicators relative to main competitors Variables in questionnaire Manufacturing conformance Product quality and reliability Product customization ability Volume flexibility Mix flexibility Delivery speed Unit manufacturing cost Manufacturing lead time Labor productivity Inventory turnover ‘lean’ production and ‘traditional’ work (LT) ‘lean’ production and ‘formalized’ work (LF) ‘lean’ production and ‘empowered’ work (LE) ‘process-focus’ production and ‘traditional’ work (PFT) ‘process-focus’ production and ‘formalized’ work (PFF) ‘process-focus’ production and ‘empowered’ work (PFE) 3. n. n. 0.065 n. (LF) (PFF) Sign.21 3.s.s. n.s.. n. n.s.s.s. Finally.49 3.73 3. (PFF) (PFE) Sign.s.s. n.017 0.

2006)) also can influence HRM practices and the fit between production and HRM (Jayaram. This association suggests that implementation of lean production practices enhances the extension of HRM best practices. The cross-sectional data limit the generalizability of these findings. 1998). and industry (Ahmad and Schroeder. 2011)) and company decisions (e. Contextual factors (e. Furthermore. Further studies should clarify the source of operational performance improvement (HR practices or lean production practices) in distinct production systems. More than one third of firms enhancing lean production practices organize daily operations in traditional way. According to the results. since the database does not cover all aspects neither of lean producers (Shah and Ward.g. ‘traditional’ work organization remains influential in manufacturing firms. Their superior performance cannot be supported by statistical measures. This remarkable proportion raises interesting questions about the performance outcomes of different production systems: how does the match (or mismatch) of production and work organization effect operational indicators? The study presented clear evidences that ‘lean’ production organization and ‘formalized’/’empowered’ work organization lead to superior performance. the association is weak. There are clear limitations to this research. 10 .‘formalized’ and ‘lean’-‘empowered’ production systems perform better than any other types. 2003. economic development. However. it seems reasonable that firms do not strive to achieve these models where the extent use of lean production practices is matched with HRM best practices. In a business environment where product customization ability and labor productivity are not of first priority ‘lean’ production organization matched with ‘traditional’ work organization can also operate effectively.. None of these is considered in the study.g. national culture. However. Operationalization is another limitation. Cagliano et al. ’Lean’ & ’Formalized’ ’Process-focus & ’Formalized’ ’Lean’ & ’Traditonal’ ’Process-focus’ & ’Traditonal’ ’Lean’ & ’Empowered’ ’Process-focus’ & ’Empowered’ Figure 3 – Operational performance indicators relative to main competitors 5.. strategic orientation (Legge. 2003) nor of HRM practices (Pfeffer. Conclusion and limitation The current paper dealt with fit of socio subsystem and technical subsystem in lean production and the impact of their match on operational performance indicators. 1999). the research provided interesting inside into the distribution of work organizations. Matching ‘formalized’ and ‘empowered’ work organization with a production system that utilizes quality and maintenance practices at a moderate level and rely on process related lean practices to a great extent (‘process-focus’ production organization ) leads to the same (‘formalized’) or almost to the same (‘empowered’) operational performance. Concerning fit of subsystems the study revealed significant association between production organization and work organization..

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