Lean Implementation and Sustainable Continuous Improvement ...€¦ · Lean Implementation and Sustainable Continuous Improvement: managing internal knowledge stock, employee engagement

POLITECNICO DI MILANO

School of Industrial and Information Engineering

Management Engineering Master of Science

Lean Implementation and Sustainable Continuous Improvement:

managing internal knowledge stock, employee engagement and

innovative work behaviour

Academic Supervisor: Prof. Alberto Portioli Staudacher

Full Professor of Operations Management at Politecnico di Milano, Italy

External Advisor: Dr. Maneesh Kumar

Reader of Service Operations at Cardiff Business School, United Kingdom

Authors:

Cristina Simoncini 836156

Riccardo Socci 833470

Academic Year 2015/2016

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AUTHORS

This Master’s Thesis was designed and accomplished by Cristina Simoncini and Riccardo Socci

during the academic year 2015/2016.

The research work is the result of the authors’ keen interest on Operations Management and their

willing to further understand and explore the Lean Management philosophy.

Combining their quantitative and statistical approach with the valuable support of their academic

supervisors Alberto Portioli-Staudacher, Full Professor at Politecnico di Milano (Milan, Italy) and

Maneesh Kumar, Reader of Service Operations at Cardiff Business School (Wales, United Kingdom),

they developed the following Master Thesis: “Lean Implementation and Sustainable Continuous

Improvement: managing internal knowledge stock, employee engagement and employee innovative

work behavior”.

The authors spent one semester of academic research at the Cardiff Business School (United

Kingdom) and concluded the accomplishment of the research work at Politecnico di Milano (Italy),

where they graduated in April 2017.

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Lean Implementation and Sustainable Continuous Improvement:

managing internal knowledge stock, employee engagement and innovative

work behaviour

ABSTRACT

The research aims at investigating the meaning of a sustainable Lean implementation by proposing a

combination of Operations and Human Resource Management practices which can be implemented

to establish a Continuous Improvement culture. The outstanding literature provides evidence that

despite the initial gains, in terms of performances improvement, coming from the implementation of

the most common and known Lean techniques, companies struggle to continue improving and

eventually move back to their pre-Lean condition. Lean Management represents indeed a socio-

technical system, where technical and social practices should be consistently implemented to foster a

Continuous Improvement culture and enable the Lean endless question for perfection. We designed

a framework representing how Lean tools and techniques can be integrated with human-focused

practices aimed at developing the firm’s internal knowledge, its employee’s engagement and

innovativeness in way that promote the establishment of a sustainable Lean culture. Regarding the

firm’s internal knowledge, our framework proposes employee ambidexterity and cross-functional

teams as the practices leading to its development. We translated our conceptual framework into a

structural model of measurable variables, which have been assessed through a questionnaire

submitted to manufacturing companies.

The quality of the measurement model as well as the goodness of the structural model have been

tested through a Structural Equation Modelling technique. The analysis provides evidence that the

designed questionnaire can be considered a valid measurement instrument and that cross-functional

teams and employee ambidexterity positively contribute to the development of the firm’s knowledge,

which ultimately play a facilitating role for the achievement of a sustainable Continuous Improvement

when Lean tools and techniques are implemented.

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Index

Summary ............................................................................................................................................ 12

Summary (Italian) .............................................................................................................................. 15

1 Introduction ................................................................................................................................. 18

1.1 Lean Management in Manufacturing Sector ....................................................................... 18

1.2 Research question ................................................................................................................ 19

1.3 Organization of the research work ...................................................................................... 21

2 Literature Review ........................................................................................................................ 23

2.1 Literature Review Scope and Methodology ........................................................................ 23

2.2 Lean Management ............................................................................................................... 24

2.2.1 Lean Implementation Tools ............................................................................................. 24

2.3 Knowledge-Based View of the Firm ................................................................................... 28

2.3.1 Knowledge-Based View in Operations Management ...................................................... 31

2.3.2 Lean Management and Knowledge-Based View ............................................................ 33

2.4 Lean Sustainability .............................................................................................................. 35

2.5 The Importance of Human Resource Management in the Lean Journey ............................ 41

2.5.1 The Role of the Employee as Lean Facilitator ................................................................ 44

2.5.2 How to promote the Employee Role within a Lean Organization ................................... 47

3 Conceptual Framework and Hypotheses ..................................................................................... 55

3.1 Conceptual Framework ....................................................................................................... 55

3.2 Hypotheses Statement ......................................................................................................... 60

3.2.1 Employee Ambidexterity and Cross-Functional Teams as Internal Knowledge Stock

developers .................................................................................................................................... 60

3.2.2 Internal Knowledge Stock, Employee Engagement and Innovative Work Behavior as

Sustainable Continuous Improvement facilitators ...................................................................... 62

4 Research Method ......................................................................................................................... 67

4.1 Research philosophy and approach ..................................................................................... 67

4.2 Research strategy, choice and time horizon ........................................................................ 73

4.3 Research choice and time horizon ....................................................................................... 75

4.4 Data collection technique .................................................................................................... 76

5 Variables Operationalization and Statistical Model .................................................................... 85

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5.1 Variables Operationalization ............................................................................................... 85

5.1.1 Lean Tools and Techniques (for manufacturing companies only) .................................. 85

5.1.2 Employee Ambidexterity ................................................................................................. 89

5.1.3 Cross-Functional Teams .................................................................................................. 90

5.1.4 Internal Knowledge Stock ............................................................................................... 91

5.1.5 Employee Engagement .................................................................................................... 93

5.1.6 Employee Innovative Work Behavior ............................................................................. 95

5.1.7 Sustainable Continuous Improvement ............................................................................. 97

5.2 Statistical Analysis .............................................................................................................. 99

5.2.1 Demographic Details ..................................................................................................... 100

5.2.2 Structural Equation Modeling Implementation ............................................................. 103

5.2.3 PLS Analysis: First Group of Hypotheses ..................................................................... 104

5.2.4 PLS Analysis: Second Group of Hypotheses ................................................................ 123

6 Work Implications and Conclusions ......................................................................................... 144

6.1 Theoretical Implications .................................................................................................... 145

6.2 Managerial Implications and Conclusions ........................................................................ 147

6.3 Limitations and Future Research ....................................................................................... 153

7 APPENDIX A ........................................................................................................................... 155

7.1 Questionnaire for Manufacturing companies .................................................................... 155

7.1.1 Cover Letter ................................................................................................................... 155

7.1.2 Background Information ................................................................................................ 156

7.1.3 Body of the questionnaire .............................................................................................. 158

8 APPENDIX B............................................................................................................................ 163

8.1 Structural Equation Modelling .......................................................................................... 163

8.2 Statistics of Partial Least Square ....................................................................................... 165

8.3 Measurement Model Assessment: Confirmatory Factor Analysis .................................... 166

8.3.1 Overview of the Common Factor Model ....................................................................... 166

8.3.2 Purposes and Parameters ............................................................................................... 169

8.3.3 Unidimensionality of Indicators: Cronbach’s Alpha ..................................................... 170

8.4 Structural Model Assessment ............................................................................................ 171

9 APPENDIX C............................................................................................................................ 175

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9.1 First group of hypotheses .................................................................................................. 175

9.1.1 Hypotheses Hp 1A and Hp 1B - RUN A ....................................................................... 175

9.1.2 Hypotheses Hp 1A and Hp 1B - RUN B ....................................................................... 176

9.1.3 Hypotheses Hp 1A and Hp 1B - RUN C ....................................................................... 178

9.2 Second group of hypotheses .............................................................................................. 180

9.2.1 Hypothesis 2A ............................................................................................................... 180

9.2.2 Hypothesis 2B ................................................................................................................ 182

9.2.3 Hypothesis 2C ................................................................................................................ 185

10 APPENDIX D ........................................................................................................................ 188

10.1 Operationalization of Lean Service Practices ................................................................... 188

10.2 Questionnaire for Service companies ................................................................................ 189

11 Bibliography........................................................................................................................... 194

Acknowledgements .......................................................................................................................... 201

Index: figures

Figure 2.1: Human Resource Development in Toyota culture (Liker et al., 2010) ........................... 43

Figure 3.1: Lean Sustainability conceptual framework ..................................................................... 56

Figure 3.2: Netland and Ferdows (2014) Figure 3.3: Piercy and Rich (2015) ................................ 59

Figure 4.1: Research Onion ............................................................................................................... 67

Figure 5.1: Geographical distribution of the respondents ................................................................ 101

Figure 5.2: Responding industries ................................................................................................... 102

Figure 5.3: Theoretical Framework describing group of hypotheses Hp 1 ..................................... 104

Figure 5.4: Distribution of Employee Ambidexterity indicators ..................................................... 106

Figure 5.5: Distribution of Cross-Functional Teams indicators ...................................................... 107

Figure 5.6: Distribution of Organizational Capital indicators ......................................................... 107

Figure 5.7: Distribution of Human Capital Value indicators ........................................................... 108

Figure 5.8: Distribution of Human Capital Uniqueness indicators .................................................. 108

Figure 5.9: Distribution of Social Capital indicators ....................................................................... 109

Figure 5.10: Circles of correlations of factors belonging to Group Hp1 ......................................... 111

Figure 5.11: Path Coefficients representation of the first inner model – Run A ............................. 116

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Figure 5.12: Path Coefficients representation of the first inner model – Run B.............................. 116

Figure 5.13: Path Coefficients representation of the first inner model – Run C.............................. 116

Figure 5.14: Theoretical Framework describing group of hypotheses Hp 2 ................................... 123

Figure 5.15: Distribution of Employee Involvement indicators ...................................................... 125

Figure 5.16: Distribution of Employee Commitment indicators ..................................................... 126

Figure 5.17: Distribution of Employee Psychological Safety indicators ......................................... 127

Figure 5.18: Distribution of Idea Generation indicators .................................................................. 127

Figure 5.19: Distribution of Idea Implementation indicators .......................................................... 128

Figure 5.20: Distribution of Idea Promotion indicators ................................................................... 128

Figure 5.21: Distribution of Sustainable Continuous Improvement indicators ............................... 129

Figure 5.22: Circles of correlations of factors belonging to Group Hp 2 ........................................ 131

Figure 5.23: Path Coefficients representations of Hp 2.A inner model ........................................... 133

Figure 5.24: Path Coefficients representation of Hp 2.B inner model ............................................. 137

Figure 5.25: Path Coefficients representation of Hp 2.C inner model ............................................. 140

Figure 6.1: Lean Sustainability conceptual framework ................................................................... 144

Index: tables

Table 3.1: Bateman and David (2002)’s model for assessing sustainability ..................................... 58

Table 4.1: Research Philosophies (Saunders et al., 2009) ................................................................. 70

Table 4.2: deductive and inductive approach (Saunders et al., 1990) ............................................... 72

Table 4.3: sample size and statistical power (Forza, 2002) ............................................................... 81

Table 5.1: Lean Tools and Techniques .............................................................................................. 87

Table 5.2: Lean Tools and Techniques indicators ............................................................................. 88

Table 5.3: Employee Ambidexterity indicators ................................................................................. 90

Table 5.4: Cross-Functional Teams indicators .................................................................................. 91

Table 5.5: Internal Knowledge Stock indicators ................................................................................ 93

Table 5.6: Employee Engagement indicators .................................................................................... 95

Table 5.7: Innovative Work Behaviour indicators ............................................................................. 97

Table 5.8: Sustainable Continuous Improvement indicators ............................................................. 98

Table 5.9: Cronbach’s Alphas of Group Hp1 variables – Run A .................................................... 113

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Table 5.10: Loadings of Employee Ambidexterity items ................................................................ 113

Table 5.11: Cronbach’s Alphas of Group Hp1 variables – Run B .................................................. 114

Table 5.12: Loadings of Group Hp1 variables – Run B .................................................................. 114

Table 5.13: Cronbach’s Alphas of Group Hp1 variables – Run C .................................................. 115

Table 5.14: Regression results of run A ........................................................................................... 117

Table 5.15: Regression results of run B ........................................................................................... 117

Table 5.16: Regression results of run C ........................................................................................... 117

Table 5.17: Total Effects resulting from run A ................................................................................ 120

Table 5.18: Total Effects resulting from run B ................................................................................ 120

Table 5.19: Total Effects resulting from run C ................................................................................ 120

Table 5.20: Bootstrap confidence interval of path coefficients in run A ......................................... 121

Table 5.21: Bootstrap confidence interval of path coefficients in run B ......................................... 121

Table 5.22: Bootstrap confidence interval of path coefficients in run C ......................................... 121

Table 5.23: Cronbach’s Alphas of Hp 2.A variables ....................................................................... 132

Table 5.24: Regression results for Hp 2.A ....................................................................................... 133

Table 5.25: Total Effects resulting from the LTT, IKS, SCI model ................................................ 134

Table 5.26: Two-stage Regression results for Hp 2.A ..................................................................... 135

Table 5.27: Cronbach’s Alphas of Hp 2.B variables ....................................................................... 137

Table 5.28: Regression results for Hp 2.B ....................................................................................... 138

Table 5.29: Total Effects resulting from the LTT, ENG, SCI model .............................................. 138

Table 5.30: Two-stage Regression results for Hp 2.B ..................................................................... 139

Table 5.31: Cronbach’s Alphas of Hp 2.C variables ....................................................................... 140

Table 5.32: Regression results for Hp 2.C ....................................................................................... 141

Table 5.33: Total Effects resulting from the LTT, IWB, SCI model ............................................... 141

Table 5.34: Two-stage Regression results for Hp 2.C ..................................................................... 142

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SUMMARY

Lean Management is conceived as an integrated socio-technical system aimed at lowering waste

while reducing suppliers, customers and internal variability (Shah and Ward, 2007), and it requires

the involvement and commitment of each member of the organization in order to improve results in

terms of quality, costs and lead times (Womack and Jones, 1996; Moyano-Fuentes et al., 2012).

Nevertheless, failures of Lean Management implementation are common, and despite the initial gains

coming from the implementation of the most common Lean practices, companies turn out to be unable

to maintain results over the medium and long term. A broad consensus exists regarding the fact that

the success of the Lean journey not only depends on the application of tools and techniques, which

we can address as the hard side of Lean Management, but strongly relies on the human factor as well.

The human component represents the soft side, meaning the establishment of a culture that supports

the Lean transformation of the whole organization (Moyano-Fuentes et al., 2013).

Focusing on not only the tools and techniques characterizing the Lean approach, but on the human

component as well, is an essential requirement for the sustainability of a TPS-based system.

The Lean pillar Respect for Humanity requires companies to actively involve workers, and all the

benefits and improvements to the production system deriving from them, in the development and

implementation of a Lean model. Researches in the Operations Management and Lean fields showed

that implementing Lean without considering the human component does not lead to the competitive

results characterizing Lean production, and it eventually erode the operational outcomes.

However, Operations Management literature is still missing a clear understanding of the mechanisms

enhancing the establishment of a Continuous Improvement culture and there is no consensus on the

definition of a sustainable Lean implementation.

On these premises, we developed this work with the aim to provide a clear understanding and

definition of Lean Sustainability and a comprehensive overview of the soft practices underlying the

transit from a mere Lean implementation, mainly focused on hard practices, to the development of a

Sustainable Continuous Improvement.

Particularly, in our dissertation “Lean implementation and Sustainable Continuous Improvement:

managing internal knowledge stock, employee engagement and innovative work behaviour”, we

propose a conceptual and structural framework that links the implementation of the most common

Lean tools and techniques to the development of the company internal knowledge, engagement and

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innovative work behaviour, in a way that lead the firm to the achievement of a Sustainable Continuous

Improvement.

The whole framework was interpreted as a representation of the Lean Sustainability meaning, as it

was designed combining all the factors that, according to the outstanding literature, are significantly

influencing the successful adoption of a continuous improvement culture, that is the heart of the Lean

endless quest for perfection (Womack,1991).

To statistically testing the relations linking the hard and soft practices proposed, all the components

of the framework have been translated into measurable variables.

The original nature of these variables, which is qualitative rather than quantitative, required the

authors to develop a measurement instrument ad hoc. As common and accepted method in the

Operations Management field, we chose to design a questionnaire and basing on the outstanding

literature we formulate a set of questions for each variable.

In order to evaluate the quality of the measurement instrument as well as the goodness of the structural

model proposed, meaning the effectiveness of the questionnaire and the strengths of the relations in

the conceptual framework, authors relied on a Structural Equation Modelling (SEM) technique named

Partial Least Square (PLS) analysis.

SEM represents one of the mostly recognized approach to measurement and hypotheses testing in

literature and PLS has been chosen for being the most suitable for the research purpose. Besides

allowing small sample size and not requiring any distribution assumption, PLS allowed us to test

concurrently measurement and structural model.

The questionnaire turned out to be well designed for the scope of the analysis, meaning that the

questions assigned to our variables are useful to evaluate them according to the indicator Cronbach’s

Alpha. All the components of our framework provided a Cronbach’s Alpha higher than the threshold

value, witnessing the quality of the measurement instrument.

At the same time, all the relations among the variables was tested by the PLS model through

regression analyses. While for our first group of hypotheses, assuming the positive contribution of

Employee Ambidexterity and Cross-Functional Teams to the development of the firm’s Internal

Knowledge Stock, we implemented a simple Multiple Regression Model, for the second group of

hypotheses, assuming the moderating role of Internal Knowledge Stock, Employee Engagement and

Innovative Work Behaviour in the relation between Lean Tools and Techniques and Sustainable

Continuous Improvement, we implemented a Multiple Regression Model with Moderating Terms.

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The whole analysis provided statistical evidence of the existence of a positive relation between

Employee Ambidexterity and Internal Knowledge Stock as well as between Cross-Functional Teams

and Internal Knowledge Stock. Also, we found statistical significance that developing the Internal

Knowledge Stock of the firm facilitate the achievement of a Sustainable Continuous Improvement

when Lean Tools and Techniques are implemented.

Despite the limitations of the research, which could have negatively affect the statistical significance

of the results, the outcomes show the need for a consistent implementation of hard and soft practices,

confirming that Lean Management should be addressed as a socio-technical system, rather than a

toolkit. Specifically, the conceptual framework provides managers with a comprehensive description

of the mechanisms underlying the meaning of Lean Sustainability, and therefore with directions to

embrace a Sustainable Continuous Improvement culture within the company, and our questionnaire

represents a potential measurement instrument able to assess to which extent the company is

following these directions.

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SUMMARY (ITALIAN)

Il Lean Management consiste in un sistema integrato di pratiche tecniche e sociali il cui scopo è quello

di ridurre il livello di sprechi e scarti, così come la variabilità legata ai fornitori, ai clienti e ai processi

interni all’azienda (Shah e Ward, 2007). Tale filosofia manageriale richiede il coinvolgimento e la

dedizione di ogni membro dell’organizzazione per migliorare i risultati in termini di qualità, costi e

tempi di consegna (Womack and Jones, 1996; Moyano-Fuentes et al., 2012).

Tuttavia, i fallimenti dell’implementazione del Lean Management sono alquanto comuni, e

nonostante gli iniziali benefici legati all’utilizzo delle più note pratiche Lean, le aziende si rivelano

non essere in grado di sostenere tali risultati in una prospettiva di lungo periodo. Esiste un vasto

consenso relativamente al fatto che il successo dell’intero progetto Lean non dipende unicamente

dall’applicazione dei suoi strumenti e delle sue tecniche, che possiamo identificare con il lato hard

del Lean Management, ma fa un forte affidamento anche sulla componente umana. Quest’ultima

rappresenta il lato soft della Lean, che sta a significare la creazione ed il radicamento di una cultura

che supporta la trasformazione Lean dell’intera organizzazione (Moyano-Fuentes et al., 2013).

Il requisito essenziale per ottenere la sostenibilità di lungo termine di un sistema basato sul Toyota

Production System è valorizzare la componente umana tanto quanto gli strumenti e le pratiche tipiche

di un approccio Lean.

Il pilastro Lean Respect for Humanity richiede che le aziende coinvolgano attivamente i lavoratori,

con tutti i benefici e miglioramenti al sistema produttivo che possono portare, nello sviluppo e

implementazione del modello Lean. Varie ricerche in Operations Management e Lean Management

hanno evidenziato come utilizzare una strategia Lean senza considerare la componente umana non

conduce ai risultati competitivi tipici di questo approccio manageriale, ma anzi può addirittura

peggiorare le performance aziendali.

Eppure, la letteratura dell’Operations Management manca tutt’ora di una chiara definizione dei

meccanismi che possono favorire il radicamento di una cultura di Continuous Improvement, ovvero

miglioramento continuo, e non esiste una definizione universalmente riconosciuta di

implementazione sostenibile della Lean.

Basandoci su queste premesse, abbiamo sviluppato questo lavoro con lo scopo di fornire un chiaro

significato al termine Sostenibilità della Lean, così come una visione complessiva delle pratiche soft

che permettono il passaggio da una semplice applicazione delle tecniche hard della Lean allo sviluppo

di un miglioramento continuo sostenibile.

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In maniera particolare, nel nostro lavoro di tesi “Lean implementation and Sustainable Continuous

Improvement: managing internal knowledge stock, employee engagement and innovative work

behaviour”, proponiamo un framework concettuale e strutturale che collega l’utilizzo dei più comuni

strumenti e tecniche Lean con lo sviluppo di Internal Knwoledge Stock, Employee Engagement ed

Employee Innovative Work Behaviour (ovvero la conoscenza interna della azienda e il

coinvolgimento e ambidestrismo dei lavoratori) in maniera tale che conducano l’azienda al

raggiungimento di un Sustainable Continuous Improvement (miglioramento continuo sostenibile).

L’intero framework teorico nasce per essere interpretato come una rappresentazione del significato

di sostenibilità della Lean, in quanto è stato disegnato combinando tutti i fattori che, in accordo con

la letteratura esistente, influenzano significativamente una riuscita adozione della cultura di

miglioramento continuo, che non è altro che il cuore della constante ricerca della perfezione che

caratterizza la Lean (Womack, 1991).

Per testare statisticamente le relazioni che legano le pratiche hard e soft proposte, tutti le componenti

del framework teorico sono state tradotte in variabili misurabili.

La natura originale di queste variabili, che è di tipo qualitativo piuttosto che quantitativo, ha richiesto

agli autori lo sviluppo di uno strumento di misurazione ad hoc. In quanto metodo comunemente

accettato all’interno del campo del Operations Management, abbiamo scelto di creare un questionario

e, grazie ad una revisione sistematica della letteratura già esistente, abbiamo formulato un set di

domande per ogni variabile.

Per riuscire a valutare la qualità dello strumento di misurazione redatto, così come la bontà e

correttezza del modello strutturale proposto - cioè l’efficacia del questionario e la forza delle relazioni

descritte nel framework concettuale - abbiamo fatto affidamento su una particolare tecnica di

Structural Equation Modelling (SEM) chiamata analisi Partial Least Square (PLS).

I modelli SEM rappresentano uno degli approcci più riconosciuti in letteratura per la misurazione e

la validazione di ipotesi e il PLS è stato scelto in quanto è il più adatto allo scopo di questa ricerca.

Infatti, oltre che permettere lo svolgimento dell’analisi su un dataset relativamente ridotto senza

richiedere la verifica di alcuna assunzione di distribuzione dei dati, il PLS ci ha permesso di testare

simultaneamente il modello di misurazione e il modello strutturale.

Il questionario si è rivelato essere ben adatto per lo scopo dell’analisi, il che significa che le domande

assegnate alle nostre variabili sono effettivamente utili per valutarle, in base al valore dell’indicatore

di unidimensionalità Cronbach’s Alpha. Tutti i costrutti (componenti) del nostro framework hanno

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mostrato un Cronbach’s Alpha maggiore del valore soglia accettato in letteratura, testimoniando così

la qualità dello strumento di misurazione, e quindi del questionario.

Contemporaneamente, tutte le relazioni tra variabili sono state testate dal modello PLS tramite una

analisi di regressione. Mentre per il nostro primo gruppo di ipotesi, che suppone il contributo positivo

di Employee Ambidexterity e Cross-Functional Teams allo sviluppo del Internal Knowledge Stock

dell’azienda, abbiamo implementato una semplice Regressione Lineare Multipla, per il secondo

gruppo di ipotesi, che ipotizza il ruolo facilitatore di Internal Knowledge Stock, Employee

Engagement ed Employee Innovative Work Behaviour nella relazione tra le Lean Tools and

Techniques ed il Sustainable Continuous Improvement, abbiamo implementato una Regressione

Lineare Multipla con termini di interazione.

L’analisi ha portato prove statistiche dell’esistenza di una relazione positiva tra Employee

Ambidexterity ed Internal Knowledge Stock, e tra Cross-Functional Teams ed Internal Knowledge

Stock. Inoltre abbiamo trovato significatività statistica che sviluppare l’Internal Knowledge Stock di

una azienda favorisce il raggiungimento di un Sustainable Continuous Improvement quando le

pratiche e tecniche (hard) della Lean sono implementate.

Nonostante le limitazioni della ricerca, che potrebbero aver negativamente influenzato la

significatività statistica dei risultati, i risultati mostrano il bisogno di una integrazione tra pratiche

hard e soft, confermando la definizione di Lean come sistema integrato di pratiche tecniche e sociali,

piuttosto che un insieme di strumenti e tecniche di produzione. Più precisamente, il framework

concettuale fornisce ai managers una descrizione complessiva dei meccanismi alla base del

significato di sostenibilità della Lean, e quindi una direzione per poter sviluppare e radicare una

cultura di Sustainable Continuous Improvement all’interno dell’organizzazione.

Infine, il nostro questionario rappresenta un potenziale strumento di misurazione capace di valutare

e monitorare nel tempo l’avanzamento dell’azienda in questa direzione.

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1 INTRODUCTION

1.1 LEAN MANAGEMENT IN MANUFACTURING SECTOR

It is universally recognized that the word “Lean” first started to be applied to the management lexicon

during the eighties, when John Krafcik, researcher at the Massachusetts Institute of Technology,

launched the International Motor Vehicle Programme (IMVP), consisting of a five-year (1985-1990)

investigation into the performances of globally operating companies belonging to the motor and

automotive industry (Samuel et al. 2015).

The research put in evidence the highly competing and successful way of operating of Toyota Motor

Company, which have been able to implement a completely different management outlook, based on

Just-In-Time and commitment in promoting respect for employees.

Krafcik described that innovative approach, the Toyota Production System, naming it “Lean” and

since then, it represents the precursor of the whole Lean Management.

Providing a commonly accepted definition for Lean Management is not an easy task, as this

management philosophy includes different but interrelated aspects and elements.

Generally speaking, Lean production is a multi-dimensional approach that involve a wide variety of

management practices, such as JIT, quality management, work teams and cross-functional work

teams, supplier management and involvement. All these processes are carried out in an integrated

system, and they work with synergies to create a streamlined and high quality system, able to deliver

goods following the pace of the market demand, with little or no waste (Shah and Ward 2003).

Since the Toyota Production System has been described in the IMVP, researchers have been studying,

documenting, and testing the actual benefits that Lean could bring to the organisation. According to

one of the books which marked the success of the TPS, The Machine That Changed the World by

Womack et al. (1990), a Lean Production System is able to develop a new product in half the time if

compared to the traditional mass production, by using half of the resources. It is therefore well

assessed in Operations Management literature that Lean implementation improves the operating

performances of a manufacturing system (Shah and Ward 2003, Shah and Ward 2007, Longoni and

Cagliano 2012, Netland et al. 2015).

An extensive Lean implementation positively relates to increases in the factory-level performances

of companies, as it allows the system to provide customers with what they want, when they want,

with high quality levels, and few or now waste.

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Yet, despite clear evidences of the benefits related to the Lean production, it is necessary to highlight

the difference and distance between a simple Lean implementation, and the success of such a

managerial system. Implementing Lean practices, tools and techniques does not necessarily lead to a

successful Lean implementation, and therefore to the sustainability over the long-term of a Lean

strategy. Many global manufacturers often struggle to implement and sustain such programs in their

production networks (Netland et al. 2015), meaning the mere use of Lean tools does not ensure

competitive performance levels over the long-term. Indeed, managers often struggle to implement a

Continuous Improvement culture within the organization and they do not clearly embrace the Lean

principle of aiming at perfection which assumes that there is always room for improvement in every

corporate process.

Always changing and developing markets, characterized by demand unpredictability and complexity,

require firms to plan and carry out improvement programs and activities (Bateman and David, 2002).

However, these programs often consist of “kaizen events” which lead to considerably good results

only over the short-term. There is indeed evidence that sustaining the gains of these short-term

improvements represents a huge challenge for companies, which therefore risk to lose not only the

initial enthusiasm and commitment, but also the benefits gained. Griffiths (1998) and Kaye and

Anderson (1999) bring the example of companies which eventually come back to their pre-

improvements conditions because their inability to keep on identifying and exploiting improvement

opportunities.

Despite the success of the Toyota Production System, and the wide spread use of Lean Management

all over the World, there are only few studies in the Operation Management literature investigating

what it means to reach the sustainability of Lean strategy over time, and which are the tools on which

the top Management can rely to guarantee this condition.

1.2 RESEARCH QUESTION

In light of these evidences, we recognized the need for a deeper research concerning not only the

meaning of a sustainable Lean implementation, but also the ways, in terms of combination of hard

and soft practices, through which companies can achieve it. In this contest, the term hard practices

refers to tools and techniques applied to the production processes of the firm, meaning the practices

belonging to Operations, Production and Quality Management.

20

On the other hand, the term soft practices focus on the human component of the company and

therefore refers to Human Resource Management activities such as work team organization,

employee involvement, job rotation, job enlargement and job enrichment, recruitment and hiring, and

training of new and experienced employees.

Literature Gap

Our research aims to fill the literature gap generated by the lack of a widely recognized and shared

definition of Lean Sustainability as well as a fragmented understanding of the Human Resource

Management role during the Lean Management implementation.

We believe that these topics should be addressed together and through an approach - the knowledge

based perspective - able to capture and highlights their strict relation.

Even if over time authors have been paying an increasing attention to the effect of the human variable

on the success of the Lean implementation (Bonavia and Marin-Garcia, 2011) and the role of people

has been recognized as crucial (Sawhney and Chason, 2005; de Treville and Antonakis, 2006), there

is no consensus on the way Lean affect people (Conti et al., 2006; de Treville and Antonakis, 2006)

or the role of Human Resource policies on the Lean journey (Liker and Hoseus, 2010; Bonaviaand

Marin-Garcia, 2011).

As Sparrow and Otaye-Ebede (2014) argue, different expectations exist within the Lean context and

these can refer to two main human-related issues. Lean developments bring in fact to the question

whether the HR architecture needs to promote a particular set of skills in order to exert a strategic and

enduring influence over the execution of a Lean strategy and whether the location of knowledge and

expertise within a company can make a difference.

Specifically, this second dimension, embedding the knowledge translation and integration

mechanism, is ascribable to the ultimate objective of a Lean system: developing dynamic capabilities

(Anand et al., 2009) that enable systematic problem-solving and continuous improvements in

organizations to better serve customers (Shah and Ward, 2007).

Secchi and Camuffo (2016) affirm that Lean Operations research, whether addressed in mainstream

Operations Management literature or Strategy, Organization and Knowledge Management literature,

is lacking a study on how within-organization processes of knowledge transfer and learning may

affect the implementation of Lean Operations (with relevant exceptions, such as Letmathe et al.,

2012).

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For this reason, we believe that adopting a knowledge based perspective would allow us to

comprehend the human resource role and value and ultimately understand how this can concur to the

definition of Lean Sustainability.

Work objective

In light of the above-mentioned literature gap, we aim to answer the following research questions:

What is the true meaning of Lean Sustainability?

Which are the soft and hard practices that companies should implement to achieve

Lean Sustainability?

Therefore, the objective of our research is twofold: first, creating a conceptual framework of practices

and mechanisms enhancing the sustainability of the Lean journey and translating it in a structural

framework of variables assessing the extent to which companies are able to implement the selected

practices in order to promote a Sustainable Continuous Improvement.

Second, investigating the moderating impact of the soft practices considered upon the capability of

the firm to promote a Sustainable Continuous Improvement when Lean hard practices are

implemented.

1.3 ORGANIZATION OF THE RESEARCH WORK

We have organized our research work into different chapters.

In Chapter 2 we provide a systematic literature review related to the relevant fields of analysis.

Starting from the definition of the knowledge-based view of the company, we moved towards a

description of what the Lean Management is, its theoretical pillars, and how they can be related to

the knowledge-based approach. Chapter 3 describes our research question and conceptual framework.

In this section we reveal the hypotheses related to the theoretical framework, and how we came up

with their definition. Chapter 4 is a simple explanation of our research methodology choices. Chapter

5 illustrates how our data collection instrument (questionnaire), the variables it is composed of, and

the statistical model have been designed. Chapter 6 reports the outcome and the managerial

implications of our statistical analysis.

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Finally, Appendix A reports the questionnaires as was submitted to the selected respondents,

Appendix B provides a full disclosure and explanation of the statistical tools used to accomplish the

research work, Appendix C reports the outcomes of the statistical analysis and Appendix D the

questionnaire for service companies, which we designed for further developments of this research.

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2 LITERATURE REVIEW

2.1 LITERATURE REVIEW SCOPE AND METHODOLOGY

The scope of this chapter is to provide a comprehensive overview of Lean Management literature as

well as a more focused picture on its connection with Human Resource Management. Also, we

provide a section on the Knowledge-based View, which is the research theory underlying our

dissertation.

The following paragraphs are the results of a systematic literature review, which has been chosen

among other literature review approaches because it is represents a replicable, scientific and

transparent process able to minimize bias through exhaustive searches of published and unpublished

studies (Tranfield et al., 2003). Also, compared to other approach, it is more strongly evidence-based

since it is concerned with seeking to understand the effects of variables or interventions that have

been found in previous studies.

Specifically, as Bryman and Bell (2003) suggest, we followed three main steps:

1) We clarified the boundaries of our review by defining all the criteria aimed at establish whether

studies should be included in the research or not. Specifically, we decided to focus on Lean

Management and Human Resource Management works focused on people interactions and team

work. The inclusive criteria were related to the year of publications, from 1990 to 2016, and to

the journals ranking; we focused on highly ranked journals (based on ABS rank of Journals

followed the UK) in the field of Operations Management and Human Resource Management such

as Journal of Operations Management, International Journal of Operations and Production

Management and International Journal of Human Resource Management.

2) We conducted the review carrying out a comprehensive unbiased search based on the following

keywords: Lean Management, Continuous Improvement, sustainability, team work, team

effectiveness, Operations Excellence, kaizen, knowledge management, Learning Organization,

Lean success. To narrow the research, we also defined exclusive criteria. We therefore excluded

studies related to green sustainability and Lean supply chain, as external to the scope of our work.

3) We finally identified 109 relevant articles. Among them, 19 belong to the Journal of Operations

Management, 17 to the International Journal of Operations and Production Management, 6 to the

International Journal of Human Resource Management, 4 to the Academy of Management Journal

and 4 to Harvard Business Review. We arranged the main findings in this descriptive chapter.

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2.2 LEAN MANAGEMENT

It is well established that the word “Lean” entered the management lexicon when the Massachusetts

Institute of Technology researcher John Krafcik promoted the International Motor Vehicle

Programme (IMVP), which was a five-year (1985-1990) investigation into the performance of the

globally operating companies belonging to the motor and automotive industry.

Toyota Motor Company showed a distinctive, new and highly performing way of working, a

completely different management outlook based on Just-In-Time processes and committed in

promoting the respect for people. Krafcik described that approach, named Toyota Production System

(TPS), as “Lean”, making it the major precursor of Lean Management and philosophy.

2.2.1 Lean Implementation Tools

Even though Operations Management literature recognizes Krafcik as the coiner of the term, it has

been identified in the best-selling book The Machine That Change The World (1990), by James P.

Womack, the origin of the success and popularity of Lean Management structure. Samuel et al. (2015)

in their review of 25 years of Lean literature, propose an analysis of the phases of diffusion of Lean

Management. Prior to the publication of Womack’s best-selling management book, the Lean

movement was purely limited to the emulation of some components of the TPS, such as the JIT. As

already said, after The Machine there was a much deeper understanding of what Lean means. The

book made the TPS accessible to a wider audience. Therefore, companies start focusing on the whole

management system, as they widened their attention from the shop-floor, to the simultaneous pursuit

of quality, cost, and delivery. In recent years, there was a shift in the focus of the Lean movement

from the sole cost and waste reduction to a value creation and appropriation. This leads us to the

conclusion that the concept of Lean Management does not consists of static management principles,

rather it is something that keeps evolving over time, and that applies to different scenarios in different

ways.

Due to its multifaceted and complicated nature, and its modularity structure, it is an arduous task to

describe what Lean Manufacturing is, since it is easy to miss the big picture and to assume

equivalence between the whole TPS system, and one of its components (Shah and Ward, 2007).

In The Machine That Change The World, Womack et al. (1990) provide one of the first definitions of

Lean, which focuses on the outcomes of a TPS-based system:

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“[...] compared to mass production, it uses less of everything – half the human effort in the factory,

half the manufacturing space, half the investment in tools, half the engineering hours to develop a

new product in half the time”.

Although the authors working on the IMVP started talking about Lean and Lean production system,

by looking at the Toyota Production System, it does not mean that this kind of management system

can be solely applied to manufacturing companies. If anything, Lean Production is portrayed as a

more or less set of management principles for the production of both goods and services (Lewis M.

A., 2000). Womack et al. themselves, in The Machine, affirm:

“We have become convinced that the principles of Lean production can be applied equally in every

industry across the globe and that the conversion to Lean production will have a profound effect on

human society – it will truly change the World.”

Indeed, driven by the success achieved by Toyota and several other lean organizations, a growing

number of companies in all industries, from good manufacturing to Internet start-ups, from fast-

moving consumer goods to healthcare, and throughout the world have been borrowing specific

approaches and methods from TPS. They have turned them into Lean Manufacturing, Lean Enterprise

and Lean Six Sigma programs in order to satisfy market needs, reduce costs, and gain an edge over

competition (Bortolotti et al., 2014).

In the following years, the discussion related to the definition of Lean Management and Lean

production and to the benefit coming from the implementation of a Lean system, has characterized

the work of many authors. The common idea, as discussed by Sanchéz and Perèz (2001), and Shah

and Ward (2003), sees Lean production as a multi-dimensional and integrated approach to

management that involves a wide variety of management practices, such as multifunctional work

teams, elimination of non-value-added activities, Just in Time, continuous improvement, supplier

management and integration, etc. More specifically, it is possible to summarize the whole Lean

philosophy and management into four main bundles (Shah and Ward 2003, Shah and Ward 2007,

Longoni and Cagliano, 2015).:

Just-In-Time (JIT)

Total Productive Maintenance (TPM)

Total Quality Management (TQM)

Human Resource Management (HRM)

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Shah and Ward (2007) aim to answer to the question “what is Lean production?”. To that end, they

identified 48 different tools and practices to represent the operational space surrounding Lean

production and Lean philosophy. They then classify these 48 practices into 10 factors, which

characterize the operational complement, and the different dimensions of a Lean system. Supplier

feedback (1), JIT delivery by supplier (2) and supplier development (3) measure the supplier

involvement level; customer involvement (4) focuses on customers’ needs; pull system (5),

continuous flow (6), set up time reduction (7), total productive/preventive maintenance (8), statistical

process control (9), and employee involvement (10) address issues internal to the firm.

The main objective of a Lean manufacturing system is to obtain a streamlined and high-quality flow

of production, delivering finished goods at the pace of customers’ demand, with little or no waste

(Shah and Ward 2003, de Treville and Antonakis 2006, Samuel et al. 2015). Shah and Ward (2007)

affirm the goal of socio-technical integrated Lean systems is being able to eliminate waste (muda),

by simultaneously reducing or minimizing customers’, suppliers’, and internal variability. The

singularity of the Lean approach lies on a single-minded focus on eliminating all the types of waste

identified by Ohno (1988): an enterprise creates value for customers through a series of activities that

transform inputs into outputs and whatever exceeds the minimum needed to perform the value-added

functions is waste.

According to de Treville and Antonakis (2006), Lean systems do not set targets in terms of level of

leanness, but they focus on continuous improvement processes. Each process leads to a reduction in

waste or to an improvement in flow, and to setting new goals for the future. One of the most

innovative solutions introduced by the TPS was to operate with minimum buffers, while attempting

to maintain a high capacity utilization. Thus, quality problems should be solved, workers should be

provided with expertise, equipment, and encouraged to help improve the production system. Demand

should be smoothed so to reduce the downstream variability.

A key element of Lean Management is the principle literature refers to as “respect-for-humanity”,

which implies a new perspective describing the role of employees within the firm. Respect for

workers is the glue that holds all the Lean physics dimensions together. It is necessary to incorporate

workers’ suggestions, make maximum use of employees’ knowledge that stands at the basis of

continuous improvement, and communicate appreciation and respect for them.

Jeffrey K. Liker, author of the international best-seller The Toyota Way: 14 Management Principles

from the World’s Greatest Manufacturer, observes that Lean principles are developed on the belief

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that the right tools applied to specific problems by expertly trained individuals will dramatically

improve business performance in a relatively short period. In Toyota, carefully selected and

developed people, over long period, will continuously improve processes, and ultimately lead to

competitive advantage and mutual prosperity.

Benefits coming from the implementation of Lean practices and tools are well established and

demonstrated by Operations Management literature.

Companies started getting interested into Lean production principles once the IMVP showed that

Japanese cars manufacturers were twice as effective as their Western competitors (Lewis, 2000).

Shah and Ward (2003) show that the adoption of Lean practices, which they divided into the four

bundles JIT, TPM, TQM and HRM, contributes substantially to the operating performance of plant.

More precisely, focusing on a five-year period, Lean practices and tools lead to a decrease in

manufacturing and customer lead time, scrap and rework cost, and unit manufacturing cost, and to an

increase in labor productivity. The authors also find out the bundles explain about the 23% of the

variation in operational performance, given the effect of the context (the reference industry), and

moderating variables (plant size, age, and level of unionization).

More recently, Netland et al. (2015) analyze both the effect management decisions, in terms of use

of dedicated teams, bottom-up performance reporting, internal audits, financial and non-financial

rewards, have on the implementation of Lean practices, and the effect of those practices on the

variation of the operational performance of the plant. Their work reveals two important outcomes.

On one side, they reveal the positive effect managerial leverages such as dedicated teams, bottom-up

performance reporting, and non-financial rewards to workers, have on the implementation of Lean

processes. On the other side, they find ulterior evidence of the positive relationship existing between

Lean Management and operational performance.

We finally report Samuel et al. (2014), who further confirm the success of Toyota by citing four key

main statistics: Toyota sales have been continuously growing in the last 40 years, Toyota profit and

market capitalization are higher than the one of its direct competitors and, finally, Toyota has become

the world leading car maker in sales ranking (Rother, 2010).

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2.3 KNOWLEDGE-BASED VIEW OF THE FIRM

Representing one of the emerging areas of interest in the strategic management field, the importance

of the knowledge-based approach to the firm has been sharply growing in the last two decades, as the

Resource-Based Theory became a valid alternative to the traditional product-based theory, or

competitive advantage view (Sveiby, 2001).

Even though there is still insufficient consensus to perceive it as a ‘theory’ of the firm, the

Knowledge-Based View directly derives from the Resource-Based Theory, and has the objective to

deeply describe the relationship existing between knowledge and the organization. It is well known

that, according to the Resource-Based Theory, the firm is seen as a unique bundle of resources and

capabilities, and the primary task of the management is to maximize the value created by optimally

deploying those existing resources and capabilities, and developing a new resource base for the future.

The Knowledge-Based View recognizes knowledge as the primary resource of the company.

Grant (1996), one of the main authors of the knowledge-based approach to the firm, starts the analysis

and the description of the Knowledge-Based View, by trying to answer the key question: “What is

knowledge?”. The response consists of the identification of the main characteristics knowledge must

have in order to be useful to the firm to create value: transferability, capacity for aggregation,

appropriability, specialization in knowledge acquisition and the knowledge requirements of

production.

The transferability of a firm’s resources, capabilities and knowledge is the essential determinant of

its capacity to build a sustainable competitive advantage. It defines whether and how information and

knowledge can be spread within and across the company. When it comes to knowledge and its

transferability, it is necessary to distinguish between explicit and tacit knowledge:

Explicit Knowledge is identified by Grant with “knowing about”. Its fundamental property is

the ease of communication within and across organizations. It is codified and documented,

thus it is very easy to communicate and capture.

Tacit Knowledge is identified by Grant with “knowing how”. Contrarily to the explicit

knowledge, it cannot be codified. It can only be observed through its application and acquired

through practice. Therefore, its transfer within and across organizations is slow and difficult.

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Many other authors address Grant’s classification of tacit and explicit knowledge. Anand et al. (2010)

examine the importance for the company to focus equally on capturing both tacit and explicit

knowledge, while many firms decide not to waste time and resources in trying to perform such a

difficult task, as apprehending tacit knowledge would be. More specifically, the authors recognize

tacit knowledge as a source of competitive advantage to the organization since its difficult-to-codify

nature contributes to the creation of difficult-to-imitate (by competitors) capabilities.

The capacity for aggregation (Grant, 1996) represents the ability of the company to add and integrate

new and existing knowledge, which is determinant for the firm’s success; while appropriability refers

to the ability of the owner of a resource to receive a return equal to the value created by that resource.

Specialization in knowledge acquisition consists of the ability of storing important knowledge and

getting rid of the non-necessary one. Finally, the knowledge requirements for production consider the

input – process – output logic scheme, which is based on the knowledge-based assumption that the

critical input in production, and primary source of value, is knowledge.

According to Grant (1996), “firms exist as institutions for producing goods and services because they

can create conditions under which multiple individuals can aggregate their specialist knowledge”.

This statement represents the basic principle of the Knowledge-Based View: the firm is considered

as a knowledge-integrating institution. It implies that knowledge creation is an individual activity,

and the primary role of a company is the collection, codification and integration of the existing and

new knowledge, which is either developed by employees (members of the organization), or acquired

by ingesting new members who own knowledge the firm did not previously have.

However, the pure transfer of knowledge between members of the firm is not what experts mean

when defining the knowledge-integrating role of the company. As illustrated above, theory defines

knowledge as the basic requirement and critical input of production. It means that production requires

the integration of many people’s knowledge, both employees and managers. Moreover, production

systems, especially those ones based on the TPS model and on Lean Management methods,

continuously look for efficiency, which is reached by minimizing the time needed to transfer

knowledge and promoting the cross-functional learning within the firm. In fact, it is well known that

one of the main practice of the Lean Management is the definition of cross-functional teams, which

integrate and relate employees with different backgrounds, skills, and know-how (Shah and Ward,

2003). Thus, in order to facilitate the knowledge transfer and integration process, Grant (1996)

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suggests a series of tools, such as rules and directives (impersonal and low-cost), sequencing, routines

and, finally, group problem-solving and decision-making.

The cited assumptions and characteristics of knowledge and the idea of a firm as a knowledge-

integrating institution lead Grant (1996) to reveal two main implications and issues related to the

internal structure of the firm: the role of hierarchy and the location of decision making.

Hierarchy

Knowledge creation is a process performed by individuals. Then, it may happen that two members,

even though belonging to the same firm, have different goals and objectives. Hierarchy has emerged

in order to solve both the difficulties in coordination and the problem of divergent goals. It is a general

feature necessary in complex systems as a problem-solving tool. In order to have an efficient

hierarchy structure two conditions must be ensured. It is essential that top-level managers do not

know only a fraction of what their employees know and that the tacit knowledge owned by employees

can be transferred upwards.

Decision-Making Location

In a very complex system, managers may face some difficulties in directly controlling all the

processes carried out within the firm and for this reason managers often rely on delegations. That

implies the owner to delegate some activities of the decision-making process to his subordinates, who

are often experts of the area the decision belongs to.

According to the Knowledge-Based View, knowledge is the most important resource within a

company. Since knowledge is developed by the members of the organization, employees are the

owners of knowledge within the firm. Then, if decision right is conferred by ownership, and if

employees and shareholders jointly own the firm’s resources, management decision rights are

delegated downwards by the stockholders, and upwards by employees.

In light of these considerations, the Knowledge-Based Theory can be considered an innovative way

to describe and study a number of recent organizational structures and models promoting the

empowerment of employees, horizontal and cross-functional teams and interfirm alliances, such as

Lean Management.

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2.3.1 Knowledge-Based View in Operations Management

In recent years the emphasis on the use of theory in Operations Management research increased (Choi

and Wacker, 2011; Ketchen and Hult, 2011) and this is particularly true for a number of theories from

the Organizational Sciences, due to their applicability and complementarity for the Operations

Management field.

Authors do not only use these theories to help explain Operations Management phenomena, but also

integrate and extend them in order to enrich the theoretical basis underlying their research questions.

Knowledge-Based View has been identified among these, together with the Resource-Based Theory,

Transaction Cost Theory, Dynamic Capabilities, Systems Theory, Resource Dependence Theory,

Organizational Learning and Social Network Theory.

Hitt et al. (2015) performed a research on the application Resource-Based Theory in the Operations

Management field and, by evaluating articles in the recent six plus years across nine of the major

journals publishing scholarly research in the field1, they confirmed its growing application in OM and

identified an emerging trend. Approximately 77% of the reviewed works involved more than one

perspective and the Knowledge-Based View has been classified as one of the mostly commonly

integrated perspective with Resource-Based Theory.

According to Lee et al. (2011) and Menor et al. (2007), knowledge reflects the intellectual capital of

a firm and provides a firm with the means needed to improve performance over time through process

innovation and product innovation.

Since it influences the ways that companies deal with environmental dynamism, it represents a

strategic resource from which firms derive their competitive advantage.

The “learning laboratories” (Leonard-Barton, 1994), relying on increased organizational knowledge,

reduces risks and uncertainties typical of dynamic environments and enable a cumulative process

where the “know-what” (where to find the necessary information) provides the bricks to build “the

know-how” (how to run operations smoothly).

Paiva et al. (2005) describe the process of manufacturing strategy as the result of the integration of

the two facets of organizational knowledge. The first facet refers to the dynamism of internal

knowledge as enabler of the company ability to continuously fit its capabilities to environmental

1 Academy of Management Journal, Academy of Management Review, Decision Sciences, International Journal of Operations and Production Management, Journal of Operations Management, Journal of Supply Chain Management, Management Science, Production and Operations Management and Strategic Management Journal.

32

changes, while the second facet deals with the external organizational knowledge, which is the

knowledge derived from sources external to the company.

In their work, Hitt et al. (2015) identify several articles highlighting the role of knowledge in

Operations Management, citing Hult et al. (2006) and Modi and Mabert (2007) for their studies about

the knowledge elements and their relations with supply chain performance, and Dyer and Nobeoka

(2000) and Germain et al. (2001) for their exploration of the knowledge sharing process in Operations

Management.

Among the reviewed papers in Operations Management field that use or integrate the Knowledge

Based-View, Novak and Stern (2008) consider the vertical integration as a prerequisite for internal

capability and knowledge development over time; Paiva et al. (2008) make a distinction between

organizational knowledge and information, nominating the former a needed resource to highly

integrate manufacturing with other functions.

Craighead et al. (2009) describe how the capability to develop knowledge together with intellectual

capital jointly determine product-specific responsiveness while Da Silviera and Sousa (2010)

positively relate learning capabilities to performance improvements in quality, flexibility and

dependability.

Oliviera and Roth (2012) attribute the identified five combinative service competency bundles

(service climate, market focus, process management, human resource policy, and metrics and

standards) to the Resource-Based Theory and Knowledge-Based View of competitive advantage.

Besides this articles collection, Letmathe et al. (2011) refer to the relevance of task understanding

and skill development and compare tacit and explicit knowledge transfer in contexts of autonomous

learning and self-observation. They derive implications for the organizational design of

manufacturing and provide a combination of learning mechanisms that stimulate the workers, which

efforts are required from an organizational and Human Resources Management perspective.

Specifically, the transfer of explicit knowledge in combination with autonomous learning and self-

observation or with autonomous learning, self-observation and additional outcome feedback

improves manufacturing performance in terms of quality and assembly time when a new task is

introduced. This suggests that managers and decision makers should enable knowledge transfer

activities and motivate active self-observation of workers’ work behaviours and outcomes.

The potential of a knowledge-based approach has been also identified by Lepak and Snell (2001) in

their research about the Human Resource architecture and its relations with the firm’s human capital.

33

Specifically, they highlight the existence of four different employment relationships –

alliances/partnerships, contractual work arrangements, job-based employment and knowledge-based

employment- that a firm can establish with its employees and four different Human Resource

configuration designed to suit the identified employment modes, respectively collaborative-based HR

configuration, compliance-based HR configuration, productivity-based HR configuration and

commitment-based HR configuration.

They conclude that the so-called knowledge-based employment, based on employees’ training,

education and knowledge development, enhance the uniqueness and the strategic value of the firm’s

human capital contributing to its competitive advantage.

2.3.2 Lean Management and Knowledge-Based View

As already said, the main principle of the Knowledge-Based View perceives the firm as an entity

which has the task of collecting and integrating the knowledge developed by its members, at an

individual level, and exploiting it in order to create value. We can then understand why this new

perspective of the firm plays such a key role in Lean Management based companies, which require

employees to increase their expertise to improve the production system (Longoni et al., 2013) and

build up new knowledge as a way to solve arising problems.

If we come back to the early slogan “work smarter not harder” (Womack et al., 1990), we see that

proponents of Lean Management designed the Lean principles in order to be applied to the enterprise

as a whole, engaging all the members of the organization and continuously challenging them to

reexamine what they take for granted.

While most of the guidelines proposed appear to be general and exportable (continuous improvement

mindset, experts who act as teachers/mentors etc.), others require knowledge translation (Larman and

Vodde, 2009) and a qualitative approach.

The recent literature shows that a Knowledge-Based View allows a deeper analysis and interpretation

of these qualitative factors, providing a clear understanding of the knowledge dimension underlying

the Lean transformation.

Specifically, Sparrow and Otaye-Ebede (2014) observe how knowledge plays a key role in moving

from process-centered to people-centered approaches in the execution of Lean. They refer to

Henderson and Clark’s (1990) distinction between component knowledge (knowledge of the parts

rather than the whole) and architectural knowledge (the shared understanding of the interconnection

34

of all components, it provides the big picture including the conflicts emerging within it). They also

relate knowledge integration and translation mechanism to the creation of expertise and structural

changes to the location of the intellectual capital associated with learning about the implementation

of Lean (Sparrow, 2012).

Considering the adoption of Lean Management principles ultimately a knowledge generation,

combination, selection, diffusion and learning process, Secchi and Camuffo (2016) find appropriate

to investigate the Lean roll-out processes relying on the Knowledge-Based View of the firm. From

this theoretical premise they derive the dimensions of their research framework, which connects

knowledge transfer success (both in terms of effectiveness and efficiency), knowledge replication

strategy (that can be closer to a template-based or principles-based approach depending on the degree

of codification, detail and standardization), decentralization of the decision making process, structural

and contextual ambidexterity to the effectiveness, and efficiency of the Lean roll-out processes.

Ikujiro Nonaka (1995), a Japanese organizational theorist well known for his studies on knowledge

management, highlights the centrality of knowledge in the competitive advantage creation process,

introducing the so-called “The Knowledge-Creating Company”. He attributes the ability of Japanese

companies such as Honda, Canon, Matsushita, NEC, Sharp and Kao to respond quickly to customers,

create new markets rapidly develop new products and dominate new technologies to their

management of new knowledge creation.

What fuels innovation is that the Knowledge-Creating Company is much about ideals as it is about

ideas, that means that creating new knowledge implies a company re-creation, a nonstop process of

personal and organizational self-renewal enhanced by a particular vision or ideal.

Staats and Upton (2011) analyze the attempt of Wripo Technologies, one of the largest IT services

and product engineering companies in the world, to apply Lean approach. Their study provides

meaningful insights about the relation between knowledge management and Lean Management,

stressing the importance of a shared understanding and the need of proper mechanisms of knowledge

transfer within the organization.

One of the main challenges identified refers to the standardization and codification of the procedures

and its, apparently, inapplicability to non-manufacturing contexts, such as the Wripo case, and is used

by the author to motivate and stimulate a continuous study of the work initially designed as tacit.

Striving to make tacit knowledge explicit is considered a guideline to engage the whole organization

in a disciplined learning process, leading to continuous improvements.

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Dyer and Nobeoka (2000) use a knowledge-based perspective to analyse how Toyota creates and

manages a high-performance knowledge-sharing network. They focus their attention on how the

Toyota network is designed to facilitate the sharing of tacit know-how providing meaningful insights

on how Toyota overcomes the dilemmas associated with knowledge-sharing in a network setting:

preventing undesirable knowledge spill-overs while motivating self-interested network members,

creating collective knowledge avoiding the emergence of ‘free riders’ members and creating the

necessary pathways to facilitate efficient knowledge flows.

Toyota’s ability to effectively solve these three dilemmas explains part of the relative productivity

advantages enjoyed by Toyota and its suppliers.

2.4 LEAN SUSTAINABILITY

The Lean production model attributes the development of a significant manufacturing performance

advantage to the capability of the firm to adhere to three key principles (Womack et al., 1990;

Womack and Jones, 1996):

Improving flow of material and information across business functions

Referring to customer pull rather than to organization push (if we referred to a shop-floor level

we could translate this principle in the implementation of a Kanban system)

Enabling continuous improvement by continuously developing people

It is worthy noticing how their counter-intuitiveness denotes a paradigmatic nature of Lean production

and implies a series of managerial concerns that undermines not only the launch of a Lean program

but also its consolidation over time.

Specifically, some tensions and resistances have been identified during the implementation of Lean

capabilities for improvement (Maalouf and Gammelgaard, 2016). Applying the paradox theory, the

authors investigate the organizational paradoxes emerging from the implementation of a range of

Lean tools in three Danish companies. Moreover, they use the four categories of organizational

paradoxes as a lens for reviewing the extant Lean literature.

First, the competing elements of Lean work design, which include mechanistic features aimed at

simplifying and standardizing processes and promoting their efficiency and motivational features

associated with greater job responsibility and rotation, embeds the paradox of organizing these

different aspects in a way that enhances performance.

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Second, the belonging paradox arises when tension between identity and interpersonal relationship

emerges. The belonging paradox is embedded in the attempt to make the team role and the functional

role coexist in cross-functional teams, where individuality should be respected but also kept

monitored since it can disrupt group decision and performance.

Third, the competing measures of managerial success and Lean pursuit of multiple and competing

dimensions of corporate performance (lower costs, short cycle time, higher quality etc.) represent the

source of the paradox of performing, which emerges when people are required to pursue short-term

and long-term objectives at the same time.

Finally, the paradox of learning refers to the ability to assimilate new knowledge and the Lean

objective to develop professional skills rather than achieving higher level of specialization as pointed

out by Womack et al. (1990):

“The paradox is that the better you are at teamwork, the less you may know about a specific,

narrow specialty that you can take with you to another company or to start a new business.”

The authors identify in the tensions emerging from the above-mentioned paradoxes the source of the

unexpected setbacks and negative dynamics that often affect Lean transformation, undermining its

benefits and its implementation. Their investigation, developed through a case study methodology,

provides also some insights about the managerial actions needed to overcome such tensions.

Experimentation and adjustment of Lean standards to local needs, coaching and mentoring to

influence the cognition and behaviors of individuals, facilitation of group discussions and reduction

of the fear of exploitation, effective allocation of resources and worktime to Lean change and

alignment with annual performance appraisal.

From this paradox perspective, Lean change happens when managers successfully overcome the

above-mentioned resistances.

Another definition of Lean success derives from the results of Shah and Ward (2007), who related

the Lean Management success to the implementation of a complex system of interrelated socio-

technical practices. Indeed, as pointed out by Liker and Rother (2011), several Lean programs fail

because of a company’s superficial approach that overlook the importance of human related practices.

A wide branch of Operations Management literature tried to relate the sustainability of Lean

implementation strategy to the role of Human Resource within the firm. It is common belief that Lean

manufacturing reaches sustainability through a planned process improvement enforced by employees

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(Flumefert et al., 2012). Sustainability, in a Lean context, is obtained thanks to the ability of workers

to develop new knowledge, thus increasing the internal knowledge stock of the company, to face and

solve problems and inefficiencies. That is the reason why it is usual to relate the term Lean

Management to “learning organization”, and to apply notions of organizational learning in resolving

sustainability issues (Smith 2011). A learning organization is an organization where workers and

employees are always pushed to think and learn so to develop new knowledge. Lucey (2009) focuses

on the importance of the employee involvement as a requirement for sustaining a Lean strategy.

According to the author, employee engagement is a reliable and robust way to establish the success

and sustainability of a major change. The term ‘Lean sustainability zone’ indicates the employee