Colloque : Changement Organisationnelles, Gestion de
Ressources Humaines et Communautés de Pratiques
Université de Technologie de Compiègne
21-23 Janvier 2003
The Adoption and Diffusion of High Performance Management:
Lessons From Japanese Multinationals in the West
Peter B. Doeringer
Boston University
Edward Lorenz
Centre d’Etudes de l’Emploi, France
David G. Terkla
University of Massachusetts Boston
Forthcoming in the Cambridge Journal of Economis, March 2003. Research for the UK
and French studies has been financed by the DG 12 of the European Commission under
its Targeted Socio-Economic Research (TSER) Programme (Contract No. SOEI –
CT1078). The research on the United States was supported by the W. E. Upjohn Institute
for Employment Research and the Alfred P. Sloan Foundation. We would like to thank
Nathalie Lazaric for allowing us to freely draw on her case study work of three Frenchbased affiliates and we gratefully acknowledge the database and case study materials on
the United States provided by Christine Evans-Klock. Research assistance provided by
Robbie Judes and Christophe LeGuhennec is greatly appreciated.
Introduction
There is an on-going international debate over how to improve the competitive
performance of the manufacturing sector in western countries. One focus of this debate is
on managerial transformation and the importance of replacing traditional management
practices with new “high performance” management practices, such as flexible work
organisation, intensive training, the use of self-managed production teams, and the
involvement of production workers in solving production and quality control problems.
Many of these practices resemble those pioneered by large Japanese enterprises
(Koike, 1988; Whittaker, 1990).1 Although questions have been raised in Japan about the
long-term efficiency of some of these practices (Japan Commission on Industrial
Performance, 1997), other analysts are persuaded that the Japanese high performance
management system offers substantial efficiency benefits (Aoki, 1990; Porter, Takeuchi,
and Sakakibara, 2000). Japanese multinationals have been at the forefront in introducing
such practices into western economies (Kenney and Florida, 1993; Doeringer, EvansKlock, and Terkla, 1998; Crowther and Graham, 1988; Munday, 1990; Elger and Smith,
1998; Sako, 1994; White and Trevor, 1983; Bourguignon, 1993) and there is growing
evidence from western firms that such practices are more efficient than the traditional
practices that they replace (Abegglen and Stock, 1985; MacDuffie and Krafcik, 1992;
Ichniowski, Shaw, and Prennushi, 1997; MacDuffie and Pil, 1998; Doeringer, EvansKlock, and Terkla, forthcoming).
Nevertheless, the international diffusion of these practices has been relatively
slow. National surveys show that it has taken over two decades for a majority of U.S.
firms to use at least some of these practices (Osterman, 1994; 2000; Black and Lynch,
1999) and adoption rates are even lower in Europe (Coutrot, 1999; Dreher, et.al. 1995;
EPOC, 1997; Waterson, 1997; Greenan, 1996; Lay, et.al. 1999). For example, the 1998
French Ministry of Employment survey of workplace employment relations, REPONSE,
indicates that only 14% of establishments in France involve more than half of their
employees in autonomous team organisation and the adoption rate of quality circles is
1
These practices are most commonly associated with the automobile and electronics industries in Japan and
are also present in other industries such as machine tools (Whittaker, 1990).
2
only 11% (DARES, 2000, p. 5). 2 According to Osterman’s 1998 survey, the comparable
rates for the United States are 38% and 58% (Osterman, 2000). While the 1998 UK
Workplace Employee Relations Survey (WERS) indicates a comparable use of team
organisation in the UK and the United States, it shows that a substantially smaller
percentage in the UK (16%) make use of quality circles (Guest, et. al. 2000, p. 16).3 Even
Japanese transplants in western countries rarely adopt the complete system of
management practices found in large enterprises in Japan. These data raise questions
about the compatibility of such practices with more traditional western industrial relations
arrangements.
This study draws upon the experience of Japanese transplants in the United States,
the UK, and France to understand better how Japanese-style management practices are
transferred to western economies and what constraints impede the transfer process.
Japanese transplants represent an ideal test case for examining these issues. Their
managers are well-versed in the strengths and weaknesses of high performance
management, their parent companies typically invest in “greenfield” plants that are free
of established management practices that might interfere with the introduction new
practices, and there is typically a willingness to adapt Japanese management practices to
western conditions if necessary.
We have conducted comparable surveys and on-site case studies of management
practices in Japanese transplants in the three countries. The comparative aspect of this
study allows us to examine whether there is a single management regime that represents
Japanese-style “best practice” for western countries, or if a series of national management
regimes are emerging among Japanese transplants in different countries.
Our surveys reach similar conclusions to other studies; that Japanese-style high
performance management practices are being transferred to the West, although often
selectively and with various adaptations (Liker, Fruin and Adler, 1999; da Costa and
Garanto, 1993; Pil and MacDuffie, 1995; Boyer, 1998; Jenkins and Florida, 1999,
Doeringer, Evans-Klock, and Terkla, 1998; Abo, 1994). However, our major finding is
2
Based on the results of a questionnaire administered to a representative population of 3000 establishments
employing more than 20 people.
3
The figures are based on the 1823 establishments employing over 25 people in the total WERS sample of
2191 establishments.
3
that patterns of transfer and accommodation differ systematically from country to
country in ways that suggest that new management practices are blended with traditional
practices to create distinctive national “hybrid” management regimes. We also show that
performance incentives for workers, particularly those involving “commitment” to the
firm, are an important adjunct to the transfer of Japanese-style high performance
management practices.
This paper also provides a partial explanation for why Japanese-style high
performance management practices do not diffuse more rapidly in the West. It shows that
national differences in public policy and in the exercise of labour power through trade
unions and informal workplace customs help to explain the existence of different hybrid
combinations of Japanese and traditional practices in different countries.
The Global Transferability of Management Practices: Theory and Evidence
Two different theoretical frameworks have been used to analyse cross-national
differences in management regimes. Theories of economic organisation see management
practices as instruments for improving micro-economic efficiency and they imply a
convergence in management practices among countries with similar technologies and
factor endowments (Williamson, 1975, 1985) . In contrast, theories of industrial relations
systems (Dunlop, 1958) see management practices as embodying considerations of
economic power, as well as efficiency. National differences among management regimes
are, therefore, likely to persist as long as the balance of power between labour and
management varies among countries.
Economic Theories of Organisation
Management practices are the subject of economic theories of organisation, where
they are interpreted as instruments for correcting market imperfections and failures –
transaction costs, imperfect information, and the potential loss of firm-specific assets -that would otherwise undermine the efficiency of production (Williamson, 1985; Aoki,
1990; Frazis, Gittleman, Horrigan and Joyce, 1998; Delery and Doty, 1996; Lazear, 1998;
Gibbons and Waldman, 1999; Dickens, Katz, and Lang, 1986; Katz and Summers, 1989).
Some of these theories focus on the importance of human capital investment by firms,
particularly when skills are firm specific. Others emphasise the need to resolve agency,
information, and co-ordination inefficiencies within the firm. Still others regard
4
compensation incentives and “efficiency wages” as the best approach to improving
productivity and operation efficiency. The common element, however, is that these
management practices can generate efficiency gains for employers.
It is typically assumed that differences in technology play a major role in
determining the extent to which particular workplace management practices are adopted.
The prominence accorded to technology implies that similar practices, or their functional
equivalents, will arise in countries with comparable technologies and factor costs. This
hypothesis about convergence predicts that Japanese-style high performance management
practices will be transferred to the West because they have efficiency advantages over
western practices in the areas of human capital investment, agency and information, coordination, and worker motivation.
Human Capital Investment
One source of labour efficiency in Japanese manufacturing is substantial
investment in both firm-specific and general human capital (Koike, 1994; Aoki, 1990).
Because lifetime employment and seniority-based pay in large Japanese factories reduce
the risks of lost training investments, substantial amounts of formal training, informal
training through rotating job assignments, and teamwork training, are common in
Japanese manufacturing. In western countries, workers tend to quit more frequently,
employment contracts are less permanent, and job tenure is likely to be of shorter
duration, so that such intensive training investments are less common than in Japan.
Agency and Information
A second set of efficiencies in Japanese manufacturing stems from practices that
reduce principal-agent problems, particularly where work effort and productivity are hard
to monitor (Williamson, 1975; Lazear, 1998; Milgrom and Roberts, 1990; Katz and.
Summers, 1989). The wage premiums paid by large Japanese firms, combined with
deferred compensation through seniority-based pay and reciprocal employer-employee
obligations based upon lifetime employment, are thought to provide “commitment»
incentives that discourage shirking by employees. High wages, seniority-based increases
in wages, and job security are also used to provide similar incentives in western
countries, but jobs are less secure and the deferred compensation profiles are often less
steep in the West so that shirking inefficiencies are likely to be more severe.
5
Co-ordination
Japanese management practices can contribute to the co-ordination of tightly
scheduled and fast-paced “lean” production and are particularly important for just-in-time
supply relationships. For example, systematically assigning workers to different jobs can
give them a broad sense of the production process, problem-solving through quality
circles can address scheduling and co-ordination issues, and flexible production teams
facilitate the reduction of production bottlenecks (Aoki, 1990). The more common
practice in western manufacturing is to develop bureaucratic rules of thumb for governing
routine co-ordination and to make overall co-ordination largely a managerial
responsibility (Williamson, 1975).
Compensation Incentives and Commitment Incentives
Japanese high performance management practices are reinforced by various types
of incentives that reward human capital investment and productivity, reduce agency
problems, and facilitate co-ordination and problem solving. For example, substantial
annual bonuses are paid to workers that are contingent upon the performance of the firm
(Koike, 1988). These bonuses provide a collective reward for improved productivity
through learning, higher work effort, and employee participation in solving production
and quality problems. They also tend to reduce principal-agent conflicts by sharing
efficiency gains with employees. In addition, the Japanese nenko wage system also has a
merit element that becomes important after several years of service as workers become
more skilled and knowledgeable, and the deferred compensation aspect of nenko seniority
pay can further motivate labour efficiency.
While piece-rate incentives and performance bonuses are sometimes used to spur
productivity in western manufacturing, and seniority plays a strong element in
promotions along job ladders, pay that is contingent upon performance is used less
frequently than in Japan. The tradition in the West, until recently, has been to base pay
on job content and to use seniority to determine job assignments.
Similarly, the loyalty and commitment of Japanese workers are secured through
practices such as lifetime employment guarantees and the sharing of managerial authority
with employees. The efficiency of employment guarantees is at the heart of recent
6
debates in Japan over how to reform Japanese organisational regimes (Japan
Commission on Industrial Performance, 1997; Porter, Takeuchi, and Sakakibara, 2000),
but they remain a part of the organisational regimes of most large enterprises in Japan.
Such commitment incentives, however, are much less prevalent in the West (Foulkes,
1980; Capelli, 1999).
Industrial Relations Systems and Management Practices
An alternative perspective on the transferability of high performance management
practices across national boundaries focuses on issues of public policy and the exercise of
power by labour and management, as well as efficiency, within national “industrial
relations systems” (Dunlop, 1958). According to this view, there are important national
differences in the relative power of labour and management, and in the public policies
used to regulate the workplace, which can lead to persistent national differences in the
types of management practices that are adopted by employers even where technologies
and markets are similar.
Comparative studies of national industrial relations systems provide considerable
support for management practices being contingent upon the local institutional context.
Even where technologies are similar, Japan, the United States, the UK, and France have
developed substantially different sets of workplace management practices that are closely
linked to the formal and informal exercise of power(Cole, 1971; Dore, 1973; Maurice,
Silvestre and Sellier,1982; Maurice, Sorge, and Warner, 1980; Braverman, 1974).
From this perspective, national differences in industrial relations systems may
constrain the transfer of high performance management practices from one country to
another where there are differences in labour power and public policy. These constraints
may block the transfer of particular management practices, or they may force
modifications in practices to make them compatible with other parts of the national
industrial relations system. In short, what is efficient under one set of national industrial
relations arrangements may not be efficient under another.
Evidence From Japanese Multinationals
The most extensive evidence on the extent to which Japanese-style management
practices can be transferred from country to country comes from studies of Japanese
multinationals operating in western economies (Cole, 1989; Kenney and Florida, 1993;
7
Fucini and Fucini, 1990; Doeringer, Evans-Klock, and Terkla, 1998; Abo, 1994; Florida
and Jenkins, 1996; Fruin, 1992; Crowther and Graham, 1988; Munday, 1990; Elger and
Smith, 1998; Sako, 1994; Trevor, 1988; White and Trevor, 1983; Bourguignon, 1993; da
Costa and Garanto, 1993). Corporate policies of Japanese multinationals typically require
that their western transplants adopt the identical investment criteria, management
information systems and productivity benchmarks that are used in Japan. More generally,
the transfer of management practices is facilitated by the practice of staffing transplants
with Japanese managers who have long experience with management practices in Japan.
The major exception to this pattern of transferring Japanese management practices
intact is found in the organisation of work and the design of personnel and human
resources practices. Here, the tendency is to blend Japanese-style management practices
with those that are traditionally used in each host country. This process of blending or
“hybridizing” Japanese and western work organisation and workforce management
practices is the responsibility of western, rather than Japanese, personnel managers who
are hired because of their familiarity with the industrial relations practices of the country
in which the transplant is located. Although these western personnel managers are often
sent to the parent company in Japan for training in Japanese-style human resources
management, they are typically expected to design hybrid systems that accommodate
established expectations regarding the exercise of authority and the structure of pay and
careers. (Doeringer, Evans-Klock, and Terkla, 1998).
The strongest evidence of this hybrid process comes from a handful of case
studies that look at similar branch plants of a single multinational in different national
settings (Fruin, 1999; Brannen, Liker, and Fruin, 1999, Sako 1994). These studies control
for the practices and strategies of parent corporations, type of product being
manufactured, and production technology. While the sample sizes are very small, they
tend to confirm that parent companies and their transplanted Japanese managers seek to
8
transfer major elements of the Japanese system, but that local adaptations are
widespread.4
New Survey Evidence on Hybrid Organisational Regimes
Because there are so few case studies and no common research methodology, it is
difficult to reach general conclusions about patterns of adoption and diffusion of
Japanese-style practices in western countries. In order to address this gap, we conducted a
series of similar interviews and surveys of Japanese transplants in the United States, the
UK, and France. In the United States, the universe of Japanese transplants was defined
using data collected on Japanese-owned affiliates by the Japan Economic Institute. The
French and UK populations were defined from listings of Japanese affiliates compiled by
the European Division of the Japanese External Trade Organisation (JETRO), the AngloJapanese Economic Institute, and the Office Franco-Japonais d’Etudes Economiques.
The European data were collected through questionnaires sent to the managing
directors of all 223 manufacturing plants of Japanese affiliates located in Britain and all
108 affiliates located in France. The U.S. data focused on three industries with high
concentrations of Japanese transplants -- rubber and plastic products, non-electrical
machinery and electrical equipment – and were obtained through detailed case studies of
28 Japanese transplants randomly selected from directories of Japanese affiliates in three
regions. To facilitate comparison, we use a subset of European responses (consisting of
21 plants in France and 44 in the UK) in the same three industries as the U.S. study (see
Table 1).
The firms surveyed span a broad range of technologies (batch, assembly line, and
continuous process), products, and ages. Specific products include computer diskettes,
rubber industrial belts, automobile dashboards, computer printers, and machine tools.
Most of the plants are medium-size, employing fewer than 500 employees (74%, 76%,
Fruin’s (1999) study of a Toshiba plant in Dieppe reports substantial barriers to transferability. However,
he sees these local adaptations as involving the local reinvention of Japanese high performance
management practices through learning and experimentation, which is an example of “close equivalence”
discussed below. Doeringer, Evans-Klock, Terkla (1998) and others describe a process of direct transfer of
practices with some limited experimentation.
4
9
and 79%, respectively, of the UK, French, and U.S. plants). All of the U.S. plants, 89 %
of the UK plants, and 90 % of the French plants are newly created greenfield operations.5
Table 1
Distribution of Japanese Affiliates by Industrial Sector
United States
(percent)
France
(percent)
UK
(percent)
Mechanical engineering and transport
32
24
36
Electronics and electrical equipmenta
36
38
50
Plastics, rubber and chemicals
32
38
14
No. of respondents
28
21
44
Industry Sector
a
Includes precision instruments
The surveys were timed to take advantage of a set of “natural experiments”
created by the large waves of investment by Japanese multinationals in manufacturing
plants that occurred in the United States in the late 1970s and 1980s and a decade later in
the UK and France. Retrospective data for the Japanese transplants in the United States
were collected covering the period between the birth of each start-up and the survey date
(1991 – 1993) and corresponding data were collected in 1998 and 1999 for the French
and UK plants. This allows us to make comparisons among Japanese transplants that
were in operation for similar periods of time in each country.
In addition to the survey data, qualitative data on management and human
resources development practices were obtained during lengthy on-site interviews at six
Japanese affiliates located in France, four in the UK, and for all 28 U.S. plants. The
studies involved multiple interviews with management. Further interviews were carried
out on the shop floor with team leaders and operators in half of the French and UK case
studies. This field research provides additional information that helps to show how
Japanese transplants construct hybrid organisational regimes in different countries.
5
Analysis of the survey results show that both start-ups and acquisitions have similar rates of adoption of
Japanese-style workplace practices.
10
Our surveys used comparable terminology to describe the various Japanese management
practices being examined in the different countries. For example, job rotation was defined
as the widespread assignment of workers to different jobs and teamwork was defined as
distinct groups of workers who shared responsibility for organising and carrying out a
production process.
We found almost no evidence of Japanese high performance practices affecting
shop floor operations being transferred intact to Japanese transplants. Instead, most are
either modified or are replaced by close substitutes that are intended to serve a similar
purpose (Westney, 1999).6 Quality circles may have less supervisory involvement than is
typical in Japan, intensive workplace orientation can replace job rotation as a means of
familiarising employees with the overall production process, the jobs among which
employees are typically rotated are more narrowly defined than those in Japan7, and “no
layoff” policies provide a modified version of the lifetime employment guarantees used
by these same companies in Japan.
There is some debate over whether these “close equivalents” should be counted
literally as “transferred” Japanese management practices (Westney, 1999). However, we
conclude from our field research that four key components of the Japanese management
system -- job rotation, quality circles, self-managing teams, and employee responsibility
for quality control – have recognisable counterparts that are intended to serve similar
functions among Japanese affiliates in the West. We, therefore, interpret these as
comparable practices while also noting when they have been modified in important ways.
Adoption Rates of Japanese-style High Performance Management Practices
In measuring the adoption rates of these practices, we use a relatively conservative
standard that a practice must apply to two-thirds or more of the front-line workforce.
According to this criterion, the United States shows the highest rate of transfer of
Japanese-style high performance management practices (see Table 2). The unweighted
average adoption rate in the United States for at least one Japanese-style practice is 82%
For a discussion of such “close” or “functional” equivalency, see Boyer, (1998); Oliver and Wilkinson,
(1992); Westney (1999), Fruin (1999) and Jenkins and Florida (1999).
7
For example, Whittaker (1990, pp. 60-61) in a comparison of the work of machine tool operators in nine
Japanese and nine UK plants finds that while there are no significant difference in the degree of rotation
between jobs, task range is nonetheless wider in Japan.
6
11
and is 14% for all four practices. The corresponding figures are 76% and 5% for France
and 66% and 2 % for the UK.
The higher utilisation of these practices in the United States is almost entirely
accounted for by theexceptionally high adoption rate of quality circles and self-managing
teams, both used in statistically significant higher proportions than in either the UK or
France (see Table 2).8 The adoption rate of job rotation in the United States is comparable
to that of France, but is low relative to the overall utilisation of high performance
management practices by Japanese transplants in the United States. The only other
contrast of note is that the affiliates in France and the UK, unlike those in the United
States, give employees responsibility for quality control much more frequently than they
adopt teams or quality circles.
Table 2
Frequency of Adoption of Organisational Practices By Japanese Affiliates
Percentage of Affiliates Applying Practice to more than
66 % of their Operators
Practice:
United States
France
UK
Job Rotation
36
38
18
Quality Circlesa
64
19**
20**
Self-Managing Teams
46
19*
16**
Employee responsibility for quality
control
At least one of these practices
50
62
60
82
76
66
All 4 practices
14
5
2
No. of respondents:
28
21
44
72.7
a
Significance of difference between U.S. affiliates and French and British affiliates.
Significance test: The test of significance of difference used is Pearson’s chi-square. * = significantly
different at the .05 level; ** = significantly different at the .01 level.
Based on Pearson’s chi square test, the differences in the adoption rates of the various practices among
countries shown in Table 2 are not the result of differences in the composition of industries or the mix
between start-ups and acquisitions.
8
12
Clustering of Japanese-style Management Practices
It is often argued that business efficiency can be further enhanced by adopting
clusters or “systems” of high performance management practices that complement one
another (Milgrom and Roberts, 1990). Our data allow us to look both at the incidence of
clustering and at the composition of clusters in the three countries.
The United States has the largest proportion of affiliates adopting multiple
practices (see Table 3). Both France and the UK are behind the United States in the
adoption of clusters of practices, with a significantly higher proportion of U.S. firms
using three or more practices than either of the other countries. However, the position of
the UK and France relative to each other is less clear. While a substantially larger
percentage of the French sample make use of some amount of clustering, over 90% of
these clusters involve only two practices. In contrast, almost 40% of the clusters among
the UK affiliates consist of three or more practices. In this respect, the pattern of
clustering of practices among UK affiliates resembles that of the United States more
closely than that of France.
Table 3
Clustering of Organisational Practices
(percentage of national samples)
Number of practices
used simultaneously
United States
United Kingdom
France
2 or morea
53.6
29.5*
52.4
3 or moreb
46.4
18.2**
4.8**
28
44
21
No. of Respondents
a
Significance of difference between the U.S. affiliates and the U.K. affiliates.
Significance of difference between the U.S. affiliates and the U.K and French affiliates.
b
Significance test: The test of significance of difference used is Pearson’s chi-square.
* = significantly different at the .05 level; ** = significantly different at the .01 level.
We also find important national differences in the composition of clusters of
practices (see Table 4). Japanese transplants in the United States come closest to
13
adopting a distinct national hybrid model based on high rates of adoption of team work
and quality circles, frequently combined with employee authority to control quality. The
combination of teams and quality circles is used by a statistically significant greater
proportion of U.S. firms than by those in the UK or France. Also, the greater use of the
combination of quality circles and employee responsibility as well as the three practice
cluster which adds the use of teams by the U.S. compared to France is statistically
significant.
Table 4
Types of Clustering
Cluster
(percentage of national sample)
U.S.
UK
FR
Rotation/teams
21.4
9.1
4.8
Rotation/ quality circles
21.4
4.5
4.8
Rotation /employee
responsibility
25
13.6
28.6
Teams/quality circlesb
42.9
9.1**
9.6**
Teams/Employee
responsibility
32.1
15.9
14.3
Quality circles/employee
responsibility
39.3
20.4
14.3*
17.9
4.5
4.8
Rotation/ teams/employee
responsibility
17.9
9.1
4.8
Teams/quality
circles/employee
responsibilitya
28.6
9.1
4.8*
Rotation/ quality
circles/employee responsibility
21.4
4.5
4.8
N
28
44
21
Rotation/teams/quality circles
a
Significance of difference between the U.S. affiliates and the French-based affiliates.
Significance of difference between the U.S. affiliates and the U.K and French-based affiliates.
b
Significance test: The test of significance of difference used is Pearson’s chi-square. * = significantly different
at the .05 level; ** = significantly different at the .01 level.
14
Job rotation, however, is adopted by well under half of the U.S. affiliates combining
teams and quality circles. In France the most common 2-practice cluster combines job
rotation with employee responsibility for quality control. However, it is rare that job
rotation is used in combination either with team organisation or with quality circles.9 In
the UK, the most common 2-practice cluster is quality circles combined with employee
responsibility for quality and relatively few of the UK firms combine this cluster with
either teams or job rotation.
Contingent Compensation Incentives
Most studies of Japanese transplants have neglected the effects of compensation
incentives on labour efficiency, even though the use of such incentives is central both to
economic theories of high performance management and to human capital investment and
long term labour productivity in Japan (Koike, 1988; Itoh, 1994). Our data show that
almost half or more of the Japanese plants in each country offer some form of wage
supplementation that is contingent upon performance (see Table 5).10 While the
contingent pay incentives found in the French, UK, and U.S. affiliates are not typical
elements of Japanese human resource systems (Itoh 1994; Koike 1994; Sako, 1997), they
serve a similar function and represent a significant component of the management
systems of Japanese hybrids in the West.
9
The only firm to combine job rotation with either teams or with quality circles is a small producer of
computer equipment employing slightly over 170 employees.
10
In addition to the pay policies listed in Table 5, plants in all three countries frequently make provision for
individual pay adjustments. These individual adjustments typically take the form of merit pay. France also
places considerable emphasis on compensation for employee suggestions.
15
Table 5
Pay Policies of Affiliates: Production Operators
Percentage of Affiliates Applying the Policy to more than
66% of their Operators
Compensation Incentive
U.S.
UK
France
Profit and Gain Sharinga
18*
14**
43
Collective or Team Bonus
29
25
24
Pay1 for knowledgeb
11*
34
24
At least one of these practices
46
55
62
No. of respondents:
28
44
21
1. Pat for knowledge refers to a formal component of the firm’s compensation programme designed to
reward the acquisition of multiple job skills.
a
Significance of differences measured between the French and the United States and U.K-based affiliates.
b
Significance of differences measured between the U.S.-based and the UK-based affiliates.
Significance test: The test of significance of difference used is Pearson’s chi-square. * = significantly
different at the .05 level; ** = significantly different at the .01 level.
As in the case of high performance management practices, there are significant
differences among the countries in the composition of the contingent practices that are
adopted. Japanese affiliates in France, for example, stand out in their extensive use of
profit and gain sharing and affiliates in both France and the UK adopt skill-based pay or
pay for knowledge plans more frequently than those in the United States. Only the use of
team or plant-wide bonuses is similar across the three countries.
Discussion of National Differences in Hybrid Japanese Management Systems
The survey evidence shows that there are relatively large national differences in
the hybrid management systems adopted by Japanese transplants in western economies.
These differences are clearly reflected in the overall adoption rates of Japanese-style
practices, which are higher in the United States than in the European countries. They can
also be observed in the adoption rates of specific practices and in the way that these
practices are clustered.
For example, giving employees responsibility for quality control is frequently
combined with the use of teams and quality circles in the United States to form a cluster
16
of practices that grant considerable authority to shop floor employees to organise work
and solve production problems. Employees in France and the UK are also commonly
given responsibility for quality control, but without comparable use of teams or quality
circles, so that the workforce has less involvement in the diagnosis of production and
quality problems. Conversely, the UK and France seem to have the edge over the United
States in the adoption of compensation incentives that encourage employees to invest in
human capital and that reward their higher productivity.
These differences among Japanese hybrid management systems suggest that
national industrial relations systems can affect the adoption of high performance
management practices, even among groups of branch plants of Japanese companies
which have considerable experience with such practices in their home country. At one
extreme, is the United States industrial relations system, where Japanese transplants
appear to find it relatively easy to adopt high performance management practices. At the
other is the French industrial relations system, where the transfer of Japanese high
performance management practices is much more limited.
The Laissez-Faire U.S. Industrial Relations System
The high adoption rates of high performance practices by Japanese transplants the
United States is consistent with a relatively laisser-faire U.S. industrial relations system
that poses few barriers to the transfer of efficient management practices. The U. S.
industrial relations system is lightly regulated by government so that employers have
considerable latitude in determining the organisation of work and the terms of the
employment relationship. Similarly unions have focused on bargaining over economic
issues while allowing employers to retain many prerogatives over the organisation of
work and the types of management practices adopted.
The major impediments to the adoption of Japanese-style organisational
arrangements by U.S. manufacturing plants have been the tradition of hierarchical
organisation and narrowly specialised jobs and the reliance on managerial authority for
production efficiency (Doeringer and Piore, 1971; Williamson, 1975; Kochan, Katz, and
McKersie, 1986; Capelli, 1999; Doeringer, Terkla, and Evans-Klock, forthcoming).
These features have been built into the training, wage determination, and career
employment practices of American industry and have been reinforced through collective
17
bargaining.
However, this situation has been changing in the last two decades because of
technological change, deregulation, increased global competition, and the decline of
unionisation in manufacturing, particularly among new establishments (Capelli, 1999;
Doeringer, Evans-Klock, and Terkla, forthcoming). The weakening of workplace
regulation through collective bargaining, combined with limited government regulation
and a growing openness among American managers to managerial reform, has created a
more favourable industrial relations climate for the adoption of Japanese-style high
performance management practices designed to make work and pay more flexible.
The De-Regulated UK System
The UK shares a number of features with the United States that should make the
industrial relations system relatively open to the transfer of Japanese-style management
practices. Union strength declined in the 1980s and this weakened the unions’ ability to
regulate the details of task assignment and workload. Moreover, the declining
competitive performance of British manufacturers in such sectors as autos and
mechanical and electrical engineering during the 1980s arguably made employers more
receptive to changing notions of best practice. These changes in employer attitudes and
the industrial relations climate created a suitable context for the negotiation of
agreements with the unions providing for new forms of flexibility and transferability
among skilled craft grades.11 These new forms of flexibility were most evident among
companies that negotiated relatively compliant “single union deals” in the 1980s and
early 1990s.
The continued decline of union influence from the mid-1990s, evident in the derecognition of unions in many work places (Brown, et. al., 1998, Claydon, 1996),
facilitated a further rolling back of traditional forms of workplace regulation based on
strict job demarcations. In this context, in both union and non-union plants alike, there
has been a new emphasis on “partnership agreements” based on the principle of actively
involving the entire workforce. (Knell, 1999; Mark, et. al., 1998). Despite the lightly
regulated character of the British industrial relations system, our evidence suggests that
relatively few of the transplants have succeeded in establishing authentic forms of
11
For such agreements in the auto and shipbuilding sectors, see Lorenz, 1994.
18
‘partnership’. The reluctance of management to share power with employees, the
unwillingness of technical personnel to take on shop-floor responsibilities, and worker
concerns over the equity of new forms of performance evaluation have all contributed to
constraining the diffusion of Japanese-style management practices.
State Regulation in the French Industrial Relations System
The French industrial relations system, as in the United States, has traditionally
relied on the bureaucratic organisation of work into job ladders within internal labour
markets. What sets France apart from both the United States and Britain is the strong
system of governmental regulation of pay and collective bargaining agreements. Base
rates of pay are linked to job classification systems that are delineated in branch-level
collective agreements (conventions collectives) negotiated between the unions and
employers associations at the regional level. These collective agreements also have a
statutory status and among the three countries studied, these job classification systems
(typically with 16 different grades for manual employees) are the most complicated and
the most distant from those used in Japan. Moreover, despite a considerable loosening of
administrative restrictions on layoffs, the standard employment contract (contrat de durée
indéterminée) in France continues to provide employees with a high degree of job
security relative to their counterparts in the United States and the UK.
State regulation of the national educational and training system also has significant
indirect effects on the diffusion of new work practices. There is a strongly held normative
assumption in France that a particular level of attainment in the state administered
educational system should provide uniform access to a particular level in the hierarchy of
job classifications and earnings (Buechtelemann, C. and E. Verdier,1998; Verdier, 2000).
In such sectors as chemicals and mechanical and electrical engineering, collective
agreements institutionalise these normative expectations by formally stipulating the
minimum classification grade for school leavers with state certified technical
qualifications. (Jobert and Tallard, 1997). This link between state certified qualifications
and access to entry-level jobs in an enterprise’s internal labour can reinforce the
traditional command and control structures characteristic of French industry by limiting
the scope for upgrading manual workers without state certified diplomas into positions of
technical or supervisory responsibility.
19
While the regulated character of the French industrial relations system can be
seen most strikingly in the complex and hierarchical systems of wage and job
classification, it’s effects are also evident in the distinctive use that French employers
make of job rotation. Job rotation is often associated with Japanese flexible production
systems, but it was also present in France during the heyday of inflexible Fordist mass
production in the 1970s when French employers made widespread use of job rotation to
obtain limited short-term flexibility in response to legal restrictions on hiring and firing.
Case Study Evidence on the Formation of National Hybrids
The preceding discussion suggests that industrial relations systems have an
important effect on the diffusion of high performance management practices in different
national settings and that Japanese transplants adopt hybrid management practices that
reflect the exercise of power in the defence of established practices, as well as efficiency
considerations. However, there are some puzzling findings in our survey data on Japanese
hybrids that are not easily reconciled with this conclusion. For example, why don’t
Japanese transplants in the UK more frequently adopt Japanese high performance
management practices since the UK industrial relations system seems to be almost as
unregulated as that of the United States? Conversely, if the U.S. industrial relations
system is so accommodating to the adoption of efficient management practices, why do
Japanese transplants in the United States adopt fewer performance-based compensation
incentives than their counterparts in the highly-regulated French industrial relations
system? In this section, we use evidence collected during our case studies to clarify the
survey findings and to provide a more detailed understanding of national differences in
the hybrid management practices of Japanese transplants.
Hybrid Workplaces in the United States
Even though Japanese transplants in the United States adopt high performance
management practices more frequently than in the other countries studied, they also
incorporate a number of practices that are in keeping with developments in the U.S.
industrial relations system in the past two decades (see Table 6). In particular, they follow
the practices of many U.S. companies in their avoidance of unions, use of traditional
work organisation based on entry training and job ladders, and they adopt contingent
forms of pay that are different from the kinds of bonuses paid in Japan.
20
Table 6
Adoption Rates of U.S. and Japanese-Style Workplace Practices
By Japanese Hybrids
Traditional U.S.
Practices
Non-union
Job ladders
Contingent pay
%
Adopting
Japanese Practices
96.4
46.4
46.4
Frequent meetings
with employees
Quality circles
Employees control
quality
Teams
Cross-training
Team training
No layoff policy
Job rotation
%
Adopting
100.0
64.3
50.0
46.4
42.9
42.9
42.9
35.7
While it would not be surprising to find traditional job ladders in unionised
Japanese transplants, formal job ladders are also used by almost half of the non-union.
This suggests that, even in the absence of a union, management has had to accommodate
to workers’ established expectations over the way in which jobs are linked to earnings
and career advancement. Continued reliance on traditional U.S. internal labour market
practices at least partly explains the relatively low utilisation of job rotation, multiskilling, and pay for knowledge by Japanese hybrid manufacturing plants in the United
States.12
At the same time, however, Japanese transplants reinforced the high performance
management practices reported in our survey with other Japanese practices, and they have
also modified some traditional U.S. practices to serve as partial substitutes for Japanesestyle high performance management practices. For example, the most frequently used
Japanese-style practices reported in our survey are those associated with flexible work
12
Kochan, Katz, and McKersie (1986, p. 100), for example, cite a figure of 19% of large non-union plants
using pay-for-knowledge systems in the mid-1980s.
21
organisation (teams, quality circles, and employee responsibility for problem solving
and quality control) and these practices have been strengthened by the adoption of team
training and cross-training to increase workforce flexibility even further (see Table 6).
Similarly, entry training is much more intensive than is typical among U.S. firms and is
used as a substitute for job rotation as a means of creating a broad exposure to job skills
in the plant (Doeringer, Evans-Klock and Terkla, 1998).
Perhaps the most dramatic Japanese-style element in the U.S. version of Japanese
hybrids, however, is the prevalence of no-layoff policies, which are adopted by over twofifths of the plants surveyed (see Table 6). While not as complete a job guarantee as the
lifetime employment practice found in Japan, such a policy represents an unusually
strong form of job security in the context of the U.S. industrial relations system and is far
more common than among counterpart new branch plants of U.S. companies (Doeringer,
Evans-Klock, and Terkla, 1998). The field research shows that such high levels of job
security are often important for securing the commitment of U.S. workers to the firm and
their high level of co-operation with Japanese-style practices, such as quality circles,
teamwork, and flexible job assignment. These commitment incentives are adopted almost
as often as contingent pay and are often used as a substitute for financial performance
incentives.
The way in which Japanese and traditional U.S. practices are combined into
hybrid organisational regimes is best illustrated by two examples from the field research.
One is a hybrid that produces rubber products, mainly for the automobile industry. Work
is organised into small production teams and substantial resources are devoted to entry
training and cross-training so that workers can understand the entire production process
and develop the skills needed for workforce flexibility. Flexible work organisation is
important to this plant because production batches are small and the product mix changes
frequently.
The corporate parent insisted that the guiding philosophy of the plant be to
“involve people in making changes.” According to the local managers, “change is an
easy sell because workers are involved in making change happen,” instead of seeing
change as threatening. The plant recruits workers with the aptitude for participating in
quality circles, a predisposition for “partnership” relationships with management and co-
22
worker, and the ability to be easily trained. All of the production workers participate in
quality circles and, unless there are urgent production needs, an hour of paid overtime
each day is devoted to quality circles and Kaizen training. There are also joint employeemanagement committees to foster communication on specific issues, such as health and
safety.
To support these practices, the plant chose to locate in an area with low rates of
unionisation in order to avoid an “us against them” attitude in the workforce. The plant
pays wages that are at the top of the area wage distribution and wage incentives are paid
for both acquiring additional skills and for team performance. The company maintains a
no-layoff policy by training employees or cutting back slightly on hours worked during
slack periods of demand.
A second example is an electrical equipment supplier that uses a highly
automated, machine-paced, mass production technology. Production jobs are repetitive
and they have only modest skill requirements, but the plant’s customers demand just-intime supply capability. Because the plant is so automated and the jobs so specialised,
opportunities for workforce initiatives to improve performance are limited. Nevertheless,
the human resources manager describes this plant as a “hybrid” of American and
Japanese-style practices. Kaizen groups are well established and they meet regularly to
resolve production and quality control problems and to make suggestions for improving
operations. Employees receive training in Kaizen practices and apprenticeship training is
also offered in electrical and mechanical skills. The plant pays above average wages for
the area, fringe benefits are generous, and it has a “no-layoff” policy. The plant located
in a rural area to reduce the probability of being unionised and a union organising
campaign was subsequently unsuccessful.
While these examples seem to confirm the openness of the laissez-faire U.S.
industrial relations system to Japanese-style high performance management practices,
Japanese transplants also take systematic advantage of the geographic diversity of
workforce attitudes and public policies toward unions in the United States by locating in
areas where workforce attitudes are most open to cooperation with management and
where unions are least likely to interfere with the adoption of management practices.
Japanese transplants in the United States are twice as likely as counterpart new domestic
23
manufacturing plants to locate in states with relatively little unionisation and are six
times more likely to locate in rural areas where they believe workforce attitudes are
particularly accommodating to Japanese-style management (Doeringer, Evans-Klock and
terkla, forthcoming).
Hybrid Workplaces in the United Kingdom
Although the UK industrial relations system resembles that of the United States in
that it is lightly regulated, our survey data suggest that the UK case is much closer to that
of France in terms of the balance between Japanese and more traditional management
practices in its Japanese hybrid factories. Since almost one third of the Japanese
transplants in the UK sample are unionised (compared to almost none in the United
States), one possible explanation is that UK unions remain an obstacle to adopting
Japanese-style high performance management practices, despite a significant decline in
their influence.
However, our evidence clearly shows unionisation per se does not explain these
low levels of adoption of Japanese high performance practices. For example, nine of the
fourteen unionised affiliates in our UK sample are characterised by the kinds of singleunion agreements that allow a high degree of managerial flexibility and have given rise to
a unique form of hybridisation not found in France or the United States. Moreover,
unionisation rates are higher among that significant minority of Japanese transplants that
have adopted clusters of three or more Japanese-style high performance management
practices than among those that have adopted relatively few of these practices.
Among these Japanese affiliates that are high adopters of Japanese-style practices,
the case studies also show a significant move towards “partnership” arrangements based
on substantial employee involvement in operational decision, significant investments in
training, and ample opportunities for the career advancement of shop floor workers. A
good example of partnership is a medium-sized producer of printers where a number of
the higher-level managerial and technical personnel, including the director of production
services, had started out their careers on the shop floor. This form of career progression
in turn has facilitated the transmission of technical and problem-solving skills to shop
floor personnel. It was not uncommon, for example, for the chief engineer responsible
24
for quality to work directly along side the team leaders and operators in performing
trouble-shooting work.
The most salient feature of those affiliates that adopt clusters of three or more high
performance practices, however, is the kinds of incentives used to reinforce these
practices. Thirty-eight percent of these affiliates provide the commitment incentives of
long-term employment guarantees, as opposed to only 5.6% of the UK transplants that
adopt fewer than three practices. This pattern bears a striking resemblance to the
frequency of use of commitment incentives in the United States.
Nevertheless, despite being lightly regulated the more general experience in the
UK is of a much more modest change and an accommodation to traditional practices. The
majority of the affiliates have experienced problems in forging new forms of work
organisation based on closer co-operation between the shop floor and the technical and
engineering offices and have had to rely more heavily on contingent forms of
compensation, such as team bonuses linked to achieving quality targets, to foster higher
performance.
One of the most striking accommodations to traditional national practices is found
in the pay and job grading practices of Japanese hybrids in the UK. The common
arrangement in the UK is to establish relatively simple criteria for assessing employee
performance, such as jointly agreed productivity or quality targets. One reason for this is
that the more complicated Japanese arrangements, relying in part on subjective
performance assessments by team leaders or supervisors, tend to generate labour conflict
around issues of favouritism and internal equity.
A good example is provided by the manager of an electronics transplant who
described how he had abandoned as unworkable the parent firm’s promotion and
evaluation system due to the tensions it generated around differential performance
appraisals. He replaced this Japanese system with a more traditional UK system of
individual evaluation based on achieving well-defined targets.
The case studies also reveal that a central obstacle to the introduction of Japanese
style high performance management practices is related to the traditional issue of skills
and training within the UK industrial relations system. There continues to be limited
investment in the technical problem-solving skills of production workers, partly because
25
most shop supervisors and team leaders lack the necessary formal training to impart
technical skills to operators on the job.13 However, it also has to do with resistance to
changes that are perceived as undermining previous status and position. Employees with
formal technical qualifications as a rule are reluctant to work directly along side
production workers on the shop floor.14
For example, a medium sized producer of photocopiers and fax machines that
initially used Japanese managers to invest in improving the technical competence of shop
floor personnel. The roles of supervisors and team leader were defined to be primarily
that of teachers and technical trouble-shooters. When the Japanese managers were
eventually replaced by indigenous British managers, training investments diminished.
The newly hired supervisors often lacked the necessary knowledge to teach and troubleshoot across the full range of assembly jobs and the handling of quality faults and
equipment failures was increasingly delegated to a handful of specialised personnel with
plant-wide responsibilities. This triggered a self-reinforcing process, where the lack of
investment in the skills of the shop floor personnel encouraged management to define the
supervisor’s job as primarily one of personnel management. In the end, the limited
development of operators’ technical and problem-solving expertise restricted their
involvement in quality circles and related continuous improvement activity and the plant
was unsuccessful on two occasions when it tried to introduce quality circles.
On balance it appears that the greater homogeneity of workforce attitudes, linked
to the historically more widespread influence of unionisation, make it more difficult to
implement Japanese-style management practices in the UK industrial relations system
than in the United States. In a number of cases, transplants in the UK have had to
negotiate union agreements in order to transfer the same types of practices that they have
unilaterally introduced in rural and non-union locations in the United States.
Hybrid Workplaces in France
The regulated nature of the French industrial relations system indirectly constrains
the diffusion of Japanese-style work practices. This can be seen in the ways that Japanese
13
The most common qualification held by supervisors in the affiliates we visited was the NEBSS (National
Examination Board for Supervisory Studies), a non-technical qualification emphasising personnel
management.
14
For a similar finding, see Sako (1994, p. 104-05).
26
transplants have adapted to traditional French job assignment practices linked to state
certified qualifications, the retention of traditional internal labour market hierarchies, and
even in how practices such as job rotation are used.16
For example, the close links that exist among nationally certified educational
diplomas and job-entry classifications can limit the scope for upgrading manual workers
to position of managerial or technical responsibility. This is illustrated by a Japanese
producer of auto parts in the Lyon region and by a producer of photocopiers near
Strasbourg. Rather than following the customary practice in Japan of recruiting team
leaders from the ranks of experienced production workers, in these two affiliates such
positions were commonly filled by recent school leavers who held the BTS (Brevet de
Technicien Supérieure), but had no prior shop-floor experience.
The hierarchical work organisation adopted by many Japanese affiliates in France
also inhibits the use of Japanese-style quality control procedures, as shown by the
example of a medium-sized Japanese producer of photocopiers and fax machines. This
affiliate, as with the majority of our French sample, has introduced the practice of making
employees responsible for production quality. In particular, individual quality faults are
recorded and the resulting performance ratings are taken into account in semi-annual
reviews that affect merit wage increases and promotion. In order to compensate for the
limited diagnostic and problem solving skills of production workers, quality faults in the
first instance are the responsibility of the supervisor and a skilled craftsman grade known
as ‘réparateur’. In the event that a solution is not forthcoming, there exists a special
service within the engineering department that has over all responsibility for quality
control. This firm’s reliance on traditional French hierarchical lines of control is captured
in its written policy regarding formal quality control procedures, which states that the
basic responsibilities of operators are to have “perfect knowledge of the operating
manual” and “to follow orders.”
The constraints of regulation also influence how job rotation is used. While the
widespread use of job rotation in Japanese transplants could be interpreted as evidence of
16
See the characterisation of job rotation in French manufacturing in the classic comparison of work
organisation and educational systems in France and Germany by Maurice et al. (1982). A recent study by
Valeyre (2000), based on a nationally representative sample of industrial firms, also finds a strong positive
correlation between the use of job rotation and the use of traditional assembly-line methods.
27
the successful transfer of a Japanese high performance management practice, the reverse
is true. Most Japanese transplants use job rotation in the same way as other French
employers to gain short-term flexibility in response to restrictions on hiring and firing. In
the affiliates we visited, job rotation was rarely seen as a way of promoting a broad
understanding of the production process, or as building skills within a team or facilitating
problem-solving. The use of job rotation in the latter sense is generally limited to the
small minority of workers organised in cells (ilôts de production) and to those few multiskilled (polyvalent) workers who were used to provide short-term workforce flexibility,
typically in response to unanticipated absenteeism.
Moreover, job rotation is even used in circumstances where manual workers are
not involved in teams, off-line quality circles, or groupes de progrès. For these reasons,
the distinctive use of job rotation in France should be seen more as a hybrid adaptation to
the regulations of the French industrial relations system, than as an indication of a
Japanese-style practice of investing in broad training and problem-solving skills.
A similar interpretation could be made about the role of profit and gain sharing in
the French context. While the survey data shows that Japanese affiliates in France use
such performance incentives at almost three times the rate of those in the United States
and the UK, this almost certainly reflects the influence of a unique French labour policy
that provides fiscal advantages to firms that negotiate profit or gain sharing agreements
(interessement légal) with a local union or comité d’entreprise.17 Among the affiliates
interviewed in France, only one, a tire producer, had a gain-sharing plan that did not take
the form of intéressement légal and instead linked pay to achieving certain performance
and quality targets. Within the constraints imposed by conventions collectives and
governmental regulations, however, Japanese transplants have been able to introduce
some new pay incentives. For example, several Japanese electronics producers have
introduced Japanese style flexible incentive systems through individual merit payment
that form a permanent part of the individual’s salary.
Concluding Lessons From the National Comparisons
The combination of survey data and case study evidence on Japanese hybrid
17
The ordinance of 4 January 1959 provided financial incentives for firms to link employee compensation
to company profits while the ordinance of 17 August 1967 made such pay system obligatory. See Reynaud
(1975, p. 252).
28
organisational regimes in three western countries clearly shows that Japanese high
performance management practices are being modified in significant ways when they are
transferred across national boundaries. These modified Japanese-style practices are
adopted at different rates and combined in different ways with workplace management
practices that are traditional to each of the three countries. The distinctive composition of
these national hybrids organisational regimes can be at least partly traced to differences in
industrial relations systems among countries. These include the ways in which
management has accommodated to the character of public polices for regulating internal
labour markets, the power of unions to regulate the workplace, and the established
expectations of workers regarding the exercise of authority and the structure of pay and
careers.
While the relatively low level of regulation of employment relationships by
government in the United States and the UK arguably provides a more accommodating
environment for the incorporation of Japanese-style practices in Japanese hybrids than is
found in France, it is nevertheless the case that there are substantial differences in the
patterns of adoption of such practices in these two countries that arguably reflect
management and workforce attitudes toward Japanese-style practices.
For example, problem-solving in quality circles and giving workers decisionmaking authority over quality control can increase their ability to slow production.
Similarly, teamwork requires co-operation among co-workers and training in multiple
skills can be expensive if workers are not committed to learning. These are also not
easily monitored activities, nor can they be readily controlled by management. This
provides a plausible explanation for British management’s general reluctance to invest in
the skills and problem-solving abilities of their manual operators. When they do make
such investments, they often couple them with the commitment incentives of job
guarantees.
Japanese transplants in the United States place the greatest emphasis on securing
such co-operation through open employee communication channels, contingent
compensation, and commitment incentives, and by locating near pools of labour that will
be relatively open to cooperation with management. However, even in the United States,
where the diffusion of Japanese-style practices is the most advanced, employers must also
29
accommodate traditional expectations that workers have about employment
relationships. This means preserving traditional elements of internal labour markets, such
as job-based wages and promotion ladders. It also means providing extra compensation
to encourage workers to accept non-traditional arrangements such as job rotation, the
acquisition of multiple skills, and paid participation in quality circles.
The comparison between the regulated French labour market and the deregulated
American and British markets provides a striking example of how public policy can
affect the hybridisation process. The impact of public policy in France can be observed
most strikingly in the relatively complex and bureaucratic procedures determining job
classifications and the structure of internal job ladders. It can also be seen in the indirect
effects on work organisation of the institutionalised link between state certification of
technical qualifications and job classification grades, and in the way that job rotation is
used to gain flexibility within such regulated internal labour markets.
While the exercise of power by labour and management and public policy result
in different blends of traditional workplace practices with Japanese high performance
management practices among Japanese transplants in different countries, we see a
common pattern in the types of traditional practices that survive and in the Japanese
practices that are most often transferred. The most commonly adopted Japanese-style
practices (such as teamwork and quality circles) are those that relate most directly to
management interests in production efficiency. In contrast, the practices of host countries
that are most often retained typically relate to worker compensation and the structure of
internal labour markets within firms. On balance, Japanese hybrids are able to introduce
more efficient high performance management practices, but they must accommodate to
worker concerns with preserving traditional practices that determine the economic
benefits from employment. It is this balance between efficiency gains for managers and
economic benefits for workers where national industrial relations systems seem to matter.
30
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