The lean-performance relationship in services: a theoretical model

Becoming a learning organization while enhancing performance: the case of LEGO

Purpose

The purpose of this study is to empirically test how problem-solving lean practices, along with leaders as learning facilitators in an action learning approach, can be transferred from a production context to a knowledge work context for the purpose of becoming a learning organization while enhancing performance. This is important to study because many organizations struggle to enhance efficiency in the short term while still trying to be long-term learning oriented (i.e. learning organization development).

Design/methodology/approach

The authors draw on theory on learning interventions to show how lean practices for problem-solving can foster learning and help an organization to become adaptive. This study’s subject is a non-production department of 100 employees at the LEGO corporation. The authors applied survey results from a natural experiment lasting 18 months between a pre-measurement survey and a post-measurement survey. The results were compared to a control department of 50 employees who were not exposed to the lean practices intervention. The authors’ focus was on the individual level as individuals have different perceptions of lean practices, performance, and learning.

Findings

Using repeated-measures tests, difference-in-difference regressions analyses, and structural equation models, the authors find that a package of contemporary lean practices for problem-solving, along with leaders who function as learning facilitators, significantly improved learning organization dimensions while also enhancing efficiency and quality and that learning organizations positively mediate the relationship between the lean intervention and quality-related performance, while efficiency is directly affected by the lean interventions. Data from LEGO's key performance indicators (KPIs), benefit trackers, on-site observations and more than 40 interviews with managers provided results that were consistent with the survey data. A detailed description of the lean practices implemented is provided to inspire future implementations in non-operations environments and to assist educators.

Research limitations/implications

The authors contribute to the learning literature by showing that a learning-to-learn approach to lean management can serve as an active and deliberate intervention in helping an organization becoming a learning organization as perceived by the individual organizational members. The authors also add to the lean literature by showing how a learning approach to lean, as used by LEGO, can positively affect short-term efficiency and quality and create a foundation for a longer-term competitive advantage (i.e. a learning organization) in a non-production context. By contrast, most of the lean literature streams treat efficiency separately from a learning organization and mainly examine lean in a production context.

Originality/value

The extant literature shows three research streams on lean, learning, and performance. The authors built on these streams by trying to emphasize both learning and efficiency. Prior research has not empirically tested whether and how the application of problem-solving lean practices combined with leaders as learning facilitators helps to create a comprehensive learning organization while enhancing performance in a non-production context.

The role of management in lean implementation: evidence from the pharmaceutical industry

Purpose

The purpose of this study is to investigate how soft lean practices moderate the performance effects of hard lean practices. The authors provide new evidence from the pharmaceutical industry, which is characterized by a highly regulated and technical environment and has been largely uncharted in the lean literature.

Design/methodology/approach

Based on a review of the literature, the authors define a set of soft and hard lean practices. The authors test the hypotheses using factor analysis and moderated hierarchical linear regression on a unique dataset containing survey data and real performance measures of 351 pharmaceutical plants.

Findings

The results show that soft lean practices can be both enabling and constraining. When management engages in performance measurement, visualisation and employee empowerment the relationship between hard lean practices and performance is positively moderated. On the other hand, when managers emphasise goal setting and work standardisation the performance outcomes are reduced.

Practical implications

Effective lean managers build organisational commitment by motivating other employees to implement lean. They use performance measurement, visualisation and employee empowerment to focus on the “why”. Less effective managers engage in commanding and micro-management. Such managers focus on the “what” by using practices like goal setting and work standardisation.

Originality/value

This article contributes to the literature on lean management by empirically testing the moderator-variable interaction effects between soft and hard lean practices. In addition, it adds new evidence from the important pharmaceutical industry.

Improving operational performance of manufacturing SMEs: the interactive effect of technical and human lean practices

Purpose

Although understanding how different resources are interconnected within firms is important, there are few studies that have focused on this area. This study aims to explore the unique and interactive effects of technical lean practices (TLPs) and human lean practices (TLPs) on the operational performance (OP) of manufacturing SMEs in Yemen, a less developed country (LDC).

Design/methodology/approach

Depending on data collected from 318 manufacturing SMEs in Yemen, the relationships in the proposed model were tested using hierarchical regression analysis via PROCESS Macro V. 3.5 in SPSS.

Findings

The results show that both TLPs and HLPs have unique effects on OP of SMEs. More importantly, both TLPs and HLPs have synergistic effects on OP.

Practical implications

The study would be of interest to Lean practitioners, as the results of this study can be used in firms to put a focus on how TLPs and HLPs have to interact when it comes to the successful implementation of lean manufacturing (LM).

Originality/value

Although research interest in LM is increasing, the interactive effects of TLPs and HLPs remain to be understood. This study provides an initial empirical evidence for performance outcomes from the interaction between TLPs and HLPs of SMEs in LDCs such as Yemen. Most of the previous studies on lean practices have focused on SMEs in developed countries, which may not fully apply to LDCs such as Yemen. This is helpful for SMEs' managers in the context of LDCs to understand how TLPs can further improve OP when interacting with HLPs.

Lean and its impact on sustainability performance in service companies: results from a pilot study

Purpose

The purpose of this empirical research is to understand the application of Lean practices (technical and social) and tools in the service sector, whose implementation is less studied, despite its economic relevance. The study aims to extend previous studies that focused on the relationship between Lean and operational and financial performance, and analyzing the impact on sustainability, encompassing economic, social and environmental perspectives.

Design/methodology/approach

A pilot survey was conducted with Lean experts in European service companies. The authors have utilized various professional contacts on LinkedIn and a satisfactory response rate was obtained for analysis.

Findings

The results of the study showed that there are several motivating factors for the implementation of Lean, the highlights being improving customer satisfaction, efficiency, delivery and cost reduction. The most frequently used Lean tools are related to the identification of improvement opportunities and causes of problems. The pilot survey also made it possible to identify the greater use of technical practices than social practices. The sustainability performance analysis showed that the better performance of service companies is in the economic dimension.

Originality/value

The authors have identified no empirical studies linking Lean and sustainable performance in the service sector. This study bridges this cognitive gap through a pilot study and therefore makes an original contribution to the current literature.

Lean management practices perception and their influence on organizational performance in a public Higher Education Institution

Purpose

The purpose of this paper is to explore the perception of Lean management practices by public servants of a Higher Education Institution (HEI) and its influence on the organizational performance. The underlying assumption is that Lean management practices may have perceived even without a whole dissemination of the Lean Thinking way in the institution, and they exercise a positive influence on organizational performance.

Design/methodology/approach

A questionnaire of Lean management practices applicable to HEIs was developed and a survey was carried out in a public HEI in Brazil. A valid sample of 748 respondents was obtained.

Findings

The results demonstrate that some Lean management practices (leadership support and employee involvement, focus on the internal customers, long-term thinking, community services value, elimination of waste and continuous improvement) have a positive influence on the organizational performance of the studied HEI. These results extend the applicability and foster the initiation of Lean management practices in the public service scenario and HEIs.

Practical implications

This study supports HEI leaders and managers in developing and/or promoting better management practices to improve organizational performance. In addition, it promotes the advancement of Lean initiatives in the organizational environment of the HEI, allowing for a better quality to the “beneficiaries” of the services provided.

Originality/value

Despite the broad evidence of Lean in the manufacturing and industrial sectors, this study advances by exploring the perception of Lean management practices in the HEIs context and their influence on organizational performance. This paper also initiates and fosters the discussion of internal costumers and community services value as basic practices of an HEI.

Lean accounting: a structured literature review

Purpose

The purpose of the paper is to perform a review and analyze the literature on lean accounting (LA) to develop insights into how LA research is developing, offering a critique of the research to date and underlining future research opportunities.

Design/methodology/approach

The research uses a structured literature review (SLR) to categorize and analyze 39 research articles from relevant journals with a publication date from 1996 to 2020 (September) and to answer three research questions.

Findings

Findings demonstrated that although LA seems to be the most suitable method for lean companies, it still lacks research in terms of the role of accountants in lean organizations as well as how its concepts are integrated with the generally accepted accounting principles (GAAP).

Practical implications

The paper provides both academics and practitioners with valuable insights regarding the role of management accounting and accountants in the pursuit of lean transformation, presenting meaningful themes and a complete analysis of the literature along with research gaps for future research.

Originality/value

The paper contributes to lean manufacturing literature by providing a comprehensive SLR of articles regarding LA. Also, the paper serves as a basis for developing future research agendas in management accounting practices for lean organizations.

Is lean a theory? Viewpoints and outlook

Purpose

Lean remains popular in a wide range of private and public sectors and continues to attract a significant amount of research. However, most of this research is not grounded in theory. This paper presents and discusses different expert viewpoints on the role of theory in lean research and practice and provides guidelines for future research.

Design/methodology/approach

Seven experienced lean authors independently provide their views to the question “is Lean a theory?” before Rachna Shah summarizes the viewpoints and provides a holistic outlook for lean research.

Findings

Authors agree, disagree and sometimes agree to disagree. However, a close look reveals agreement on several key points. The paper concludes that Lean is not a theory but has plenty of theoretical underpinnings. Many lean-related theories provide promising opportunities for future research.

Originality/value

As researchers, we are asked to justify our research drawing on “theory,” but what does that mean for a practice-driven phenomenon such as lean? This paper provides answers and directions for future research.

Impact of lean service, workplace environment, and social practices on the operational performance of India post service industry

This paper aims to study the determinants of the Lean Service System (LSS) on the Operational Performance (OP) of India's mail service in the National Sorting Hub (NSH), Mangaluru, Karnataka, the southern part of India. Measuring the OP in mail service is a big challenge in the postal service industry. Hence, we have conducted a survey, and 150 usable data has measured the impact of Lean Service Practices (LSP), Lean Workplace Environment Practices (LWEP), and Lean Social Practices (LSoP) on the OP. The results are analyzed from the partial least square based structural equation modelling (PLS-SEM) with the support of R programming. The analysis shows that there is positive and significant impact of LSP (β = 0.380, p < .05), followed by LWEP (β = 0.281, p < .05), and LSoP (β = 0.266, p < .05) on OP. The practical effect of the findings of LSS are effectively implemented for enhancing the OP of the business. This research addresses the appropriate empirical model to test LSS in India's postal service industry, which is scant in the existing literature. Moreover, this study helps India Post to review its policy so as to sustain the effectiveness of Lean Service (LS) implementation.

Digital transformation at logistics service providers: barriers, success factors and leading practices

Purpose

The rapid advancement of digital technologies has fundamentally changed the competitive dynamics of the logistics service industry and forced incumbent logistics service providers (LSPs) to digitalize. As many LSPs still struggle in advancing their digital transformation (DT), the purpose of this study is to discover barriers and identify organizational elements and associated leading practices for DT success at LSPs.

Design/methodology/approach

This study utilizes a two-stage approach. Stage 1 is devoted to a literature review. Stage 2, based on multiple case studies, analyzes information collected across nine international and global LSPs.

Findings

This research derives a practice-based definition of DT in the logistics service industry, and it has identified five barriers, eight success factors and associated leading practices for DT. The main obstacles LSPs struggle with, are the complexity of the logistics network and lack of resources, while the main success factor is a leader having and executing a DT vision, and creating a supportive organizational culture.

Practical implications

The results contribute to the emerging field of DT within the logistics and supply chain management literature and provide insights for practitioners regarding how to effectively implement it in a complex industry.

Originality/value

The authors analyze DT from the perspective of LSPs, traditionally not viewed as innovative companies. This study compares their DT with that of other companies.

Contextual effects on the LSS implementation in networked service environments

Purpose

The purpose of this paper is to investigate the contingency effects that contextual factors of a networked service environment have on the phased Lean Six Sigma (LSS) implementation frameworks.

Design/methodology/approach

This paper employs the critical realism (CR) case study research methodology to examine the contingent and causal relationships between contextual configurations of business networks, the DMAIC or PDCA phases in an LSS implementation agenda, and business management functions. The authors conducted a single case study on the basis of challenges they met in kicking off lean transportation in the Port of Houston.

Findings

The key finding from the study is a mid-range theory regarding the contingency effects of contextual factors of service business networks on the phased LSS implementation frameworks. The authors found that when there are complexity and dynamics of contextual factors at the field layer, management should focus more on tasks in early LSS phases to emphasize influencing. When there is no centralized authority in the network and the value-system is loosely coupled, management needs to execute more tasks as described in the define, measure and analyze phases with the purpose of both influencing and orchestrating. When individual actors have goals not aligned well with the goal of the business network and have unmatched operations capabilities, these factors should be considered as early as possible in these LSS phases. When a business network has complicated business processes with high unpredictability and uncertainty and individual actors’ value-creation systems are not well embedded in the entire value-creation system, PDCA will be the preferred core structure of an LSS implementation agenda.

Research limitations/implications

This study contributes to the LSS research stream by introducing a causal/contingency model that prescribes the contingency effects of three contextual configurations on LSS implementation. It also contributes to the emerging discipline, business network management, regarding how to use LSS frameworks in strategic planning. It also contributes to the CR school of problem-driven case study by using a strategic initiative framework as a platform and each phase in the framework as a unit. This conceptualization of the entity of interest helps explore the interactions among three theoretical constructs: contextual configurations, phased LSS implementation agenda and management functions.

Practical implications

Managerial implications of this study are twofold. One is the procedure of analyzing the impacts of contextual factors on the causal relationships between LSS implementation phases and network management functions. The entire procedure represents the agenda-setting process of LSS implementation, the most daunting and challenging managerial task in LSS projects. Another one is the guideline on how to determine whether DMAIC or PDCA is appropriate for the LSS agenda when used in a networked environment.

Originality/value

This paper would serve as an excellent resource for both academicians and LSS practitioners in initiating, orchestrating and managing an LSS project in a networked service environment. This study represents the first effort to explore the impact of contextual factors of business networks on lean transformation.

A systematic review of Lean in healthcare: a global prospective

Purpose

Fostered by a rapid spread beyond the manufacturing sector, Lean philosophy for continuous improvement has been widely used in service organizations, primarily in the healthcare sector. However, there is a limited research on the motivating factors, challenges and benefits of implementing Lean in healthcare. Taking this as a valuable opportunity, the purpose of this paper is to present the key motivating factors, limitations or challenges of Lean deployment, benefits of Lean in healthcare and key gaps in the literature as an agenda for future research.

Design/methodology/approach

The authors used the secondary data from the literature (peer-reviewed journal articles) published between 2000 and 2016 to understand the state of the art. The systematic review identified 101 articles across 88 journals recognized by the Association of Business Schools ranking guide 2015.

Findings

The systematic review helped the authors to identify the evolution, current trends, research gaps and an agenda for future research for Lean in healthcare. A bouquet of motivating factors, challenges/limitations and benefits of Lean in healthcare are presented.

Practical implications

The implications of this work include directions for managers and healthcare professionals in healthcare organizations to embark on a focused Lean journey aligned with the strategic objectives. This work could serve as a valuable resource to both practitioners and researchers for learning, investigating and rightly adapting the Lean in the healthcare sector.

Originality/value

This study is perhaps one of the comprehensive systematic literature reviews covering an important agenda of Lean in Healthcare. All the text, figures and tables featured here are original work carried by five authors in collaboration (from three countries, namely, India, the USA and the UK).

Lean thinking for education: development and validation of an instrument

Purpose

The purpose of this paper is to respond to the increasing demands that education currently faces and develop a structured approach for the implementation of lean thinking (LT) in primary and secondary education (P&SE) and empirically validated it.

Design/methodology/approach

An extended literature review was conducted of studies on LT in education, service and manufacturing, in which a preliminary list was formed of LT dimensions, which were subsequently reviewed by a focus group. An instrument was generated, which was distributed to 1,400 education professionals, and 394 replies were received. The measures were tested for validity and reliability. After the first round of analyses, measures were tested further to strengthen the proposed instrument.

Findings

The findings confirmed that the instrument developed is both valid and reliable and that the proposed measures consist actual dimensions of LT in P&SE. A number of success factors that would be required for LT initiatives to be implemented effectively within the P&SE context in a holistic perspective were revealed.

Practical implications

Although a number of studies have been developed on LT in the manufacturing or service sector, its implementation in education and particularly in P&SE remains scant. The instrument developed provides sufficient knowledge of which are the most important dimensions to consider when pondering LT in education.

Originality/value

While LT has been the subject of previous research in education, this study represented the first look at lean in P&SE and was the first of its kind to develop and validate in a real environment a lean implementation instrument for use in educational institutions. Researchers and practitioners can use the proposed instrument to build models of facilitating practices to improve performance while contributing to economic growth and enhancing social empowerment.

A theoretical framework for the social pillar of lean

Purpose

The purpose of this paper is to propose a theoretical framework for the social pillar of lean (SPL), which is a neglected topic in the lean management literature.

Design/methodology/approach

The authors first identify shortcomings in research on the SPL that are attributable to neglect of relevant perspectives in organisational research. The authors then present a theoretical case outlining the factors that should be considered in SPL research, how they relate to one another and how they should be integrated in future studies of lean change implementation.

Findings

The theoretical framework for the SPL proposes a categorisation of factors and their relationships across levels of analysis that are relevant to the SPL. The inclusion of previously neglected perspectives, such as the relational coordination theory, within this framework offers new insights and directions for research.

Practical implications

By emphasising relationships, the SPL framework sheds light on the scale and complexity of the management challenges involved in lean implementation.

Originality/value

The proposed framework promises to enhance the efficacy of lean research by focussing on factors, such as relationships, that are most relevant to lean implementation.

Toyota Kata as a KM solution to the inhibitors of implementing lean service in service companies

Purpose

This paper aims to resolve the inhibitors of lean service using knowledge management (KM) concepts through the use of Toyota Kata. To achieve this, the authors updated the research on lean supportive practices and inhibitors of lean technical practices presented by Hadid and Afshin Mansouri (2014) through a systematic literature review (SLR). The SLR focused on empirical studies/cases from the past 15 years and confirmed the inhibitors of lean technical practices. As a result, Toyota Kata is proposed as a KM solution to the inhibitors of lean service implementation in service companies.

Design/methodology/approach

The authors carried out an SLR to identify inhibitors of lean service in real case applications and analyzed the resulting bibliographic portfolio using KM as a lens, along with three theories: universal theory, socio-technical systems theory and contingency theory, which assist in highlighting and clarifying the potential impact of using Toyota Kata as a solution to the inhibitors of lean technical practices.

Findings

When the authors analyzed the inhibitors of lean technical practices, they discovered that there is a strong relationship between the inhibitors and the individual (staff) personal characteristics regarding commitment, involvement, communication and preparation. These inhibitors and characteristics should work as a system, and Toyota Kata improves people’s skills and process performance by connecting people, processes and technology. Also, the authors noted that the Toyota Kata concept used can provide benefits in the implementation of lean service for companies, such as the internalization of continuous improvement, this becoming part of the company culture. Moreover, it has been demonstrated that Toyota Kata provides an effective way to achieve KM.

Research limitations/implications

This study may not have enabled a complete coverage of all existing peer-reviewed articles in the field of practices and inhibitors presented by Hadid and Afshin Mansouri (2014). However, it seems reasonable to assume that in this review, a large proportion of the studies available was included.

Practical implications

This paper opens a new perspective on the use of Toyota Kata by managers as a solution to implement KM, spinning the spiral of knowledge.

Originality/value

This is the first study that seeks empirical evidence of inhibitors of lean technical practices and proposes Toyota Kata as a KM Solution for these issues. As a result, this study advances the facility to overcome these inhibitors, opening a new perspective for management to lead in achieving operational excellence.

Strategic lean actions for sustainable competitive advantage

Purpose

The purpose of this paper is to add to the quality management body of knowledge by solidifying the connection between operational and strategic aspects of lean transformation. Previous research has examined these issues in isolation, demonstrating mixed results in financial and operational efficiencies. The authors show that when operational and strategic changes are jointly considered the likelihood of success for lean transformation increases.

Design/methodology/approach

The authors provide a literature review of 109 peer-reviewed papers on lean manufacturing and qualitative analysis of 23 Baldrige award winners (2000-2014) that implemented lean to assess the importance of strategic actions in achieving a sustainable competitive advantage through lean transformation.

Findings

The authors find that lean transformation yields mixed results unless strategic actions are taken by senior management. These strategic actions include but are not limited to knowledge management, human resources, and business growth and can result in performance heterogeneity by improving the output/input ratio of the firm. This performance can then manifest as either doing the same level of business with fewer resources (a profit play) or doing more business with the same resources (a growth play). As specific examples, the authors analyzed Baldrige award winners for evidence of lean strategic action to drive performance gains. The authors suggest further model validation through directed interview and/or survey research.

Originality/value

This paper clarifies the need for jointly implementing lean tools with strategic actions. The findings provide more deliberate strategic actions for organizations wishing to increase the likelihood of success of lean transformation and ultimately improve quality.

Lean-team effectiveness through leader values and members’ informing

Purpose

Although empirical tests of effective lean-team leadership are scarce, leaders are often blamed when lean work-floor initiatives fail. In the present study, a lean-team leader’s work values are assumed to affect his or her team members’ behaviors and, through them, to attain team effectiveness. Specifically, two of Schwartz et al.’s (2012) values clusters (i.e. self-transcendence and conservation) are hypothesized to be linked to team members’ degree of information and idea sharing and, in turn, to lean-team effectiveness. The paper aims to report the examination of these hypotheses.

Design/methodology/approach

Survey responses (n=429) of both leaders and members of 25 lean-teams in services and manufacturing organizations were aggregated, thereby curbing common-source bias. To test the six hypotheses, structural equation modeling was performed, with bootstrapping, linear regression analyses, and Sobel tests.

Findings

The positive relationship between lean-team effectiveness and leaders’ self-transcendence values, and the negative relationship between lean-team effectiveness and leaders’ conservation values were partly mediated by information sharing behavior within the team.

Research limitations/implications

Future research must compare the content of effective lean-team values and behaviors to similar non-lean teams.

Practical implications

Appoint lean-team leaders with predominantly self-transcendence rather than conservation values: to promote work-floor sharing of information and lean-team effectiveness.

Originality/value

Human factors associated with effective lean-teams were examined, thereby importing organization-behavioral insights into the operations management literature: with HRM-type implications.

The impact of Lean bundles on hospital performance: does size matter?

Purpose

The purpose of this paper is to study the effect of the implementation of Lean bundles on hospital performance in private hospitals in Jordan and evaluate how much the size of organization can affect the relationship between Lean bundles implementation and hospital performance.

Design/methodology/approach

The research is considered as quantitative method (descriptive and hypothesis testing). Three statistical techniques were adopted to analyse the data. Structural equation modeling techniques and multi-group analysis were used to examine the research’s hypothesis, and to perform the required statistical analysis of the data from the survey. Reliability analysis and confirmatory factor analysis were used to test the construct validity, reliability and measurement loadings that were performed.

Findings

Lean bundles have been identified as an effective approach that can dramatically improve the organizational performance of private hospitals in Jordan. Main Lean bundles – just in time, human resource management, and total quality management are applicable to large, small and medium hospitals without significant differences in advantages that depend on size.

Originality/value

According to the researchers’ best knowledge, this is the first research that studies the impact of Lean bundles implementation in healthcare sector in Jordan. This research also makes a significant contribution for decision makers in healthcare to increase their awareness of Lean bundles.

Leanness assessment: a literature review

Purpose

Assessing the outcome of lean transformation journey has been of interest to both researchers and practitioners. Various qualitative and quantitative assessment methodologies have been proposed in literature to track and measure the degree of leanness attained. The purpose of this paper is to understand the evolution of this leanness assessment literature over different attributes and identify gaps for future research.

Design/methodology/approach

A detailed literature review of peer-reviewed journal articles and conference papers addressing leanness assessment was performed. Content analysis methodology involving a four-step process suggested by Mayring (2004) was adopted for this study.

Findings

The number of studies in literature on leanness assessment is low when compared to that in the area of lean implementation. Assessment methodologies developed are of wide range, varying from simple qualitative checklist to complex quantitative mathematical models. Following the trend of lean implementation literature, lean thinking assessment literature is also getting transformed from process-level monitoring to enterprise-level monitoring. Finally, based on this review, a simplified leanness assessment framework is proposed for future validation.

Research limitations/implications

Only peer-reviewed journals and conference papers were analyzed, while excluding the manuals, reports, and white papers from practice. Clustering of leanness assessment literature revealed that future studies in this domain would fall into two major categories, namely manufacturing leanness assessment and service leanness assessment.

Practical implications

Practitioners can use this review study to choose a suitable methodology for assessing the leanness attained in their organization by controlling for the structural attributes identified.

Originality/value

This is the first paper to review the topic “leanness assessment.” The review analyzes the entire literature available on leanness assessment to summarize its current status and identify potential future directions.

Is lean service promising? A socio-technical perspective

Purpose

– The purpose of this paper is to contribute to the ongoing debate about the effectiveness of lean practices in the service sector.

Design/methodology/approach

– This paper examines the impact of lean service on firm operational and financial performance. Exploratory factor analysis is used to reduce the data and identify the underlying dimensions of lean service, and partial least squares structural equation modelling is used to test the developed model.

Findings

– The results indicate that the social bundles of lean service had an independent positive impact on firm operational and financial performance. Furthermore, while the technical bundles had an independent positive effect on only the operational performance, they interacted with the social bundles to improve both the operational and financial performance. The findings suggest that service managers must follow a systematic approach when implementing lean service practices without focusing on one side of the system at the expense of the other.

Practical implications

– The paper highlights the importance of implementing lean service as a socio-technical system (STS) if service firms are to achieve the best possible benefits from their implementation. The motivation factor (social side) and the customer value factor (technical side) are capable of improving all operational performance dimensions and profit margin even if implemented alone. Therefore, service managers with limited resources are encouraged to start lean service implementation with practices within these factors. However, they can also expect improved operational and financial performance from implementing other factors as they positively interact to further improve performance.

Originality/value

– Viewing lean service as a STS, this paper incorporates a larger set of lean practices than previous studies and demonstrates empirically their capability of improving service firms’ operational and financial performance. It contributes significantly to the emerging literature on lean service by empirically testing the mechanism through which lean service affects firm performance.

Supply chain finance and financial contagion from disruptions - evidence from the automobile industry

Purpose

This research explores the effect of supply chain disruptions on competitors. Using companies in the automobile industry, we study the contagion effect in supply chains based on the affected firm and its competitors, whether the disruption occurs domestically or by a foreign-based firm, and within the context of economic market cycles.

Design/methodology/approach

Standard event study methodology is used to test the stock price reaction to supply chain disruptions. The purpose of this methodology is to determine whether the announcement of an event produces a “significant” stock price reaction around the time of the announcement. To conduct such tests, daily stock returns are measured around the announcement date and compared with the expected return. To further test whether the event study results can be explained by the business cycle, sample period, and stock characteristics, we use regression analysis. Our analysis is based on a data of 408 disruptions compiled from news announcements.

Findings

Supply chain disruptions have consequences for affected companies as well as competitors. The stock market impact from disruptions in automobile companies is affected by market cycle as well as the brand domicile. We observe that negative stock effect of disruptions occurs in bear markets but not in bull markets. American-brand automakers experience a larger stock price decline in bear markets compared to Japanese-brand automakers. Our results support a contagion effect as American-brand automakers experience negative stock reactions when a competitor announces disruptions. The contagion is more pronounced for American-brand automakers in bear markets when disruptions are announced by Japanese-brand automakers. We do not find evidence of a contagion effect for Japanese-brand automakers, indicating that they may be more resilient and are not affected by competitors’ supply chain performance.

Research limitations/implications

The U.S. automobile industry is dominated by five major firms. While our research is ground-breaking, the ability to generalizing to other industries that are less concentrated in leadership and competition may be limited.

Practical implications

Our study has implications for supply chain managers who make decisions regarding investments in disruptions mitigation. The results are also of interest to investors who may seek opportunities to take short positions on stocks within the automobile industry.

Originality/value

Our paper is the first to test the impact of supply chain disruptions on competitors. Additionally, we characterize the impact of disruptions based on market cycle and company domicile.