Advanced Manufacturing Technology, Employee Participation and Economic Performance: An Empirical Analysis

Traditionally there has been little awareness of the need to link technology issues with human resource management issues. Technologies have been deployed to improve firm performance independent of programs and practices that involve workers in decision making (MacDuffie and Kochan, 1989; Graham and Rosenthal, 1986; Walton, 1985). Similarly, human resource management innovations have been implemented by firms without explicitly linking them with production technology. Firms implement new technologies to improve their competitiveness. Reductions in labor costs are made possible by new automated machines and equipment which take over decisions about production and perform at accelerated rates operations formerly performed by humans. Faster performing technologies permit increased production using the same, fewer, or less skilled employees. Such technology-driven competitive strategies have in the past distracted firms from the performance enhancing potential of employee participation (Graham and Rosenthal, 1986). Some firms even considered technology-driven strategy and employee involvement programs as mutually exclusive (MacDuffie and Kochan, 1989). The former was seen to improve economic performance through lower labor costs and increased managerial control while investments in the latter were seen to increase costs and diffuse control. Since the 1970s, the secondary importance accorded employee participation and the view of technology and employee participation as antithetical strategies have begun to erode (MacDuffie and Kochan, 1989; Walton, 1985; Piore and Sabel, 1984). Employee participation programs, semi-autonomous workgroups, and quality circles have greatly increased (Delaney et al., 1988; Voss, 1987) as firms have begun to include workplace innovations as additional competitive strategies (Osterman, 1994) to supplement technology-driven strategies. There is considerable evidence that both the application of new technology (Cooke, 1989) and the institution of workplace innovations (Eaton and Voss, 1992; Voos, 1987; Katz et al., 1983) improve the competitive positions of firms. However, their simultaneous effects on economic performance are still unclear. Most studies of the influence of workplace human resource innovations on economic performance have not linked these innovations with new technologies. The investigations have been restricted to the direct and singular impact of formal labor-management programs such as quality circles and semiautonomous workgroups on productivity (Wagner III, 1994; Cutcher-Gershenfeld, 1988; Voos, 1987; Katz et al., 1987). Furthermore, these studies have mostly concentrated on quantitatively defined measures of economic performance, typically productivity. As a result, the link between employee participation and less quantifiable but important performance measures such as production flexibility, process quality, and product quality have been deemphasized. A few studies have investigated the joint impact of advanced manufacturing technology and workplace innovations on economic performance (MacDuffie and Kochan, 1989; Krafcik and MacDuffie, 1989) but have also focused on limited indicators of performance or have restricted the studies to the auto industry (see MacDuffie and Kochan, 1989). The current study investigates relationships between workplace innovations and advanced manufacturing technology, and explores in several industries the relative effects of advanced manufacturing technology and workplace innovations on an inclusive set of economic performance indicators. RESEARCH QUESTIONS Performance Standards, Advanced Manufacturing Technology and Employee Participation Increasing international competition, shortening product life cycles, and growing differentiation in product markets have necessitated a redefinition of economic performance standards (Carnevale, 1991; Dertouzos et al., 1989; Nasar, 1987). Quality products and the ability of firms to respond quickly to small, and new orders with varied specifications and attributes have become additional major performance dimensions. …