Multi‐skilling, Delegation and Continuous Process Improvement: A Comparative Analysis of US–Japanese Work Organizations

Abstract

This paper focuses on the stylized differences in work organizations and labour market practices between the United States and Japan concerning multi-skilling, delegation, continuous process improvement, human capital accumulation and labour turnover. It presents a model that addresses interconnections among three key features of work organizations (multi-skilling, delegation and continuous process improvement), and examines ways in which they are related to labour market practices. It analyses strategic interactions among firms concerning their choices of work organization, and shows that strategic complementarity arising from labour market externality can yield the multiplicity of equilibria that provides a systematic explanation for the differences.

13. Theory and Evidence in Internal Labor Markets

“…One of the conclusions here is that at least some of the historical difference between the US and Japan likely stems from the later initial adoption of these practices in the US and slow diffusion. However, some differences likely still remain even after taking account of the later initial adoption in the US and slow diffusion, and my sense is that the correct explanation for the remaining differences lies with different incentives for decentralized decision making across the two countries as emphasized, for example, recently by Morita (2001Morita ( ,2005 and earlier by Aoki (1986). I hope to have shown how a close partnership between theory and empirical evidence can be used to reach a deeper understanding of the driving forces behind internal-labor-market phenomena than can be reached by either empirical evidence or theory taken in isolation.…”

“…One problem with this argument is that, as mentioned above, even though there are no promotions early in careers in Japan, many young white-collar workers in Japan do seem to have a clear sense of long-term career prospects. 32 Morita (2001Morita ( ,2005) also presents a multiple-equilibrium argument, where his argument serves as an explanation for differences concerning human-capital accumulation including multiskilling, decentralized decision making, continuous process improvement, and turnover. His argument builds on earlier discussions in Aoki (1986) and Koike (1988) and is related to the argument concerning decentralization in Subsection V.B.…”

“…Of the theories that I have reviewed, the one that I believe shows the most promise is the one presented in Morita (2001Morita ( ,2005. On the one hand, for various reasons, the other arguments are somewhat lacking in terms of providing a convincing explanation for the gamut of US-Japanese differences.…”

Two perspectives on multiskilling and product-market volatility

“…In this section we discuss some of these extensions, providing additional empirical evidence, and then turn to a more general discussion of our approach and findings and how they relate to the existing literature. Morita (2005) notes that firms employing continuous process improvement need workers who understand the production process beyond a narrow area of specialization. Job rotation provides workers with the broad understanding needed to contribute productivity-enhancing ideas to management.…”

“…We note some novel theoretical predictions that result from synthesizing our findings with the existing literature and test two of these predictions empirically. In particular, we integrate our theory with that of Morita's (2005) paper on continuous process improvement, providing empirical tests of both integrative extensions.…”