Organizational learning is critical to the performance and long-run success of firms and nations. Organi-zations that are able to learn from their experience and transfer the knowledge they acquire throughout their establishments are more successful than their counterparts that are less adept at organizational learning. Yet organizations vary significantly in their ability to learn with some organizations demonstrat-ing dramatic improvements and other organizations evidencing little or no learning. Leveraging extensive data collected over several years from a high technology, offshore product development and manufacturing facility of a U.S. firm, this project conducts three studies to shed light into learning across 1) product, 2) workgroup, and 3) geographic boundaries within the firm.
Intellectual Merit: The first study focuses on organizational learning in a multi-product production envi-ronment with high turnover. Ninety percent of U.S. output comes from multi-product facilities. Yet past studies of organizational learning have focused primarily on production sites with a single product or a product with minor variations. This first study investigates how product mix and employee turnover affect performance, whether turnover is more harmful for certain products and processes than others, and whether turnover of individuals with certain skills and experiences is more harmful than turnover of other individuals. The second study examines knowledge transfer across workgroups. The third study sheds insights into whether moving product development closer to manufacturing helps performance, which product development activities may be important to co-locate, and the impact on performance of moving more product development activities offshore. As more manufacturing has moved overseas, there have been concerns that knowledge work, such as R&D, will follow.
Broader Impact: These three studies provide empirical evidence about knowledge accumulation and transfer in an offshore environment, and thereby inform corporate decisions about offshoring as well as U.S. industrial and manufacturing policy.
Intellectual Merit Extending research on organizational learning to multi-product environments is of particular importance given that the vast majority of products are manufactured in such environments. We investigate learning in a multi-product facility drawing on exceptionally rich data for a manufacturing firm that is a leading producer of high technology components. Weekly data for 10 years from the firm's production and human resource tracking systems are augmented by surveys of managers and engineers and by extensive first-hand observation. We find that productivity improves when multiple generations of the firm's primary product family are produced concurrently, reflecting the firm's ability to augment and transfer knowledge from older to newer product generations. No significant transfer of knowledge is evident between the primary product family and other products. Productivity is, however, decreased when the production facility is faced with extensive within-product buyer-specific customizations. We develop the implications of these findings for theory and practice. Broader Impact: Management Our findings have important implications for manufacturing facilities that manage a multitude of products in one location and see product variety at multiple levels. Our on-site interviews suggest that our focus firm felt a tension between the potential additional revenues of having a more diversified product offering, versus the perceived additional costs of the same. Our results suggest that industries that see products evolve through generations may benefit -- in terms of productivity -- from having co-production of older products at the same time as newer ones in the same facility. At the same time, we find that firms that over- diversify their product portfolio, even if only at small volumes, and also firms that allow too many customizations to meet different customer specifications, may hurt their productivity. Managers should be wary of the costs to productivity of taking on too broad a portfolio of products. Additionally, managers need to weigh the tradeoffs of the additional revenues they may receive by meeting individual customers’ requests through tailored products, against the decrease in productivity associated with having more minor product variations on the line. Broader Impact: Policy With 87% of U.S. output coming from multi-product production environments and over half of all U.S. firms altering their product portfolio every five years [Bernard et al. (2010)], understanding the performance dynamics of multi-product firms is important as the U.S. looks to future growth, particularly in the manufacturing sector of the economy. Within this context, it will be important to better understand where there are and are not challenges associated with high product heterogeneity. Our study suggests that opportunities may exist to improve the productivity of existing facilities through more careful selection of product heterogeneity.
