Lean production, subcontracting, and industrial development: The case of the Brazilian automobile industry
Peebles, Glenn Harold
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https://hdl.handle.net/2142/21850
Description
Title
Lean production, subcontracting, and industrial development: The case of the Brazilian automobile industry
Author(s)
Peebles, Glenn Harold
Issue Date
1995
Doctoral Committee Chair(s)
Baer, Werner W.
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Business Administration, Management
Economics, Commerce-Business
Language
eng
Abstract
Over the last several decades, manufacturers in the developed countries have adopted organizational techniques collectively referred to as lean production. An essential element of the lean production model is the specialization and decentralization of production decisions throughout the supply network. The principal firm delegates production and product development to its suppliers, who become specialists in components or subassemblies of the final product. There may be many such tiers of principal-subcontractor relations. Contracts and relations between the principal and supplier are long-term, and thus allow for free exchange of information and the development of highly specific assets. The principal and supplier firms maintain an interdependent relationship, where the success of the principal is dependent on the success of its suppliers; thus the supplier's development is in the interest of the principal contracting firm.
Research to date on lean production has concentrated on developed countries. As a result, the lean production model presumes a well-educated labor force, adequate infrastructure, and an industrialization experience that includes mass production. In contrast, developing countries are characterized by a scarcity of well-educated labor, poor infrastructure, and, as late industrializers with small internal markets, much less experience with mass production. The literature on lean production has neglected supplier relationships in developing countries, where they are arguably crucial for industrial development. The logic of the lean production model holds out the promise that principal firms (often multinationals) may become true conduits of technology and modernizing innovations for developing country industries, and thus greatly facilitate the necessary competitive adjustments demanded by the world market.
To address the issues involved in lean production subcontracting, data were collected from a survey of the suppliers of Fiat Automoveis S.A. in Brazil. Fiat has begun a lean production program, and a stratified sample of its lean producing and non-lean producing suppliers were interviewed. The data support the view that lean production is transferable to developing countries, but it also suggests that lean production may require heavy future investments in human capital if it is to truly be a springboard for industrial development.
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