Transferring a lean production concept from Germany to the United States: The impact of labor laws and training systems

Abstract

Multinational corporations are continually looking for best practices to implement at their facilities throughout the world. Ideally such companies would implement the same practice throughout their facilities worldwide. Too often they run into difficulties and sometimes even outright failures. Some problems in implementing such practices cross-nationally can be linked to differences in institutional environments. Hence, executives need to be keenly aware of how distinct institutions in various national settings potentially impact the viability of a particular strategy. This article examines the effect of such institutions on best practices through a case study of a German multinational that implemented the same lean production program at one facility in Germany and one in the United States. It finds that the heavily regulated environment in Germany proved conducive to the success of this program there, while the liberal environment in the United States contributed to its failure at their U.S. facility. Particular attention is paid to how labor laws and training institutions influenced the outcome at each facility. © Academy of Management Executive, 2005.