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The Effects of Human Resource Management Systems on Economic Performance: An International Comparison of U.S. and Japanese Plants

Author

Listed:
  • Casey Ichniowski

    (Columbia University, Business School, 713 Uris Hall, 3022 Broadway, New York, New York 10027)

  • Kathryn Shaw

    (Carnegie Mellon University, Graduate School of Industrial Administration, Room 250, Pittsburgh, Pennsylvania 15213)

Abstract

This study uses personally collected data from 41 steel production lines to assess the effects of Japanese and U.S. human resource management (HRM) practices on worker productivity. The Japanese production lines employ a common system of HRM practices including: problem-solving teams, extensive orientation, training throughout employees' careers, extensive information sharing, rotation across jobs, employment security, and profit sharing. A majority of U.S. plants now have one or two features of this system of HRM practices, but only a minority have a comprehensive system of innovative work practices that parallels the full system of practices found among the Japanese manufacturers. We find that the Japanese lines are significantly more productive than the U.S. lines. However, U.S. manufacturers that have adopted a full system of innovative HRM practices patterned after the Japanese system achieve levels of productivity and quality equal to the performance of the Japanese manufacturers. This study's evidence helps reconcile conflicting views about the effectiveness of adopting Japanese-style worker involvement schemes in the United States. United States manufacturers that have adopted a definition of employee participation that extends only to problem-solving teams or information sharing do not see large improvements in productivity. However, U.S. manufacturers that adopt a broader definition of participation that mimics the full Japanese HRM system see substantial performance gains.

Suggested Citation

  • Casey Ichniowski & Kathryn Shaw, 1999. "The Effects of Human Resource Management Systems on Economic Performance: An International Comparison of U.S. and Japanese Plants," Management Science, INFORMS, vol. 45(5), pages 704-721, May.
  • Handle: RePEc:inm:ormnsc:v:45:y:1999:i:5:p:704-721
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    File URL: http://dx.doi.org/10.1287/mnsc.45.5.704
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    References listed on IDEAS

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    Cited by:

    1. Gatti, Corrado & Volpe, Loredana & Vagnani, Gianluca, 2015. "Interdependence among productive activities: Implications for exploration and exploitation," Journal of Business Research, Elsevier, vol. 68(3), pages 711-722.
    2. Jordan I. Siegel & Barbara Zepp Larson, 2009. "Labor Market Institutions and Global Strategic Adaptation: Evidence from Lincoln Electric," Management Science, INFORMS, vol. 55(9), pages 1527-1546, September.
    3. Chandra Sekhar & Manoj Patwardhan & Vishal Vyas, 2016. "A Study of HR Flexibility and Firm Performance: A Perspective from IT Industry," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 17(1), pages 57-75, March.
    4. William Collier & Francis Green & Young-Bae Kim & John Peirson, 2011. "Education, Training and Economic Performance: Evidence from Establishment Survival Data," Journal of Labor Research, Springer, vol. 32(4), pages 336-361, December.
    5. Yun-Hwa Chiang & Chu-Chun Hsu & His-An Shih, 2015. "Experienced high performance work system, extroversion personality, and creativity performance," Asia Pacific Journal of Management, Springer, vol. 32(2), pages 531-549, June.
    6. Andrew J. Oswald & Eugenio Proto & Daniel Sgroi, 2015. "Happiness and Productivity," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 789-822.
    7. David Cooper & John Lightle, 2013. "The gift of advice: communication in a bilateral gift exchange game," Experimental Economics, Springer;Economic Science Association, vol. 16(4), pages 443-477, December.
    8. Marvin B. Lieberman & Rajeev Dhawan, 2005. "Assessing the Resource Base of Japanese and U.S. Auto Producers: A Stochastic Frontier Production Function Approach," Management Science, INFORMS, vol. 51(7), pages 1060-1075, July.
    9. Albert Irawan, 2014. "Factors that Determines the Success of Business Demon Value Added Management," Business and Economic Research, Macrothink Institute, vol. 4(1), pages 319-350, June.
    10. Cooper, David J. & Sutter, Matthias, 2011. "Role Selection and Team Performance," IZA Discussion Papers 5892, Institute for the Study of Labor (IZA).
    11. repec:eee:jeborg:v:136:y:2017:i:c:p:76-90 is not listed on IDEAS
    12. Boselie, J.P.P.E.F. & Paauwe, J. & Jansen, P., 2000. "Human Resource Management and Performance," ERIM Report Series Research in Management ERS-2000-46-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    13. Steve Berry & Ahmed Khwaja & Vineet Kumar & Andres Musalem & Kenneth Wilbur & Greg Allenby & Bharat Anand & Pradeep Chintagunta & W. Hanemann & Przemek Jeziorski & Angelo Mele, 2014. "Structural models of complementary choices," Marketing Letters, Springer, vol. 25(3), pages 245-256, September.
    14. Gupta, Vishal, 2013. "Development of a Causal Framework linking High Perofrmance HRM Practices, Positive Psychological Capital, Creative Behaviours," IIMA Working Papers WP2013-03-05, Indian Institute of Management Ahmedabad, Research and Publication Department.
    15. Boselie, J.P.P.E.F. & Paauwe, J. & Richardson, R., 2002. "Human Resource management, Institutionalisation and Organisational Performance," ERIM Report Series Research in Management ERS-2002-41-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    16. Boselie, J.P.P.E.F. & Hesselink, M. & Paauwe, J. & van der Wiele, A., 2001. "Employee Perception on Commitment Oriented Work Systems," ERIM Report Series Research in Management ERS-2001-02-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    17. Boswell, Wendy R. & Bingham, John B. & Colvin, Alexander J.S., 2006. "Aligning employees through "line of sight"," Business Horizons, Elsevier, vol. 49(6), pages 499-509.
    18. repec:eee:jeborg:v:148:y:2018:i:c:p:20-33 is not listed on IDEAS
    19. Nakamura, Tsuyoshi & Ohashi, Hiroshi, 2012. "Intra-plant diffusion of new technology: Role of productivity in the study of steel refining furnaces," Research Policy, Elsevier, vol. 41(4), pages 770-779.
    20. Jaime Ortega, 2001. "Job Rotation as a Learning Mechanism," Management Science, INFORMS, vol. 47(10), pages 1361-1370, October.
    21. Bradley R. Staats & Francesca Gino, 2012. "Specialization and Variety in Repetitive Tasks: Evidence from a Japanese Bank," Management Science, INFORMS, vol. 58(6), pages 1141-1159, June.
    22. Zavyalova, E.K. & Kosheleva, S.V. & Alsufyev, A.I. & Tsybova, V.S. & Kucherov, D.G., 2015. "Innovative human resource management practices in Indian IT companies," Working Papers 6429, Graduate School of Management, St. Petersburg State University.

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    Keywords

    human resource management; productivity; Japan;

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