Organisational Innovation: Competing Models of Productive Efficiency

Decisions made by firms over investment in technological and production systems embody conceptions of productive efficiency that are themselves becoming sources of competitive advantage. It is argued in this paper that three dominant models of productive efficiency inform such decisions in the 1990s. There is the model of efficiency that fits with mass production, emphasising division of tasks, standardisation, repetition and cost minimisation. There is the model that underlies the successor system of lean production, first practised by Toyota in Japan, where the emphasis is on just-in-time, total quality management, and employee integration. While some authors limit the options available to firms to these two, this paper argues that there is a third, western alternative which traces its roots to sociotechnical innovation; in the current period it finds expression in business process re-engineering associated with the introduction of information technologies and quality assurance, and takes the form of such organisational innovations as cellular manufacturing, client-centred service cells and ‘high performance’ work systems. The conceptual framework is illustrated in the field of industrial relations, where competing models of structured employee-management relations have profound implications for the competitive posture adopted by firms.