Organizational Innovations and Economic Growth
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Organizational Innovations and Economic Growth

Organosis and Growth of Firms, Sectors and Countries

Elias Sanidas

Analysing the USA and Japan from the late 19th century to the present day, the book provides an accessible synthesis of economics, management and econometrics to calculate the impact of various organizational innovations on economic growth. The author concludes that organizational innovations make essential contributions to sustained economic growth and that this should be reflected in economic policy both at the firm and the national level.
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Chapter 7: Empirical Evidence on the Links between Industrial Sectoral Growth and the Lean Production System (JIT/QC) in the USA

Elias Sanidas


7.1 INTRODUCTION In the previous chapter a general discussion was presented about the importance of manufacturing leading firms and leading sectors in Japan and the USA. This discussion was primarily descriptive. In this chapter empirical evidence will be more precise and thorough by considering a primary OI, that of JIT/QC. The latter also represents the main axis of OIs, and is mainly influenced by the POM.1 Milgrom and Roberts (1990) examined the complementary relationships between flexible manufacturing technologies, shorter production runs, more frequent product redesigns, lower inventories and other variables of modern American manufacturing, and found that these complementarities are an essential feature of a new era. In particular, lower inventories are an intrinsic part of all these complementarities. They summarized their research as follows (ibid., p. 511): ‘Manufacturing is undergoing a revolution. The mass production model is being replaced by a vision of a flexible multiproduct firm that emphasizes quality and speedy response to market conditions while utilizing technologically advanced equipment and new forms of organization … ’. Ebrahimpour and Withers (1993) confirmed that a major shift in manufacturing philosophy from static optimization (initially in the USA) to dynamic evolution (Japanese type) occurred in the USA. In The Machine that Changed the World, Womack et al. (1990) describe the lean production system (LPS) that was devised and implemented in Japan in the 1960s and 1970s, and then transplanted in the USA in the late 1980s and 1990s.2 Whether this system is replacing the mass production system, as the...

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