Implementing corporate lean programs: The effect of management control practices

• Date: 01 May 2015
• DOI: http://doi.org/10.1016/j.jom.2015.03.005
• Author: Jason D. Schloetzer,Torbjørn H. Netland,Kasra Ferdows
• Published date: 01 May 2015

Journal of Operations Management 36 (2015) 90–102

Contents lists available at ScienceDirect

Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

Implementing corporate lean programs: The effect of management

control practices

Torbjørn H. Netlanda,b,∗, Jason D. Schloetzer c, Kasra Ferdowsc

aNorwegian University of Science and Technology, Norway

bCentre for International Manufacturing, University of Cambridge, United Kingdom.

cMcDonough School of Business, Georgetown University, United States

article info

Article history:

Received 12 August 2014

Received in revised form 12 March 2015

Accepted 17 March 2015

Available online 24 March 2015

Accepted by Daniel R Guide

Keywords:

Management control

Lean manufacturing

Lean implementation

Factory performance

abstract

Weexamine how management control practices relate to the implementation of a corporate lean program

at the factory level. Our empirical analysis uses data from a large manufacturing firm that is implementing

a corporate lean program in its global plant network. We find that using dedicated teams to lead the lean

program, developing and frequently reviewing lean-focused performance reports, and using nonfinancial

rewards linked to lean implementation are favorably associated with more extensive implementation of

lean practices in the factories. We do not find evidence that the use of management-initiated internal

audits and financial rewards tied to lean implementation are strongly associated with more extensive

lean implementation. We also present evidence of a positive relation between lean implementation and

improvements in operational performance in the factories. Overall, these findings suggest that when

implementing a corporate lean program, the firm must pay careful attention to the type of management

control practices it uses for controlling the input, process, and output aspects of the lean program.

© 2015 Elsevier B.V. All rights reserved.

1. Introduction

Corporate lean programs aim to implement lean manufacturing

practices in the firms’ global plant networks. Despite the docu-

mented benefits of these practices (Shah and Ward, 2003; Womack

and Jones, 1996; Womack et al., 1990), many global manufactur-

ers often struggle to implement such programs in their production

networks (Netland and Aspelund, 2014; Pay, 2008; Schonberger,

2008). As with the implementation of any company-wide improve-

mentprogram, the management control practices used can foster or

impede the lean implementation process (Ahlström and Karlsson,

1996; Anand et al., 2009; Bititci et al., 2011; Fullerton et al., 2013;

Kennedy and Widener, 2008; Liker, 2004). This paper investigates

the relation between the use of several common management con-

trol practices and the implementation of a corporate lean program.

We organize our analysis using the conceptual framework of

management control articulated most recently by Merchant and

Stede (2012). The framework views management control as ele-

ments that seek to control and coordinate the inputs to a process,

the process itself, and the outputs of a process. This input-process

∗Corresponding author. Tel.: +47 98245169.

E-mail addresses: torbjorn.netland@iot.ntnu.no (T.H. Netland),

jds99@georgetown.edu (J.D. Schloetzer), ferdowsk@georgetown.edu (K. Ferdows).

-output control framework guides our empirical analysis, which

uses factory-level data collected from a world-leading commercial

vehicles manufacturer regarding its on-going effort to implement

lean on a global scale. Specifically, we use internal company data

from formal audits of lean implementation in 36 plants of the man-

ufacturer as well as data from a questionnaire survey collected from

multiple respondents in the same plants. The audit data were com-

piled by an internal team of experts from the manufacturer who had

conducted on-site assessments of the extent of lean implementa-

tion at each factory. We combine the audit data with our survey

data, which include information regarding the use of management

control practices in each factory, as well as changes in the opera-

tional performance of the factory. We supplement the quantitative

datawith factory visits and semi-structured interviews with factory

employees to improve our understanding of the manufacturer’s

lean program and management control practices.

We use two-stage least-squares methods to analyze the data.

The first-stage regression tests the extent to which management

control practices relate to the extent of lean implementation. The

second-stage regression examines the relation between the extent

of lean implementation in a factory and changes in its opera-

tional performance. To operationalize our conceptual framework

of management control, we identify the extent to which factory

managers create dedicated lean implementation teams that sup-

port the lean program (i.e., input control), develop lean-focused

http://dx.doi.org/10.1016/j.jom.2015.03.005

0272-6963/© 2015 Elsevier B.V. All rights reserved.