Labor policy, choice and the organization of work: A case study of the efficacy of lean production at a German conglomerate in the United States and Germany

Firms around the world are adapting new organizational strategies to address the decline in product life cycles. While some firms are focusing on external flexibility by largely relying on external labor markets and outsourcing arrangements, others are creating greater internal flexibility by depending primarily on internal labor markets and lean production programs. This dissertation contends that the institutional structure of coordinated market economies proves more conducive to the latter strategy, while institutions in liberal market economies provide substantive incentives for the former strategy. It uses a case study of a German conglomerate and an analysis of academic literature in Political Science, Economic Sociology, and Business Management to probe the impact of labor market institutions on the ability of firms to realize benefits from lean production. The German conglomerate attempted to implement the same lean production program in the United States and Germany. Differences in labor laws, training systems, managerial styles and union power in these two countries are claimed to have contributed to the failure of this program in the United States and its success in Germany. Strategies which rely on external flexibility would seem to have greater chances of success in the United States, while strategies built around internal flexibility would appear to have a greater likelihood of success in Germany. In the end strategies which rely on external flexibility would seem to put downward pressure on wages for blue-collar workers. On the other hand, strategies such as lean production which depend on internal flexibility may actually empower workers to fight for better wages.