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An Empirical Examination of Dynamic Quality-Based Learning Models

Author

Listed:
  • Christopher D. Ittner

    () (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • Venky Nagar

    () (School of Business, University of Michigan, Ann Arbor, Michigan 48109)

  • Madhav V. Rajan

    () (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Abstract

Using detailed data on defect rates and quality costs from twelve plants of a Fortune 500 company, we provide the first direct tests of predictions arising from two sets of dynamic quality-based learning models. We find greater support for quality-based learning models that assume learning is a function of both proactive investments in quality improvement and autonomous learning-by-doing, than for models that assume learning is a function of reactive investments in quality improvement alone. We then extend these two sets of models to examine the impact of individual prevention activities and past nonconformance expenditures on defect rates. We find that benefits from different types of prevention expenditures vary, and that past nonconformance expenditures provide learning opportunities that allow the organization to more efficiently cope with future failures, thereby reducing subsequent nonconformance costs. These important implications are absent in current quality-based learning models, providing an opportunity for future theoretical development.

Suggested Citation

  • Christopher D. Ittner & Venky Nagar & Madhav V. Rajan, 2001. "An Empirical Examination of Dynamic Quality-Based Learning Models," Management Science, INFORMS, vol. 47(4), pages 563-578, April.
  • Handle: RePEc:inm:ormnsc:v:47:y:2001:i:4:p:563-578
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    File URL: http://dx.doi.org/10.1287/mnsc.47.4.563.9831
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    References listed on IDEAS

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    1. Richard L. Marcellus & Maqbool Dada, 1991. "Interactive Process Quality Improvement," Management Science, INFORMS, vol. 37(11), pages 1365-1376, November.
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    Citations

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    Cited by:

    1. Charles J. Corbett & María J. Montes-Sancho & David A. Kirsch, 2005. "The Financial Impact of ISO 9000 Certification in the United States: An Empirical Analysis," Management Science, INFORMS, vol. 51(7), pages 1046-1059, July.
    2. Wang, Weijia & Plante, Robert D. & Tang, Jen, 2013. "Minimum cost allocation of quality improvement targets under supplier process disruption," European Journal of Operational Research, Elsevier, vol. 228(2), pages 388-396.
    3. Eelke Wiersma, 2007. "Conditions That Shape the Learning Curve: Factors That Increase the Ability and Opportunity to Learn," Management Science, INFORMS, vol. 53(12), pages 1903-1915, December.
    4. Chen, Jiguang & Hu, Qiying, 2015. "Optimal payment scheme when the supplier’s quality level and cost are unknown," European Journal of Operational Research, Elsevier, vol. 245(3), pages 731-742.
    5. Demeester, Lieven L. & Qi, Mei, 2005. "Managing learning resources for consecutive product generations," International Journal of Production Economics, Elsevier, vol. 95(2), pages 265-283, February.
    6. Scott F. Rockart & Nilanjana Dutt, 2015. "The rate and potential of capability development trajectories," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 53-75, January.
    7. Biskup, Dirk & Simons, Dirk, 2004. "Common due date scheduling with autonomous and induced learning," European Journal of Operational Research, Elsevier, vol. 159(3), pages 606-616, December.
    8. Vörös, József, 2008. "A kereslet hatása az árak, a minőség és a fejlesztési döntések dinamikájára
      [The effect of demand on the dynamics of prices, quality and development decisions]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1094-1115.
    9. Vörös, József, 2013. "Multi-period models for analyzing the dynamics of process improvement activities," European Journal of Operational Research, Elsevier, vol. 230(3), pages 615-623.
    10. repec:eee:ecolec:v:146:y:2018:i:c:p:193-202 is not listed on IDEAS
    11. El Ouardighi, Fouad & Pasin, Federico, 2006. "Quality improvement and goodwill accumulation in a dynamic duopoly," European Journal of Operational Research, Elsevier, vol. 175(2), pages 1021-1032, December.
    12. repec:spr:annopr:v:264:y:2018:i:1:d:10.1007_s10479-017-2649-2 is not listed on IDEAS
    13. Paul F. Zantek & Gordon P. Wright & Robert D. Plante, 2002. "Process and Product Improvement in Manufacturing Systems with Correlated Stages," Management Science, INFORMS, vol. 48(5), pages 591-606, May.
    14. repec:bla:jscmgt:v:53:y:2017:i:4:p:13-36 is not listed on IDEAS
    15. Ray Reagans & Linda Argote & Daria Brooks, 2005. "Individual Experience and Experience Working Together: Predicting Learning Rates from Knowing Who Knows What and Knowing How to Work Together," Management Science, INFORMS, vol. 51(6), pages 869-881, June.
    16. Adrian S. Choo & Kevin W. Linderman & Roger G. Schroeder, 2007. "Method and Psychological Effects on Learning Behaviors and Knowledge Creation in Quality Improvement Projects," Management Science, INFORMS, vol. 53(3), pages 437-450, March.
    17. Hoang, Phi & McGuire, William & Prakash, Aseem, 2016. "Is there Life after Death?: The Enduring Effects of the 33/50 Program on Emission Reductions," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235556, Agricultural and Applied Economics Association.
    18. Wiersma, Eelke, 2008. "An exploratory study of relative and incremental information content of two non-financial performance measures: Field study evidence on absence frequency and on-time delivery," Accounting, Organizations and Society, Elsevier, vol. 33(2-3), pages 249-265.

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