Niels-E. Wergin and Mun Yee Cheek

1. Niels-E. Wergin and Mun Yee Cheek How “Japanese” are European Mangers?A study on the transferability of Toyota’s Managerial Practices to its European non-manufacturing subsidiaries University of Greenwich / Univ. of Kent JointH.R.M.ResearchDayUniversity of Greenwich 08 April 2005

2. Lean Production • Interest in “lean production” began in early 1990s • Raised by MIT study “The Machine that Changed the World” (Womack et al.1990) • Higher productivity and quality with different organisation of work, not different technology • UK, US: Japanese transplants (Kenney and Florida 1990)

3. The Toyota Production System • Main principles of “Lean Production” were developed by Toyota • Main person behind the “Toyota Production System”: Taichi Ohno • Elements: • Just in time (JIT) • Kanban (Sign, Index Card) • Kaizen (Continuous Improvement) • Muda (Waste) • Heijunka (Production Smoothing) • Andon (Signboard) • Pokayoke (Foolproofing) • Jidoka (Autonomation)

4. Transferability • Lean Production debate has focused on transferability • To which degree can the principles of lean production be transferred to factories in the west? • Role of “Transplants” such as NUMMI (Toyota-GM joint venture) • Focus on manufacturing • Very little research on impact of Japanisation on white-collar workers

5. Research Question • To which degree is Toyota able to transfer its managerial practices and principles from Japan to its (non-manufacturing) overseas operations in Europe? • General management principles (“The Toyota Way”) • HRM practices

6. Toyota’s Managerial Practices • Challenge: “current trends are addressed in the light of a longer range vision” (Toyota 2002) • Kaizen: continuous improvement by involving everyone in quality matters • Genchi-Genbutsu: identify root cause of problems (rather than symptoms), attention to detail • Respect: stresses sincere communication and mutual trust • Teamwork: facilitates mutual learning • Consensus: decisions are made consensual • Long-term orientation

7. Toyota’s HRM practices • Recruitment of fresh graduates • Internal labour markets and lifetime employment • Job rotation • Extensive internal training & socialisation • Implicit performance evaluation • Seniority plus merit pay (nen-ko)

8. Cases Research is based on interviews in three non-manufacturing subsidiaries of Toyota in Europe • TMME – Toyota Motor Marketing Europe n.v./s.a. • 1670 employees • established in 1989 (as TMSE); based in Brussels • TFR – Toyota France S.A. • 145 employees • established in 1971; based in Paris • TGB – Toyota (GB) Plc • 484 employees • established in 1965; based in Epsom

9. Interviews 20 interviews: • TMEE: 1 japanese co-ordinator 3 managers 2 senior managers • TFR: 2 directors Sécrétaire Générale Président • TGB: 2 senior managers 1 director Chairman • Six additional interviews

10. Results – TMEE

11. Results – TFR

12. Results – TGB

13. Results – Comparison • TMEE: Transfer of the “Toyota way” general management principles is very limited • Main reason: none of the HRM principles have been transferred • Main reason: Belgian labour market is occupational rather than internal (Marsden 1986) • TFR: Transfer of the “Toyota way” general management principles is limited, but less so than at TMEE • Four out of six of Toyota’s HRM practices have been transferred • TGB: By far the most complete transfer of managerial practices: • All general management principles have been transferred fully to TGB, apart from ‘consensus’ • Half of the HRM practices have been transferred

14. Hypotheses The following factors explain the degree of transferability: • Employment legislation (different from JP) • Number of Japanese expatriates • Ownership structure • Cultural factors • Labour market conditions & HRM practices

15. Hyp. 1: Employment Legislation • In none of the cases, employment legislation seems to have affected the transferability of Toyota’s managerial principles, although working time legislation and legislation on works councils means that Toyota managers in France and Belgium operate differently • Hyp. 1 disproved

16. Hyp. 2: Expatriates • TMME: ca. 170 Japanese staff (ca. 10%) • TFR: 3 Japanese Staff (2%) • General Secretary, President (MD is French), one coordinator • TGB: 2 Japanese staff (0.5%) • Chairman (MD is British), one coordinator • Causation seems to be reverse to what was expected • “there may be an element of them thinking ‘if it’s not broken, don’t fix it’, ‘these guys know what they are doing, they understand their market, they are doing a good job, so let them go on with it’” (interview 11) • Hyp. 2 disproved

17. Hyp. 3: Ownership Structure

18. Hyp. 3: Ownership Structure (2) • Currently, all three subsidiaries are fully owned by TMC (Toyota Motor Corp.) • However, TGB was previously owned by Inchcape venture capitalists • One should expect therefore that transfer to Britain has been less complete – but the opposite is the case (though there were some changes since the sale to Toyota) • Hyp. 3 disproved

19. Hyp. 4: Cultural Differences • According to interviewees, some problems with ‘cultural differences’ in all three cases, however: • TGB managers seem more willing to accept the ‘Toyota way’ than managers in BE and F, e.g. in regard to consensual decision making • “I think that we’ve all bought into it very well… we all see the benefit… there is a general understanding and very little resistance” (interview 12) • TGB managers seem more willing to accept the ‘Toyota way’ • Surprising – UK has more individualistic culture than F, BE (role of social Catholicism) • Hyp. 4 disproved

20. Hyp. 5: Institutional Structure • BE, as coordinated market economy, has institutional structures quite similar to those in JP – firms are more organisation-oriented than market oriented (Dore 1989) • e.g. training • e.g. financing – debt, not equity • French firms, too, are more organisation-oriented, but moving towards being more market-oriented • UK is liberal market economy, quite different from Japan • e.g.labour markets – more fluid

21. Labour market characteristics adapted from Estevez-Abe et al. 2001

22. Institutional structure • Looking at institutional structure, transfer to F should be most wide-ranging, to UK most limited – but opposite is the case. Why? • Companies in LMEs, which lack the coordinating capacities of CMEs, have to stabilise their core workforces through other means, such as internal training and promotions • “…employers (in LMEs) seeking to pursue high-quality production (and lacking the strong non-market coordinatin mechanisms that support this in the CMEs) often turn to strategies that involve internalising skill formation and instituting various plant-based mechanisms for securing labour cooperation and peace” (Thelen 2001:74)

23. Conclusion • Employment legislation, the number of expatriates, ownership structure, and cultural factors/behavioural dispositions do not explain why the transfer of Toyota’s managerial practices to BE, F, UK does (not) take place • The institutional framework and the structure of the labour market have some explanatory power, but not in the way anticipated • The existence of Toyota’s HRM practices seems to facilitate the transfer of its other, general management principles • Yet, HRM practices were adapted to local circumstances in all three cases • Japanese managerial practices are an integrated whole