A Japanese production concept implemented at Dutch companies

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A Japanese production concept implemented at Dutch

companies

By

Leonie Soares

University of Groningen

Faculty of Management and Organization

Msc International Business & Management

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Abstract

The purpose of this research is to identify how and why the implementation of a production concept differs across companies in the same country. The study is based on existing literature and an empirical research of seven companies. The research showed that different dimensions played a significant role in how and why the implementation of lean production, and specifically kaizen, differs but also is similar across Dutch companies.

Keywords :lean production, transfer production concept, implementation of a production concept

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1. Introduction

Background

Lean production has long been recognized as a key factor in the success of Japanese companies. As a consequence many Western companies have strived to imitate and implement the concept with varying degrees of success. But also the radically changing international business environment (like sharp increases in costs of material, energy and labour, overcapacity of production facilities, increased competition and changing customer values and higher quality requirements) causes Western managers to look for other methods to improve their business.

Lean production in Japanese companies is well documented in the management literature. Due the increasing demand of Western companies wanting to implement this concept, lean production is conceptualised as compromising modules of practices that can be disassembled, summarized in ‘actionable consulting packages and “how to” books’ and transplanted to another context (Saka, 2004).

When an effective production concept is transferred from one national context to another, there is a possibility that the production concept has to be adapted. Researchers have shown that there are various barriers to the transfer success of a production system. They adopted a more integrated understanding of the way a production concept is socially constituted and how this influence the possibility of diffusing production concepts to other national contexts (Abo, 1994, Kostova, 1999).

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this thesis is to reflect the active process of implementing a new Japanese production concept in Dutch companies.

The third contribution of this research is that this research does not only focus on the automobile industry but also on other manufacturing industries.

A production concept is defined in this thesis as organizational practices concerning lean production, specifically the kaizen method, originated from Japan. The thesis investigates how and why the implementation and internalisation of a production concept (kaizen) differs across companies in the Netherlands.

Research question and research objective

The study provides a unique opportunity to examine the introduction and implementation of one tool of lean production, namely the kaizen method, in Dutch companies. The objective of this thesis is to identify, describe, analyse and evaluate if, how and why the implementation and internalisation of lean production, the kaizen method, differs across companies in the Netherlands. The how question in this thesis involves identifying what kind of variation there exists across companies in the Netherlands. Furthermore it says something about the internalisation level of companies implementing a production concept. The why question explores contextual reasons for variation across companies in the Netherlands implementing the kaizen method. According to this the following exploratory research question is developed: How and why does the implementation and internalisation of a production concept differs across companies in the same country?

Unit of analysis

This research will be a qualitative explanatory comparative case study. The study examines how and why the implementation of the kaizen method, and lean in general, from six Dutch companies and one Belgium company differs. All seven firms are manufacturing firms, (except for one company, that is a service company) though manufacturing different things, however they all introduced and implemented lean principles in their organisation. More and more Western companies are implementing lean production in their organization, however successes implementing this new production system vary among companies.

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of tools that organizations can use to implement lean production; one of these tools is kaizen. Kaizen is sometimes also called continuous improvement, for this research it is investigated if, how and why kaizen is used by Dutch companies.

Thesis structure

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Chapter 2 Literature review 7

2. Literature review

2.1 Introduction

This chapter will give insight in the theories, which have been examined during the literature study. In the literature review, core contributions from Japanization and Institutionalist literature are described. Furthermore some models of different authors are described in more detail since some aspects might be used to develop a framework to guide the empirical research.

2.2 Contributions of the existing literature

This thesis focuses on how and why implementation of lean production, in specific kaizen, differs across companies in the same country, the Netherlands. The literature review explores two different perspectives concerning how and why implementation of a production concept (lean production) differs across companies. The how question investigates the kind of variations implementing a production concept across companies, and the why question explores contextual reasons for variation.

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2.2.1 Japanization literature

Within the Japanization literature there are two major perspectives, which could be identified, these are the Labour Process and Lean Production perspective (Saka, 2003, Steward, 1998). These two perspectives are different in the focus; managerial-users vs. labour control (Saka, 2003) and in whether cross-national transfer of Japanese production system is possible and what kind of role the contextual differences play in these kinds of transfers.

Concerning how a production concept is implemented and internalised differs across companies; the Lean Productive perspective is initially optimistic about the transfer success, though they only focus on a successful transfer and imitation (except the research performed by Abo et al, 1994). They admit that adaptations of the transferred production system is sometimes necessary, though according to Becker-Ritterspach (2006) this is merely focused on the ‘transfer-with-secondary-adaptations’ or as ‘functional equivalents’ (Kenney and Florida, 1993, Oliver and Wilkinson, 1988, Mishina, 1998, Adler et al., 1998, Pil and MacDuffie, 1999). However there is research done to what extend an ideal Japanese production system can be transferred to the United States (Womack et al., 1990, Kenney and Florida 1993, Pil and MacDuffie, 1999).

The Labour Process perspective is initially pessimistic about transfer success and notified the importance of continuation of local patterns. Nevertheless both perspectives emphasize that the transfer success or failures varies by different dimensions of production systems (or by the kind of content transferred) and the hybrid or mixed outcomes as a result of transfer processes.

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The Labour Process perspective see firms as actors able to select, change and create their environment to some extent, but this perspective does not pay attention how these companies can shape their environment. According to this perspective transfer difficulties are mainly caused by the contextual difference between the home and host country and by differences in industrial relations and labour control practices. According to Becker-Ritterspach (2006) in this stream there is a strong focus on the context-boundedness of organizational forms and potential difficulties to transfer them to new contexts (e.g. Ackroyd et al., 1988, Dickens and Savage, 1988, Procter and Ackroyd, 1998, Morris et al., 1998). Ackroyd et al. (1988) differentiates between direct Japanization, mediated Japanization and permeated or full Japanization. Direct Japanization refers to setting up Japanese-owned companies, mediated Japanization refers to the indirect process of British firms copying or emulating Japanese practices by adopting aspects of Japanese production techniques and organization in a ‘piecemeal fashion’. And permeated Japanization refers to the wider possibility of Britain replicating institutional patterns of the Japanese economy and society. (Ackroyd et al., 1988)

Concluding it can be stated that this research is focused on the indirect process of Dutch companies copying or emulating Japanese practices, as Ackroyd called “mediated Japanization”. From the Japanization literature it can be suggested that institutional/societal context, sectoral/industrial context, and the organizational context influence the transfer and implementation of a production concept. These different contexts can have an influence on the similarities or differences across Dutch companies. It is assumed that the institutional/societal context cause similarities across the companies, since this is the same for all sampled companies of this research. Furthermore it is assumed that differences across companies may arise due differences in the sectoral/industrial and organizational context.

Selected contributions

1. Lillrank (1995) ‘The Transfer of Management Innovations from Japan’

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Regarding how a production concept is implemented differs across companies Lillrank (1995) makes a distinction between copying and application. The author compares the transfer of management innovations with electric power over long distance. According to him distance is not only geographical but also due to differences in culture, society, history and strategic paradigms. A larger distance can lead to a lost of the original management innovations due to misunderstanding and incomplete information. These losses can be reduced by switching new ideas and practices up to various levels of abstraction and packaged for the transfer process. At the receiving end, the application process starts. This means that the receiver switches down the abstraction to suit the local conditions by the interpretation and reapplication over several learning cycles. According to Lillrank the process of packaging and unpackaging is the key process to understand. (See figure 1)

Figure 1: Transfer of complex systems requires abstraction and application Transfer

Application Abstraction

Copying (Source: Lillrank, 1995, p.974)

Concerning why a production concept is implemented and internalised differently across companies Lillrank helps to explain this by identifying transfer channels of management innovations. The model that he created consists out of three variables these are:

1. Level of abstraction used in the process (high or low)

2. The approach of the actors involved in the process (demand or supply driven)

3. Type of managerial content transferred (management principles, organizational vehicles and management techniques)

Combining the abstraction levels and the approaches of actors, Lillrank developed a general classification of transfer channels for organizational innovations.

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Figure 2: Types of transfer channels for organizational innovations High abstraction Low abstraction Demand Supply driven driven (Source: Lillrank, 1995, p.977)

The level of abstraction is affected by the complexity of the system but also to the number and types of social interfaces. Tools with rather clear-cut applications require little abstraction/application as they can be applied in most types of organizations. Concerning the demand and supply driven approach, Lillrank (1995) explains the demand driven approach as focusing on developing solutions. “A manager struggling with bad quality goes to Japan to look for specific answers on how to manage his/her own factory for zero defects” (Lillrank, 1995, p. 976). However the perception might be selective and the learner only sees what he or she wants to see. The supply drive approach is concentrated on formulating questions and building understanding. Scholars develop a model on what is going on in Japanese factories but without encountering problems at home. With increasing demand of Western companies to implement Japanese production concepts, the relevant parts of the academic supply get translated into actionable consulting packages and ‘how to’ books.

Low abstraction-supply driven contains descriptions of new practices without deeper reflections or implications. Low abstraction-demand driven is used when potential users start to see the value of a new practice and try to apply it as quickly as possible. High abstraction-supply driven is typically used by scholars. High abstraction-demand driven is used when the original innovation is crystallized into a universal principle.

Multi-purpose concepts Academic studies Customer satisfaction

Time-based Theoretical

Competition interpretations Kaizen

Statistics: theory of tools

Quick fixes, slogans

Case descriptions Copies

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Furthermore also the type of managerial content transferred helps to explain why a production concept is implemented differently across companies. Management principles, like for example the Japanese management principles emphasize quality and flexibility, long-term growth, and employment security. When these principles are applied in certain organizations or situations they get formulated into strategies. Management principles can have low and high abstraction levels. Organizational vehicles is a structure that is required for carrying a strategy, this is mainly a high abstraction level. Whereas generic management tools and techniques can be both high and low abstraction levels. For example tools can be transferred on a low abstraction level, though the underlying principle of that tool may be high abstraction. (Lillrank, 1995)

What does Lillrank’s model indicates for the empirical research?

Based on this model it is expected that differences and similarities may arise across the Dutch companies implementing a production concept. Differences or similarities may arise depending on what kind of tool is transferred. If more “underlying theory” tools are used, it is assumed that variation will take place across the Dutch companies. This is expected due the fact that these tools require high abstraction/application and every company can understand and implement these kind of tools on a different manner. However if it is made use of clear-cut tools than it is expected that organizations will implement the tool at the same manner, since these tools require little abstraction/application. Furthermore it is assumed that the supply driven approach of consultancy packages and “how to books” will also influence how a production concept is implemented. Though from the model developed by Lillrank it can not be clearly explained if this supply driven approach will cause differences or similarities

across companies. However it is assumed that these consultancy packages and “how to” books offer the same kind of information concerning the implementation of a production

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2.2.2 Institutionalist literature

In the Institutionalist literature two different approaches can be distinguished. These are the American institutionalism and European Institutionalism. The approaches differ in the conception of institutions and provide different answers to the transferability concept of organizational forms and practices (Saka, 2003).

Concerning how a production concept is implemented and internalised differs across companies. The American Institutionalist approach looks at different degrees of adoption of organizational practices and are concerned with the question to what extend the organizational elements of subsidiaries reflect the foreign parent or local/host context. For example Kostova (1999) differentiate between implementation and internalisation. Whereas implementation is defined as the degree to which the recipient unit follows the formal rules implied by the practice. Internalisation is that state which employees at the recipient unit attach symbolic meaning to the practice- they “infuse it with value” (Selznick, 1957). According to Westney (1993) innovations may emerge and intended and unintended factors can cause a transferred model to change in a new context. Intended changes may occur due for example another industry or country and unintended changes may occur due imperfect and distorted knowledge about the original model (Westney, 1987).

According to Becker-Ritterspach (2006) the European Institutionalist in general think that as a result of transfer a production concept and adaptation, hybrid forms may emerge. However Becker-Ritterspach (2006) argues that there is little effort made to typify different transfer/hybridization outcomes or different kinds of contextual constitution, though an exception is the framework provided by Boyer (1998).

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transfer of organizational forms and practices. This in contrast with the work of Kostova (1999), according to her, practices transferred across borders may not “fit” with the institutional environment of the recipient unit, which in turn may hinder the transfer.

The European Institutionalist in general suggest that there is a strong country-of–origin effect (Becker-Ritterspach, 2006). However lately they pay more attention to how strategies and structures of firms are shaped by the national institutional context (Morgan, 2001). Another example is the author Sharpe (1997). She identified that local practices and attitudes at the firm level could negatively influence the implementation of Japanese practices and forms.

Concluding the Institutionalist literature mostly focus on institutional context and the local institutional pressures to explain why differences may arise across companies implementing a production concept. However for this research as mentioned before, the institutional context and the local institutional pressures are the same for each Dutch company. This would suggest that similarity will occur across the sampled companies. However recently the European Institutionalist also identified firm level attitudes as an influence on the implementation of a production concept. As the firm level attitudes of the Dutch companies may differ, also variation may arise across Dutch companies implementing a production concept.

Selected contributions

1. Kostova (1999) ‘Transnational transfer of strategic organizational practices: a contextual perspective’

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Concerning the how question Kostova differentiate between implementation and internalisation. As mentioned before implementation is defined as the degree to which the recipient unit follows the formal rules implied by the practice. Internalisation is that state which employees at the recipient unit attach symbolic meaning to the practice- they “infuse it with value” (Selznick, 1957). Internalisation is conceptualised as organizational commitment, job satisfaction, and psychological ownership of the production concept.

Concerning the why question Kostova differentiate between social context, organizational context and relational context. In the social context Kostova focused on the country institutional differences by measuring the institutional distance between home and recipient. This is done by reflecting on the cognitive, normative and regulative components of an institutional environment. According to Kostova “countries differ in their institutional characteristics, organizational practices reflect the institutional environment of the country where they have been developed and established, and therefore when practices are transferred across borders, they may not ‘fit’ with the institutional environment of the recipient country, which in turn may be an impediment to the transfer” (Kostova, 1999, p. 314). Kostova focused for the organizational context on the organizational culture of the recipient unit. This is done by reflecting on the favourability for learning and change and the compatibility with the practice. Finally the relational context is identified as the transfer coalition at the recipient unit to the parent company. The transfer coalition is composed out of two groups; (1) a stable ‘core’, and (2) a flexible ‘expert’ group. The core group consists out of key managers of the recipient unit who are in charge of all transfers. The expert group may include employees who are experts in the functional area of the practice. According to Kostova (1999) this transfer coalition serves as a bridge between the recipient unit and the parent company. The relational context is divided by Kostova (1999) in the attitudes of transfer coalition and perceived dependence of a recipient unit on the parent company.

What does Kostova’s model indicates for the empirical research?

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Moreover the organizational context could also explain differences across the Dutch companies, since the organizational culture for each Dutch company could be different. This is because the favourability for learning and change and the compatibility with the practice, which influence the implementation of a production concept, may differ across companies. However also similarities are expected to be found across the Dutch companies since the institutional environment for these companies is the same. The relational context, identified by Kostova, is not relevant for this research. This is because this research is more about mediated Japanization and not the transfer of a production concept from a parent company to a subsidiary.

2. Westney (1987) ‘Imitation and Innovation – The transfer of Western organizational patterns to Meiji Japan.

Westney (1987) investigated what happened to Western organizational forms, when they were transferred to the Japanese environment in the Meiji Japan. The reason why this model is explained in more detail is because this researcher also identified, as Kostova, the internalisation of a production concept. However more important, Westney goes more into depth why differences may arise across companies implementing a production concept, by focusing on firms that are implementing a production concept that do not fit the receiving context. As this might also be the case for the sampled Dutch companies in this research, the model provided by Westney seemed important to use.

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Lastly in the organization creation scenario an attempt is made to create the required organizational context in the host environment. This suggests that small changes are needed in the host organizational context.

Regarding to the why question: Westney (1987) states that departures occur deliberately and unintended. The unintended departures are a consequence of “imperfect information” about the original model and “implicit alternative concepts” of the workforce in the receiving context (Westney 1987, p.25). Although perfect imitation is aimed, lacking information and a different local reading and interpretation, can change the implementation of the model. Westney classifies three causes concerning the deliberate departures: “selective emulation”, “adapting the patterns to different societal scales” and “adapting the new organization to an environment that lacks some of the organizations that support it in the original setting” (Westney, 1987, p.25). According to her selective emulation can take place for a variance of reasons, for example a possible conflict with valued local patterns or just a preference for only some aspects of the original model. However this means that certain elements from the model are eliminated. Also a different geographic and demographic scale of the receiving environment can lead to an adapted model. Though Westney (1987) is of opinion that the main cause for deliberate departures in different organizational environments is the receiving context. She argues that the organization forms are rooted in specific ‘organizational sets’ in their home environment. And when this organizational form is transferred to the new host environment this may not fit due either lack or differ in terms of organizational-set required.

What does Westney’s model indicates for the empirical research?

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2.3 Conclusion

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Chapter 3 The analytical framework 19

3. The analytical framework

3.1 Introduction

First the unit of analysis will be discussed in this chapter. The unit of analysis is lean production, specifically kaizen implemented across Dutch companies. However also some core dimensions of lean production and kaizen are explained in this chapter. Finally this chapter develops a framework to guide the empirical analysis of how and why the implementation of a production concept differs across companies in the same country.

3.2 Unit of analysis

The unit of analysis of this thesis is lean production, specifically kaizen of seven companies in the Netherlands. The core goal is to identify, compare and explain the difference of implementing a production system. This is done by asking how lean production and kaizen were implemented by the organisations. Though also when a company did not made use of a particular tool of lean production it is asked why. In this way it is kept in mind that companies not always transfer all methods or tools that are part of lean production. Companies may be very selective in what they implement and what not, important for this research is to find out the reason for this. However before the identification, comparison and explanation concerning the difference of implementing a production system across companies is made, it is first needed to identify what the core dimensions of the Japanese production concept are.

3.2.1 Production concepts

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3.2.2 What is lean production?

The arise of lean production was due Taiichi Ohno, Toyota’s chief production engineer. He concluded that mass production would not work in Japan and decided to come up with a different production concept, called the Toyota Production System or lean production. Henry Ford inspired Ohno, and the assembly line with a constant flow of supplies, became the basis of lean production. The system should minimize waste, which can be seen as resources which do not ad value. (Womack, 1990)

Lean production refers to the systematic identification and elimination of waste, while increasing responsiveness to change. It is said that lean production reduces waste by 80 percent and the production cost by 50 percent. Higher quality and profits are reached by lowering the manufacturing cycles times and a decrease in labour and inventory. The flexibility of lean production fits the changing environment and high market demands. Therefore, the objective of lean production is to do activities without mistakes, minimize waste and to be flexible in a changing environment.

There are a number of tools that organizations can use to implement lean production. Most of these lean methods are interrelated and some can occur concurrently. In general stability and standardization are the building blocks (Imai, 1986).

3.2.3 What is Kaizen?

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The core features of Kaizen are according to Berger (1997):

Process orientation: “Before results can be improved, process must be improved, as apposed to result orientation” (Imai, 1986, p.16-17). This means that managers should stimulate and support the effort of employees to improve processes, which requires that a majority of the employees are actively involved. This can be achieved by providing employees with adequate skills and training in simple process-oriented methods.

Improving and maintaining standards: “There can be no improvements where there are no standards” (Imai, 1986, p.74). Kaizen is inseparable from maintaining standards. While standards are maintained, improvements can be made for example by a problem-solving format, the PDCA-cycle.

People orientation: According to Imai (1986) there are three types of kaizen activities of everyone’s contribution for the overall improvement process. These are management oriented kaizen, group-oriented kaizen and individual-oriented kaizen. Management-oriented kaizen means the gradual improvement of systems procedures such as planning and control, organization, decision-making processes and information systems. Group-oriented kaizen concerns small group activities in which employees focus mainly on improving work methods, routines and procedures. Finally individual-oriented kaizen is focused on improving one’s own work; this can be done by suggestion systems.

3.2.4 Export of kaizen from Japan to the West

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However with the adoption of kaizen principles to Western companies, some shifts in management and culture were needed.

From a Western model…. to a Kaizen model

Individual working Team working

Unitary leadership Delegation, participation and consensus

Making do Continuous improvement

Rigidity and specialism Flexibility and collaboration

One-way communication Two-way communication

(Colenso, 2000)

From this it can be assumed that the societal/institutional context play an important role in transforming the Western model to a kaizen model. Challenges for Western companies mainly lies in transforming the management and culture of the organisation.

3.2.5 Uniformity of kaizen, the difficulties implementing kaizen at

Western companies

According to several writers kaizen plays an important role in the success of manufacturing companies. Imai (1986, p xxix) describes it as “the single most important concept in Japanese management”. Oliver and Wilkinson (1992, p.35) comment, “kaizen is the distinguishing feature between Japanese and Western organisation”. According to Sengenberger and Campbell (1993, p.3) kaizen is “one of the principal features of lean production”, in their belief objectives of lean production and kaizen are identical: the avoidance of waste. Bertode (1993, p.292) note that kaizen “is a reason why Japanese manufacturers are able to manage quick productivity and quality breakthroughs as a key component in a turn round strategy.” However there are also some constraints implementing kaizen, especially in Western companies.

According to Colenso (2000) Western companies encountered some difficulties when implementing kaizen in their companies. The difficulties were the following:

• Re-definition of the role and style of managers

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Open-minded, able to conceptualise, willing to learn new behaviours, team oriented, flexible and adaptable, good communicators and able to listen and respond.

• Changing attitudes in the workforce

Japanese workforce seems to be different than the Western workforce. They are in general people who work harmoniously in teams, are willing to put the good of the company before their own interests, give enormous effort and work hard to avoid conflict. Japanese companies are able to rely on the dedication of their employees, whereas Western companies have more difficulties with this. In general Western companies have spent more time in convincing the employees of the benefits of kaizen than convincing the managers. In general when introducing kaizen, problems arose when: management is not seen to be supporting kaizen principals, efforts and improved results are not rewarded and more and more is expected, which resulted in stress.

Another research performed by the Europe Japan Centre also observed some difficulties, which UK companies encountered during the implementation of kaizen. Out of a survey with UK managers it can be concluded that in general UK managers spoke positively about kaizen (Barnes, 1997). The main difficulties that UK managers encountered were:

• It is difficult to achieve in practice

Since it requires a complete change in attitude and culture, and all employees need to be committed and have the energy to change. Furthermore it requires a great amount of time. • It is difficult to maintain enthusiasm

Since some employees see kaizen as a threat to their jobs. Also a lot of poor ideas are put forward, as well as good ones, which can be de-motivating. Finally some UK managers were of opinion that by the implication there is never complete satisfaction.

• Continuous improvement is not sufficient by itself, companies also need major innovations.

Occasionally it is better to do things better, but it may not be commercially sensible. Furthermore it can make people blind to the wider issues, and there is a danger of becoming totally evolutionary at the expense of revolutionary advances (Barnes, 1997 p. 35).

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• Training

Extensive training is a must for Kaizen, problem-solving skills but also team leadership, working attitudes and team working. It is thought in general that Kaizen takes at least five years for Western companies to be totally embedded in the company culture.

• Stress reduction

In some companies there were many complaints of stress. Some companies tried to reduce this stress by developing more family-friendly policies, including for example flexible work times or a company physiotherapist. However there are also some companies who believe that Kaizen practices reduced the stress.

• Motivation and rewards

Kaizen suggestions can be rewarded with certain amounts of money depending on the success of the suggestion. However it is also important for the company to provide more positive and more regular motivation in order to keep the employees enthusiastic. (Colenso, 2000)

From these experiences of other companies implementing kaizen it can be stated that most difficulties implementing the production concept are based on differences in the social/institutional context. This means that the home social/institutional context of the original organizational form differs with the host social/institutional context. Examples of adaptations due differences in social/institutional context are the re-definition of the role and style of managers and the changing attitudes in the workforce.

3.2.6 Conclusion

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3.3 The how and why question, a framework developed

Based on the literature review in chapter two an analytical framework is developed.

Concerning how the implementation of a production concept differs across companies, the framework developed by Kostova (1999) is made us of. The reason why this framework is chosen to answer the how question, is because the researcher makes a clear distinction between implementation and internalisation. If a production concept is implemented it does not automatically mean that this production concept is also internalised by the organization. The internalisation level is high when commitment, satisfaction and psychological ownership to work system are high. Furthermore how exactly lean production is implemented across companies is left open for exploration. This is done because it is difficult to make assumptions beforehand on how a certain concept is implemented across companies.

Regarding why differences in implementing a production concept across companies in the same country may arise, different dimension or contextual reasons are used. In contrast to the how question, for the why question certain dimensions are selected beforehand that is based on the literature discussion. It is assumed that differences in the “why” can explain the differences in “how” a production concept is implemented and internalised across companies. However this relational context need to be explored in more detail. Underneath the “why dimensions” are explained in more detail.

Demand context

When a company want to implement a new production concept it might be very selective what to use and what not. This is called by Westney (1987) selective emulating, however also Lillrank (1995) identified this selective perception of companies. As mentioned before this selective approach can take place for a variance of reasons, for example a possible conflict with valued local patterns or just a preference for only some aspects of the original production concept. If companies are selective in implementing a new production concept, it is assumed that variance may arise across companies how a production concept is implemented.

Sectoral/Industrial context

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Organizational context.

Both the Japanization research stream and the Institutionalist research stream indicated the influence of the organizational context on the implementation of a production concept. Though the European Instititutionalis call this firm level attitudes, it is based on the same, the organizational context. As the firm level attitudes of the Dutch companies, or differently said the organizational context, may differ, it is assumed that also variation may arise across Dutch companies concerning how a production concept is implemented. As also Kostova (1999) indicated more specifically that the favourability for learning and change and the compatibility with the practice may differ across companies. This may influence how and to what extend a production concept is implemented.

Kind of tool transferred

Drawing on Lillrank (1995) a distinction can be made between tools with clear-cut applications and tools that have an underlying theory. The implementation for clear-cut application tools or the underlying theory tools are different. The clear-cut application tools are seen as tools that can be applied in a variety of situations and organizational setting. Whereas the underlying theory tools deal with the underlying principles, which might not be applied in a variety of situations and organizational setting, and adaptation might be necessary. Furthermore more commitment and understanding is needed to implement the underlying theory tools. Besides that it should be noted that sometimes under same label what is transferred, different things can be transferred. Therefore differences may arise across companies how a production concept is implemented, depending on what kind of tool is implemented. If more “underlying theory” tools are used, it is assumed that variation will take place across the Dutch companies. However if it is made use of clear-cut tools than it is expected that organizations will implement the tool at the same manner, since these tools require little abstraction/application.

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Societal/institutional context

Drawing on several researchers (e.g. Kostova, 1999) the institutional/societal context also influence the transfer of a production concept to a different host context. Since the societal/institutional context is the same for the Dutch companies, sampled in this research, it is assumed that this context will cause similarities across the companies how a production concept is implemented.

Supply context

‘How-to’ books and consultancies can change the original organisation model to a new host environment. When companies read the ‘how-to’ books or make use of a consultancy, than maybe unintended an adapted organisational model is implemented in the company. Drawing on Westney (1987) she calls this imperfect information about the original model and “implicit alternative concepts”. Also Lillrank (1995) mention the influence of consulting packages and ‘how-to’ books on implementing a production concept. Though from literature review it can not be clearly explained if the supply context will cause differences or similarities across

companies. However it is assumed that these consultancy packages and “how to” books offer the same kind of information concerning the implementation of a production

concept. Therefore it is carefully suggested that the supply side will cause similarity across the Dutch companies implementing a production concept.

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Figure 3: Core relations to be explored concerning how and why the implementation of a production concept differs across companies in the same country?

Why How

= Assumed to cause similarity across companies on how a production concept is implemented = Assumed to cause variance across companies on how a production concept is implemented

Supply context • ‘How-to’ books • Consultancies

Demand context • Selective approach

Kind of tool transferred • Clear-cut application • Underlying theory

Organizational context • Favourability for

learning and change • Compatibility with

practice

Implementation of production concept at recipient unit

Internalisation of production concept at recipient unit

• Commitment to production concept

• Satisfaction to production concept • Psychological ownership of the

production concept Social/Institutional context

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Chapter 4 Research Methodology 29

4. Research Methodology

4.1 A qualitative explanatory comparative case study

This master thesis will be a qualitative explanatory comparative case study. A qualitative research relies on a number of factors that underlie various aspects of human behaviour. It especially investigates how and why questions. The goal of this research project is to explore and explain if, how and why the implementation of lean production, the kaizen method, differs across companies in the Netherlands.

A qualitative research seemed most suitable for this thesis, since it facilitates to explore the unknown. According to Becker-Ritterspach (2006) qualitative research is appropriate when the relevant contextuality is not sufficiently known beforehand which require exploration. This is also the case for this thesis, since relevant contextuality is not exactly known beforehand to explain the similarity or difference of implementation of the kaizen method across companies. A qualitative approach is “uniquely suited to uncovering the unexpected and exploring new avenues” (Marshall and Rossman 1995, p.26)

Furthermore it is chosen to perform a case study for this thesis. According to Yin (2003) case studies can be when causalities are not well understood or known. Moreover there can be made a distinction between explorative, descriptive and explanatory case studies. According to Yin (2003) ‘what questions’ can indicate an explorative research, whereas ‘why and how questions’ can indicate a more explanatory research. Since this thesis focus on the ‘how and why question’ to explain possible similarities or differences across companies implementing the kaizen method, this thesis is mainly an explanatory case study.

Case studies can involve either single or multiple cases. For this thesis it is chosen to make use of a multiple case study instead of a single case study. With a multiple case study generalization of results will increase.

4.2 Data collection

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automotives, machines for the transportation & distribution industry. Furthermore the study is mainly focused on one host country context, the Netherlands. However there is one company that is situated in Belgium. It is chosen to include this company in the sample as well, since the company belongs to the automotive industry. Lean production is started in the automotive industry and it might be interesting to compare this company with the other companies in the Netherlands, not operating in the automotive industry. However throughout this thesis it is referred only as companies in the Netherlands since differences between both countries is assumed to be low. As mentioned before all companies are manufacturing companies, manufacturing different things, except for one company. This one company is a service company, however it is chosen to also include this company in the sample, since it might provide us with a view on how the “kind of company” may influence the way a production concept is implemented.

This sample is chosen for several reasons: First this research does not investigate only lean production in general, but focus on kaizen in specific. This makes it easier to compare all cases with each other since it is more focused on one work system. Second, focus lies on manufacturing firms, since lean production in general is mostly implemented in manufacturing firms. Previous research is mostly focused on the automotive industry, since this is where the Japanese work system; lean production, is developed.

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Concluding this thesis will add valuable information to the existing literature on how and why alternative production concepts are implemented across companies, since it is focused on different manufacturing industries and host country.

The thesis draws on interviews with managers of different companies. A total of 9 interviews were conducted between 9 July and 8 August 2007. Additionally with some companies factory tours were made possible and provided complementary data. The researcher also attended a one-week kaizen event at a company in the food & beverage manufacturing industry, which was guided by a consultancy. This enabled the researcher to be sensitive to the context dependent nature of diffused production concepts. Besides that, background information was also gathered by an interview with a consultancy company. This is a company specialised in giving advice to other companies how to introduce and implement lean production in their organizations. Information was gathered on the meaning for companies or/and individuals of a new production concept; lean production; the kaizen method.

Introducing the seven companies

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company that is investigated for this research has 3,600 employees international. This company started with implementing lean components in 2003. The sixth company is a company situated in Belgium and operates in the automobile industry. This company is a rather large company and has also divisions abroad. In Belgium there are 4,800 employees. This company started with implementing lean components in the beginning of the eighties. Nowadays they also use Six Sigma. The last company operates in the machine manufacturing serving mainly the Dutch transportation industry. This company is only situated in the Netherlands and has around 3,300 employees. They started with implementing lean components in 2005 and especially focused at the beginning on kaizen.

Interview guide

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Figure 4: Interview guide

Personal information of the interviewee • Career, function, age, education

New production concept compared with old production concept • Main differences and similarities

• Advantage and disadvantage of new production concept • Encountered difficulties implementing new production system • Identify transfer scenario

Implementation:

• When is the production concept implemented? • What and how is implemented?

• Preparation on the production concept

• How is knowledge of production concept spread out through the organizations? • Sustainability of the production concept

Is the production concept internalized? • Commitment to practice

• Satisfaction with practice

• Psychological ownership of practice

Differences in contextual conditions impacting implementation new production concept • Societal/industrial context

• Organizational context • Sectoral/industry context

• Supply context (‘How-to’ books and consultancies) • Demand context (perception approach)

• Kind of tools transferred (clear-cut tools or underlying theory tools)

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4.3 Quality of the performed research

According to Yin (2003) the development of case studies designs need to maximize four conditions related to design quality, these are: construct validity, internal validity (for explanatory and causal case studies only), external validity, and reliability. Following these criteria will be discussed with regard to this thesis.

Construct validity

Construct validity involves whether appropriate operational measures are established for the concepts under research (Yin, 2003). Construct validity in case studies has been a source of criticism because of potential investigator subjectivity (Tellis, 1997). However according to Yin (1994) there are three remedies to contradict this, these are: using multiple sources of evidence, establishing a chain of evidence and having a draft case study report reviewed by key informants. This research rests on the triangulation method (Miles and Huberman, 1994). For this thesis multiple sources of evidence were used by drawing on guided open-ended interviews, observations, and documentation. The benefit of triangulation is that it will increase the internal validity of the study. By presenting in chapter five empirical evidence, this thesis has tried to establish a chain of evidence by linking evidence and conclusions as transparent as possible. Furthermore the draft thesis is reviewed by key informants and asked to give their feedback Finally an interview guide was established to assure that the different interviews across the companies were responding to the same set of questions.

Internal validity

According to Yin (1994) internal validity is only a concern in causal (explanatory) cases. As this thesis is an explanatory research, several methods were used to increase the internal validity. Firstly due the guided interview approach openness was created, which created an in-depth understanding of causalities and openness for unpredicted issues and associations. Secondly Yin (1994) suggests that the problem of ‘inferences’ in case studies can be dealt with by using pattern matching. This thesis used the ‘pattern-matching logic’ by comparing the empirical data with theory-derived association between contextual perspectives and the degree of implementation of a production concept.

External validity

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This thesis contributes to theories about how and why implementation of a production concept differs across companies, by focusing on how and why similar or different patterns of implementation of lean production, the kaizen method, have come above across companies. Although the sample size is relatively small, this research can still be seen as reliable. For example Hamel (Hamel et al., 1993) and Yin (1984, 1989a,b, 1993, 1994) argue, “The relative size of the sample whether 2, 10, or 100 cases are used, does not transform a multiple case into a macroscopic study. The goal of the study should establish the parameters, and then should be applied to all research” (Tellis, 1997, p3).

Reliability

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Chapter 5 Seven cases 36

5. Seven cases

5.1 Introduction

In this chapter the main characteristics of the companies sampled will be explained. Furthermore general information is given on if, how and when companies implemented lean production and specifically kaizen. Due the anonymity of the companies, they are numbered. This chapter serves as a basis for chapter six, where a comparison is made concerning the differences and similarities across the companies implementing lean production and specifically kaizen, this is described along the dimensions identified in the research framework.

5.2 Seven case studies

Company one started to implement lean principles in 2006. A division is made between operative departments and office departments. In June 2006 a team of five men was set up to assist the introduction of lean. Several steps were identified to implement lean at the company. (See appendix one) In total, there are 23 departments that became familiar with the lean principles. The lean team started with two departments as a pilot project, these were the Employee Service Centre (as one of the office departments) and Non-Food and Beverage department (as one of the operative departments). At this moment the team consists out of 5 members (all members work part-time on lean). Furthermore some employees received basis training on lean. Around the end of June 2007 the company decided to hire a consultancy firm, to organize a one-week kaizen event at an operative department. At this moment they are starting to implement kaizen at one department.

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operators and mechanics are involved. However after some experience the company decided that it was wise to involve also the shift leaders in this phase, since they are the people who implement and have to work with the new production concept. In the third phase the production concept is implemented and employees get the opportunity to practice this new concept. Most of the time the company first start with the 5s method, followed by the introduction of kaizen and other tools of lean. However also the specific needs of a department is taken in consideration, than a tool is implemented that fulfil this need. The last phase is added later after gaining some experience in implementing lean. So this phase is rather new but focus on change management. Furthermore there is no specific lean team since according to them; this way lean comes not in the whole organisation. They have change agents (intern consultants) who give advice to different departments. Change agents travel to every fabric. In February 2007 this company started with implementing kaizen. For each unit or department there is a continue improvement team. These teams decide what problem should be handled firsts and they coordinate that. Than small kaizen groups are formed that are related to that problem and they will handle this problem. They plan one week so they can work on it the whole week without disruptions of their daily work.

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so-Chapter 5 Seven cases 38

called ‘lean community’, consisting out of black belts and green belts together. On different departments employees will be trained like a sort of green belt, called internal lean consultants. Green belts work mostly part-time and their responsibility is to exchange knowledge, help to change the organisation, and try to give this to the employees on that department so they can do it themselves. Black belts is were the knowledge is and do this full time for 2 a 3 years

Company four started first with implementing Six Sigma in 2005. After several months this company also started with implementing some lean principles. However this company did not introduced kaizen. It is chosen to still include this company in the sample since it might be interesting to understand why this company only implemented some principles of lean. According to this company they choose to use first Six Sigma since this company is not a manufacturing company and is more focussed to improve the internal processes, which are very complex. Therefore they preferred to make use of Six Sigma since according to them this help to increase the performance and the affectivity. Nevertheless they do make use of value stream mapping and process cycle analysis, though this is not their main focus. This company gathered knowledge on this working concept by comparing different quality and improvement techniques, reading, and network with other companies who also introduced this working concept and by hiring a consultancy. Furthermore the knowledge on this work concept is spread throughout the organisation by so called ‘master black belts’, ‘black belts’ and ‘green belts’. The master black belts form the program management of Six Sigma and lean, they train black and green belts and coach the black belts.

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developed a so called “optimalization project”. This consists out of two value carries of two different departments, furthermore there are five sub-teams formed representing each production line. These sub-teams discuss once a week how to improve their workplace or department. Furthermore these sub-teams get trained in certain tools of lean production (know how) by a consultancy. Than these sub-teams further coach and help the rest of the department to introduce new things, where everybody has it own task. This company did not introduced kaizen but a similar concept called “Fout vrij van mij” translated “Fault free of me”. This means that on a weekly basis it is discussed where delays or problems occurred, and this is evaluated per department. The idea of this concept is taken from another company.

The sixth company started with implementing some lean components in the beginning of the eighties. They do not work with lean, but with Total Product Maintenance (TPM), however this also includes some components of lean, like continuous improvement, waste reduction & cost deployment and the 5S. They gathered information on this concept by reading, visiting other companies, consultancy and than cross-functional workgroups developed their own company version of lean production. Most tools are implemented at the same time, though some tools were faster implemented than others. According to this organisation 5S is very important basis since this is a way for employees to feel responsible for their own workstation and it is a method with which you can easily detect abnormalities which than can be solved. Kaizen is called in this organisation continuous improvement, and they started with this around the beginning of the eighties. Furthermore, recently Six Sigma is introduced in the company; according to them this method is very helpful to be able to choose between all the different tools. Basis knowledge of production method is spread through kick-off days, training and team meetings. However as this organisation works already with this production system for many years, employees perceive this way of working as ‘normal’. Only when some new techniques are introduced there is some resistance, but this is far less than at the beginning.

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gathered knowledge on improvement techniques and components of lean by visiting a Japanese company working in the same industry in Japan, reading, visiting other companies in the Netherlands and a consultancy. There is no real lean team but a quality department, they focus in general on improvement techniques like kaizen and six sigma. This quality department is also trained to be a kaizen facilitator. Furthermore at the beginning there was a kind of steering group who decided for every division what kind of improvement ideas were first implemented and what in a later stadium. This kind of structure was set up to be in control and to create a continue character of improvement projects. However they changed this structure since it seemed that middle management was not committed to the projects, which resulted that projects often failed. At this moment, managers of departments have to ask the help of an intern consultant (employees of the quality department) when they have a specific problem which they want to be solved. So more focus is on the demand of the managers than that it is lay up on by higher management. Than the managers of the production departments are not trained but get some background information provided by the intern consultants. The intern consultant will work with the employees of the workplace and check their commitment and than the necessary training will be given. Kaizen groups consist out of five to six people. Most of the time there is a group leader or a process leader that guides the group. Furthermore the kaizen group consists most of the time out of people from one particular department, but this depends on the kind of project.

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Figure 5: General information seven cases

Company 1 2 3 4 5 6 7

Industry Food & beverage manufacturing Food manufacturing Aerospace manufacturing, machine building, maintenance Energy sector Machine manufacturing serving transport and distribution industry Automobile Machine manufacturing serving Dutch transportation industry Nr. of employees in Netherlands 1.400 3.000 7.000 5.000 3.600 4.800 3.300 Divisions abroad

No Yes Yes No Yes Yes No

Started with implementing lean components 2006 2006 2005 2005 2003 Beginning of the eighties 2005 Started with kaizen 2007 2007 2006 No Similar concept called “Fault free of me” 2005 Called “continuous improvement”, beginning of eighties 2005 Use of consultancy

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Chapter 6 Differences and similarities implementing lean and kaizen 42

6. Differences and similarities implementing lean and

kaizen

6.1 Introduction

This chapter will compare the seven cases presented in chapter five and explain similarities and differences found concerning implementing a production system across companies in the same country. In the overall comparison the broad differences and similarities are described. In the next subchapter the similarities and differences are highlighted along the how and why question.

6.2 Overall comparison

A first broad comparison of the seven cases concerning how and why implementation and internalisation of a production concept differs across companies in the same country reveals the following pattern. All companies started recently with implementing lean principles, this varies from two to four years ago, except for one company that started at the beginning of the eighties. Not all companies implemented the kaizen tool, the reason for this varies. Furthermore also the order of implementing lean tools varies, however most of the time companies start with value stream mapping and the 5S method. Finally most of the companies are not yet in the phase of internalising the production concept into their organization, explanation for this will be given in the next chapter.

6.3 Similarities and differences

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6.3.1 The how question?

When are components of lean production and kaizen implemented across the companies?

As mentioned before all companies started recently with implementing lean principles, this varies from two to four years ago, except for one company that started at the beginning of the eighties. This also counts for the kaizen tool, if kaizen was implemented at a company than this only started one to two years ago, except than for the same company that started with lean components at the beginning of the eighties. The explanation of this similarity will be done in the why section

What and how is a production concept implemented across the companies?

All sampled companies stated that their production concept is not a direct copy from the Japanese lean production. Some companies choose to use some components of lean production, or the tools that they find necessary to implement.

Concluding in overall most companies implemented not the total of lean production but components of lean production. However most of the companies start with value stream mapping, this is because this method gives a good overview of the current state and the wished future state. Value stream mapping provides a solid basis to further lay out the future actions to be taken to realize the future state.

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After the value stream mapping most of the companies want to start with the 5S tool.

However there is one exception, company four does not use the 5S tool at all, the reason for this can be find in the fact that they operate in a different industry. This company is not a manufacturing company and is more focussed to improve the internal processes, which are very complex. Therefore it is chosen to not use the 5S tool as according to this organisation this would not help to improve the performance and the affectivity of the company. Nevertheless they do make use of value stream mapping and process cycle analysis, though this is not their main focus. This company focus more on using Six Sigma since this, according to them, would help to realise their goal to increase the performance and the affectivity.

A Japanese production concept implemented at Dutch companies