Hyundai Manufacture System

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‘The Mutation of the Toyota

Production System: Adapting the TPS

at Hyundai Motor Company’

Article in

International Journal of Production Research · August 2007Impact Factor: 1.48 · DOI: 10.1080/00207540701223493

CITATIONS

34

READS

767

2 authors:

Byoung-Hoon Lee

Chung-Ang University

22 PUBLICATIONS 134 CITATIONS

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H.-J. Jo

University of Ulsan

1 PUBLICATION 34 CITATIONS

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International Journal of Production Research,

Vol. 45, No. 16, 15 August 2007, 3665–3679

The mutation of the Toyota Production System: adapting

the TPS at Hyundai Motor Company

B.-H. LEE*y and H.-J. JOz

yDepartment of Sociology, Chung-Ang University, 221 Heuksuk-dong,

Dongjak-gu, Seoul, 156-751, South Korea

zDepartment of Sociology, Ulsan University, San 29, Moogeo 2-dong,

Nam-gu, Ulsan, 680-749, South Korea

(Revision received January 2007 )

This paper examines the spread of Toyota Production System (TPS) throughKorea, by focusing on the experience of Hyundai Motor Company. Drawingupon data obtained from field research, this case study interprets the adoptionof TPS from an evolutionary perspective, arguing that the emulation of TPSshould not entail adopting TPS as Toyota developed it originally, but to developone’s own production model. Over the past 40 years, Hyundai has developed itsown production model, Hyundai Production System (HPS), initially emulatingTPS, followed by re-interpreting and modifying TPS to adapt to the company’sunique circumstances. HPS is a mutated form of TPS. The Hyundai case revealsthat the adoption of TPS involves a complex evolutionary process of organizational learning and interpretation. This case sheds light on the possibility

of various paths toward lean production, and demonstrates that both externaland internal factors combine to form a complicated causal chain, influencing the‘mutated’ emulation of TPS and generating a certain pattern of path-dependencein the evolutionary trajectory of a particular production model.

Keywords: Toyota Production System; Lean production; Production model;Evolutionary perspective; Hyundai Production System

1. Introduction

Over the past two decades, Toyota Production System (hereafter TPS) hasdemonstrated its overwhelming influence on the restructuring of the global auto

industry. This is evidenced by the on-going perception of TPS as a world-class

manufacturing model (Oliver et al . 1994) or as ‘the machine that changed the world’

(Womack et al . 1990), along with the unceasing advances of Toyota amid global

auto market competition. Indeed, TPS has disseminated beyond Toyota to other

automakers and other industries across the globe, in various forms—transplants,

joint ventures, imitative learning, and consultancies (Ebrahimpour and

Schonberger 1984).

*Corresponding author. Email: [email protected]

https://www.researchgate.net/publication/229503740_World_Class_Manufacturing_Further_Evidence_in_the_Lean_Production_Debate1?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/229503740_World_Class_Manufacturing_Further_Evidence_in_the_Lean_Production_Debate1?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/229503740_World_Class_Manufacturing_Further_Evidence_in_the_Lean_Production_Debate1?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/229503740_World_Class_Manufacturing_Further_Evidence_in_the_Lean_Production_Debate1?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==


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Korean automakers are no exception in attempting to adopt TPS, so as to

enhance their operational efficiencies and business competitiveness. TPS has been

a prime benchmark for Korean automakers, as they have viewed Toyota as

an exemplary role model, having made successful inroads into global markets.

At Korean auto plants, however, TPS has not been adopted as it has been in Japan;rather, it has been implemented in a deviant form, for various socio-contextual and

organizational reasons.

Our study aims to examine the spread of TPS through Korea, by focusing

on the experience of Hyundai Motor Company (hereafter Hyundai). Hyundai is an

interesting case for several reasons. First, Hyundai is a ‘Cinderella’ case, having been

transformed from a low-cost domestic manufacturer in a developing country in the

early 1970s to a major player in the contemporary global auto market. At present,

it is ranked among the top 10 automakers worldwide, both in terms of production

volume and product quality (Jo 2005). Second, Hyundai is a sterling example that

can shed light on how TPS has been implemented by Korean manufacturing firms,

since it represents a typical or influential business model in terms of corporate

governance, management style, market strategy, and labour relations in Korea.

Third, given the fact that little research literature exists on the transferability

of TPS to developing countries, the Hyundai case may contribute to broadening our

understanding of the logistics, advantages and disadvantages of TPS dissemination

to non-Western, developing economies. Finally, Hyundai presents a good case

to figure out key factors constraining and shaping the adoption of TPS at a recipient

site, thereby helping to further develop a theoretical framework to analyse the

processes and outcomes of TPS diffusion in new venues.

Drawing upon data obtained from field research, this case study attempts

to interpret the adoption of TPS from an evolutionary perspective. Our argument isthat the emulation of TPS should not entail adopting TPS as Toyota developed

it originally, but to develop one’s own production model, thereby creating

a competitive edge versus global competition. In this vein, our case study offers a

new lens through which to view the spread of TPS across borders.

In field work which was conducted between April 2005 and March 2006 we

interviewed a number of senior managers and supervisors in production and

production technology departments, as well as having additional talks with union

officials and collecting primary company data. The next section (section 2) presents

a detailed review of the literature on the transferability of TPS, followed by a

historical overview of TPS emulation at Hyundai (section 3). In section 4, whyHyundai has adopted a deviant form of TPS is explained. Section 5 compares

Hyundai’s manufacturing performance with that of Toyota. Finally, in section 6,

implications of this case study will be addressed.

2. Literature review

To examine the transferability of TPS, we need to start by clarifying what TPS is.

Since Sugimori et al . (1977) shed light on the basic concepts of TPS in their seminal

article, a number of academics have tried to capture the essence of this extraordinarymanufacturing innovation, by labelling and configuring it in various ways. Over

time, the concept of TPS has evolved from a combination of waste-eliminating

3666 B.-H. Lee and H.-J. Jo


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manufacturing techniques and full labour utilization (Sugimori et al . 1977) to

the post-Ford or ‘lean’ production system that encompasses supply chain manage-

ment, RandD functions, customer relations, and lean production organizations

(Womack et al . 1990). As a consequence, TPS has been described as a method,

a process or program, a strategy, a goal, a belief or state of mind, and a philosophy(Vokurka and Davis 1996). This multi-facet concept creates some confusion

(Bartezzaghi 1999). Moreover, because Toyota evolved its manufacturing operations

to deal with labour shortages and changing market demand in the 1990s (Katayama

and Bennett 1996, Shimizu 1998, Benders and Morita 2004), TPS can be viewed

as an evolving entity, rather than a fixed one, causing further difficulties

classifying it.

Given this confusion, there has been heated debate over the transferability

of TPS along three lines of thought: a convergence perspective; a structuralist

perspective; and a contingency perspective.

The convergence perspective, which mainly draws upon the International

Motor Vehicle Program (IMVP) (founded at the Massachusetts Institute of

Technology in 1979), a collaborative research consortium investigating the

performance of the global motor industry (Lewis 2000), highlights the superb

performance of TPS, as achieved by Japanese manufacturers, including Toyota and

several Western emulators. According to this perspective, TPS, which was invented

in one context, is recognized as the dominant production system of the 21st century,

verified by its superior performance versus global competition (Cusumano 1988,

Krafcik 1988, Womack et al . 1990). This school of thought treats TPS, or lean

production, as a universal set of management norms that can be transferred

anywhere (Adler and Cole 1993, Womack and Jones 1994). Despite some

variations reflecting the recipients’ strategies and contexts, these authors insistthat TPS becomes the manufacturing system into which every business player

tends to converge when trying to survive in the contemporary global market

(Forza 1996).

The structuralist perspective denies the universal transferability of TPS,

emphasizing the unique socio-economic context in which Toyota exists (Williams

et al . 1994). Nakamura et al . (1996) note that the transfer of TPS across national

boundaries is considerably more difficult than the spread of specific TPS

components, given different social contexts, which include differences in culture,

social relations, economic conditions, and business practices. Thus, this school insists

that TPS, historically, has evolved under Toyota’s singular conditions, and that itssubstance can be transferred to other structural contexts only with difficulty

(Williams and Haslam 1992).

Between these two polar positions, the contingency perspective postulates a

compromise, by considering both the superiority of TPS and the necessary

pre-conditions and constraints related to its transferability. This academic group

stresses that the successful implementation of TPS is dependent upon several

organizational factors at recipient sites, like long-term management strategies,

labour-management cooperation, employee and union involvement, open commu-

nication, and investments in training (Harber et al . 1990, White et al . 1999). They

also point out that the processes and outcomes of TPS emulation are conditionedby external forces (i.e. market situations, international division of labour, local

institutional environment, social culture) (Liker et al. 1999, Mehta and Shah 2004).

The mutation of the Toyota Production System 3667

https://www.researchgate.net/publication/235275646_The_evolution_of_production_models_Is_a_new_paradigm_emerging?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/230770969_Lean_Production_and_Sustainable_Competitive_Advantage?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/256070768_Designed_for_Learning_A_Tale_of_Two_Auto_Plants?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/242019880_Work_Organization_in_Lean_Production_and_Traditional_Plants_What_Ere_the_Differences?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/4819023_Japanese_Manufacturing_Methods_at_US_Manufacturing_Plants_Empirical_Evidence?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/4819023_Japanese_Manufacturing_Methods_at_US_Manufacturing_Plants_Empirical_Evidence?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/4819023_Japanese_Manufacturing_Methods_at_US_Manufacturing_Plants_Empirical_Evidence?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/240259957_Just-in-Time_The_Issue_of_Implementation?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/240259957_Just-in-Time_The_Issue_of_Implementation?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/240259957_Just-in-Time_The_Issue_of_Implementation?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/240259957_Just-in-Time_The_Issue_of_Implementation?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/240259957_Just-in-Time_The_Issue_of_Implementation?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/200552299_Characteristics_of_a_Work_Organization_from_a_Lean_Perspective?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/200552299_Characteristics_of_a_Work_Organization_from_a_Lean_Perspective?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/200552299_Characteristics_of_a_Work_Organization_from_a_Lean_Perspective?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/4819023_Japanese_Manufacturing_Methods_at_US_Manufacturing_Plants_Empirical_Evidence?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/256070768_Designed_for_Learning_A_Tale_of_Two_Auto_Plants?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/240259957_Just-in-Time_The_Issue_of_Implementation?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/200552299_Characteristics_of_a_Work_Organization_from_a_Lean_Perspective?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/242019880_Work_Organization_in_Lean_Production_and_Traditional_Plants_What_Ere_the_Differences?el=1_x_8&enrichId=rgreq-4b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In a similar vein, Doeringer et al . (2003) revealed national differences in the actual

adoption of TPS, comparing Japanese multinationals across the United States,

the United Kingdom and France.

Among the three different theoretical views of the existing literature, the

convergence and structuralist perspectives both present a one-sided rationale forassessing the diffusion of TPS—the first disregards the impact of national and

organizational factors over the transfer of TPS; whereas the latter underestimates

the universal advantage that TPS has enjoyed in the post-Ford era. By contrast, the

contingency perspective has the merit of combining these two approaches to generate

a more balanced view, thereby helping to capture the variations in process

and outcomes in the transfer of TPS across firms and countries. However, the

contingency perspective is somewhat limited in its ability to clarify how and why

recipient firms adopting TPS develop their own workable production models,

deviating from the original model. The contingency approach provides a static

picture of variations in the adopted form of TPS, but does not explore the dynamic

evolution of TPS implementation, how the components or principles of TPS have

been transmuted by recipient sites. The problem with this perspective is that

it focuses only on contingencies related to TPS dissemination, ignoring the recipient’s

active role—management’s strategic capabilities—in dealing with various

eventualities.

In this vein, the ‘emergent process’ perspective, hypothesized by Liker et al .

(1999), is useful in compensating for weaknesses in the contingency theory. This

perspective views the spread of TPS as an evolving and indeterminate transformation

process, which can lead to various outcomes, depending upon the form of TPS

adopted. Bartezzaghi (1999) helps to understand the process perspective by

distinguishing between contingent models and paradigms. According to him, theproduction model is a set of ‘optimal’ manufacturing techniques and practices for

a given company, while the production paradigm is a coherent body of ‘general’

principles to design and manage manufacturing systems. The production paradigm,

given its competitive advantage, tends to prevail as the universal standard emulated

by most industrial players, until a new system emerges in the changing business

environment.

TPS was devised as a specific production model suitable for Toyota’s unique

circumstances in the 1960s (i.e. a lack of natural resources, Japanese work attitudes,

life-time employment practices, enterprise unions, little discrimination, and good

opportunities for job promotion among blue-collar workers), as stated by Sugimoriet al . (1977). Under drastic changes in market conditions—that involved intensified

competition and diversified customer demands—TPS, equipped with a set of new

manufacturing principles, like JIT and Kaisen, became recognized as a production

paradigm suitable to replace the existing Ford mass production system, with its

success verified by the outstanding manufacturing performance that Toyota and its

clone plants have achieved since the 1980s.

Emulating TPS, as it originated with Toyota, many manufacturers have

then developed their own production models, conditioned and constrained

by various societal factors (i.e. market situations, institutions, institutions,

culture, work norms, supply chain structure) and organizational factors(i.e. business strategy, corporate history, labour-management relations, pre-existing

interpretative mechanism of production technology, and the level of worker skills)


https://www.researchgate.net/publication/5208376_The_adoption_and_diffusion_of_high-performance_management_Lessons_from_Japanese_multinationals_in_the_West?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/5208376_The_adoption_and_diffusion_of_high-performance_management_Lessons_from_Japanese_multinationals_in_the_West?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/5208376_The_adoption_and_diffusion_of_high-performance_management_Lessons_from_Japanese_multinationals_in_the_West?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/235275646_The_evolution_of_production_models_Is_a_new_paradigm_emerging?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/5208376_The_adoption_and_diffusion_of_high-performance_management_Lessons_from_Japanese_multinationals_in_the_West?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/235275646_The_evolution_of_production_models_Is_a_new_paradigm_emerging?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==


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(Liker et al . 1999, Lewis 2000). Those production models have two inherent

characteristics:

1. The models are specific to individual manufacturers, even though they

attempt to simulate the basic principles of TPS; and

2. The models have evolved over time, by means of the continuous selection,

interpretation, assimilation, and transmutation of the principles and

operational elements of TPS, in order to deal with changing business

conditions (Bartezzaghi 1999).

As indicated by Lewis (2000), drawing upon resource-based theory, no

manufacturer produces an exact replica of Toyota’s manufacturing arrangements.

Each must follow the trajectory of its own production model to establish its own

competitive advantages.

Figure 1 depicts a hypothetical research model, summarizing the above literature

review on the diffusion of TPS. Here, TPS is defined as a collection of principles(including manufacturing methods, work organization, human resource manage-

ment, and supply chain management), which originated with Toyota, but now is

recognized as a standard for manufacturing worldwide. Those TPS principles may be

emulated by various means; including prototyping (an initial replica of manufactur-

ing arrangements), technical transfer (imitation or import of manufacturing facility

and technical knowledge through Toyota-related consultancies), and benchmarking

(establishing goals and comparative standards). Through this emulation process, the

recipient ‘mutates’ the TPS principles; in other words, it develops its own production

model by selecting, interpreting, and transmuting TPS principles to meet its own

business context, comprised of both external and internal (or organizational) forces.Note that this research model is applicable to ordinary manufacturers that have

adopted their own course while emulating TPS, without having any direct linkages

to Toyota, such as transplants or joint ventures. Consequently, it offers more

generalized insights about the spread of TPS across borders. The next section applies

this research model, in order to examine the specific case of Hyundai.

TPS

Recipient'sMutationof TPS

Internalcontingencies

Externalcontraints

–Manufacturing method and techniques

–Work organization

–HRM

–Prototyping

Emulation channel

–Technical

transfer–Supplier management

[Japanese context]

Figure 1. Hypothetical diagram of a TPS diffusion model.


https://www.researchgate.net/publication/230770969_Lean_Production_and_Sustainable_Competitive_Advantage?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/230770969_Lean_Production_and_Sustainable_Competitive_Advantage?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/230770969_Lean_Production_and_Sustainable_Competitive_Advantage?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/235275646_The_evolution_of_production_models_Is_a_new_paradigm_emerging?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/230770969_Lean_Production_and_Sustainable_Competitive_Advantage?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/235275646_The_evolution_of_production_models_Is_a_new_paradigm_emerging?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/230770969_Lean_Production_and_Sustainable_Competitive_Advantage?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/230770969_Lean_Production_and_Sustainable_Competitive_Advantage?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==


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3. Historical trajectory of TPS emulation at Hyundai

Hyundai, established in 1967, started to emulate TPS when it began production of its

subcompact car model, Pony, in 1975. At the time, the company invited Seiyu Arai,

the former senior engineer for Mitsubishi, to be a technical advisor while it wasbuilding its first assembly plant. Arai, who had been a student of Ohno Taiichi,

the inventor of TPS, played a crucial role in devising the technical layout and

operational processes of the Hyundai plant. In particular, he encouraged Hyundai

to adopt some TPS principles in its manufacturing processes. For instance, Arai

taught Hyundai management how to carry out Toyota’s ‘three-problems ban policy’,

to eliminate (1) irrationality, (2) imbalance, and (3) superfluity (in sequence

of priority) in manufacturing operations (Kang 1986). Interestingly, however,

he reversed the original order of the policy priorities, in order to cope with Hyundai’s

resource shortage during its start-up stage, by stressing the elimination of superfluity

as the first priority, followed by elimination of imbalance and irrationality.

In addition, the Japanese advisory group, led by Arai, adopted TPS manufacturing

methods to improve the tooling of stamping dies, to shorten the set-up time for press

lines, and to make the body-welding line more efficient at the Hyundai plant. They

also shaped the organization of manufacturing processes (including the leading

role of shop-floor foremen), imitating the prototype of Toyota and other Japanese

automakers. During our interviews, Hyundai senior managers admit that Arai

and his advisory group helped Hyundai management to enjoy the advantage

of ‘late-development’, by emulating TPS in a selective manner.

In the mid 1980s, Hyundai made significant inroads into the global auto market,

along with the successful entry of its Excel (a subcompact car) into the North

American market. Since then, it has exhibited rapid growth owing to domesticmotorization and increases in demand overseas. Its domestic production volume

soared more than 10-fold between 1980 (64 070 units) and 1990 (650 388 units), and

almost 30-fold between 1980 and 2000. Against a backdrop of dramatic business

growth, Hyundai aggressively expanded its manufacturing capacity through the

1980s and 1990s. During this period, it adopted elements of TPS in a piecemeal

and discontinuous way; whenever it renovated production lines along with the

introduction of new car models, or when it opened new assembly plants.

In the early 1980s, when Hyundai renovated its first assembly plant to establish

mass production lines for Excel, Hyundai management made a large investment in

automated production equipment, and implemented the concept of just in time (JIT),in a rudimentary form, by changing the method of material handling from the

existing bulk-parts delivery system to sequential parts delivery.

In the late 1980s, when a second assembly plant was built, Hyundai management

introduced the production scheme of flexible automation by installing the ‘flexible

body line’ (FBL), thereby enabling them to facilitate the production flow of various

cars (2–4 models) and to smoothly adjust production volume via a reduction

in set-up time. While building the FBL, Hyundai contracted for technical consulting

from Yamashita Machinery, which had designed and supplied the main buck system

of the body-building line for Toyota, and had devised the Toyota-imitated ‘one buck

system’ along with its own invention of the ‘windmill jig system’ (Jo 1998). The onebuck system and the windmill jig system are both automated systems using a set

of modified 4-dimension main bucks to weld panels into auto body frames at the



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body-welding shop—the former in the body-building line and the latter in the body-

re-spot and the body-completion areas. The two body-welding technologies enabled

Hyundai management to flexibly switch car models in the production flow and save

working spaces. In addition, the Hyundai plants computerized sequential parts

inventory management, in order to upgrade the level of JIT parts delivery and reducework in process (WIP). At the same time, the company launched various shop-floor

campaigns (i.e. Kaisen and the suggestion program; the ‘Three-Rights Campaign—

Do Right things at the Right time in the Right place’ the ‘Five Work Attitudes

Campaign—Plain, Orderly, Clean, Neat, and Disciplined Work’; and the shop-floor

dialogue forum) patterning itself after Toyota’s workplace innovation activities.

According to the Hyundai managers we interviewed, the rapid development of

a mass production system enabled the company to achieve Toyota productivity levels

during this period.

In the third assembly plant, which opened its doors in 1991, Hyundai moved

towards a flexible mass production model (Lee 1997). It upgraded the FBL and

assembly line control (ALC) system with computerized operations to synchronize

production orders, thereby expanding its capability to manufacture more diverse

car models in a production line, with less WIP and parts inventory. This advanced

production process was aided by the implementation of an MRP (material

requirements planning)-based system and a value-added network (VAN) to directly

control and link assembly line parts orders with outside vendors in a JIT manner.

From the early 1990s, Hyundai management also introduced the principles of TPM

(total preventive maintenance) and TQC (total quality control), encouraging

production workers to cover maintenance and quality assurance jobs in their work

areas, like Japanese workers at Toyota plants.

In the late 1990s, Hyundai management built a green-field plant (in Asan),simulating Toyota’s Kyushu Miyata plant. Designing this new plant, Hyundai

utilized a group of retired Toyota engineers to reproduce the manufacturing layout

and facilities of the Miyata plant. The Asan plant, which started its operations in

1996, was almost identical to the Miyata plant in its layout of production processes.

Like the Toyota green-field plant, for instance, the Asan plant consisted of a set of

segmented assembly lines, with inter-line buffers (about three vehicle units), and it

improved the working environment by automating production facilities using an

ergonomic design. It is noteworthy that the new plant attempted to adopt the ‘pull’

production system, controlled by MRP-based scheduling, rather than by the Kanban

system, thereby remarkably improving the ratio of completed sequential productionup to 95% (compared with 75% at the brown-field plants) and reducing parts

inventory down to 0.8 days (compared with 1.7 days at the old plants) during its

start-up stages (Chung 1997). However, this attempt was halted by the economic

crisis in 1997 and the company’s unprecedented massive downsizing in 1998, so that

this plant then returned to the traditional ‘push’ production model (Jo 2001).

Furthermore, this green-field plant implemented such new programs as direct

supplier delivery (of auto parts to production lines), a 100-PPM (parts per million)

quality assurance campaign, a work team quality guarantee plan, and various

fool-proofing tools, both to mimic and catch up with Toyota.

After recovering from the economic slump of 1997–1998, Hyundai officiallybegan making efforts to develop its own unique production model, the so-called

Hyundai Production System (HPS) in pursuit of a global manufacturing network.



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In devising HPS, Hyundai management continued to benchmark itself against

Toyota’s manufacturing performance. At the same time, it made clear that HPS

was deviant from the core principles of TPS—of ‘pull’ production and ‘workerinvolvement’—which were tried at the Asan plant, but with little effect.

The core of HPS is demonstrated by its ambitious multi-year plan of production

management innovation, as illustrated in table 1. In accordance with this strategic

plan, the company implemented APS (advanced planning and scheduling) in 2002 and

E-BOM (enterprise bill of material) early in 2006, while planning to install

ERP (enterprise) by the end of 2006 and establish a comprehensive production

management system combining SCM (supply chain management) and OTD (order to

delivery) in 2007. Hyundai management expects that, once the OTD system—that can

complete the business process of order-to-delivery within a week—is active, HPS can

become as lean and responsive to market demands as TPS. Despite its effort toemulate the JIT operations of TPS, HPS (equipped with ERP and OTD) primarily is

governed by the traditional principle of ‘push’ production.

HPS is also a technology-oriented and engineer-driven approach, moving

towards minimizing worker involvement, which is in sharp contrast to TPS.

Hyundai management has made massive investments in automation over the past

two decades. As a result, the automation of the press and body-welding shops has

reached almost 100% and that of the assembly lines has increased up to 15%,

comparable with Toyota. Hyundai management chiefly has pursued automation

to save labour, compared with Toyota, wherein automation has been treated as

a supplementary means to make each worker’s job efficient and easy. Similarly,according to Hyundai management, the HPS approach to fool-proofing machinery

is somehow different from Toyota’s system: the former stresses the elimination

Table 1. Roadmap of production system innovation at Hyundai.

Stage and component Description

1. APS (advanced planning and scheduling) To enhance the accuracy of productionplanning and maintain the optimal levelof auto parts inventory by visuallycontrolling the due date of customerdelivery

2. E-BOM (enterprise bill of material) To develop the corporate-wide BOM database necessary for implementing ERP

3. ERP (enterprise resource planning) To build an IT system to manage the entirework flow from product development,manufacturing, sales and customerservice

4. SCM (supply chain management) To establish a systemic network to inter-connect manufacturing processes tosuppliers, sales dealers, and customers

5. OTD (order to delivery) To build the total management systemto maximize the efficiency of businessprocesses, comprising customer orders,parts supplies, manufacturing, anddistribution

Source: HMC internal document.



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of tasks in which workers may make a mistake, whereas the latter underlines

the prevention of faulty operations among workers. Another example of Hyundai’s

engineer-oriented approach can be identified in its emphasis on modular production.

Hyundai management set out a long-term plan to develop a modular productionsystem for establishing ‘just-in-sequencing’ (JIS) operations, as illustrated in table 2.

According to the plan, the overall level of modularization increased from 30%

in 2005 to 40% in 2006. This modularization has entailed the outsourcing of parts-

sequencing jobs, the automation of modular parts assembly, and the simplification

of main production lines (Lee 2003). As displayed in figure 2, HPS also includes

a Toyota-style workplace innovation programme, comprised of ‘basic management’,

thereby strengthening the shop-floor ethic of hard work and ‘substance manage-

ment’, stressing Kaisen activities and manufacturing performance (i.e. quality,

operational costs, and productivity). However, this workplace innovation program

and the previous shop-floor campaigns at Hyundai are contrary to the TPS principleof worker involvement, in that they are solely driven by shop-floor management,

without production worker commitment. Instead, college-graduated engineers

Workplace management

Substance management

Common management

Objective management

Organizational management

Basic management

Work environment

Worker morale

Safety and energy-saving

Work attitude

Figure 2. Conceptual map of HPS workplace management innovation.Source: HMC internal document.

Table 2. Modularization plan at Hyundai.

2001 2002 2003 2004 2005 2006

Cockpit module Module design & parts development Integrated modules development

Chassis module Simpleassembly

Module design &parts development

Integrated modules development

Front-end module Module design &parts development

Integrated modulesdevelopment

Source: Cho et al . (2004).



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are the main force of production process innovation, since they are very motivated

to apply for numerous patents (i.e. four patents per engineer in 2005) because

of a merit-pay system and other performance incentives.

To summarize, Hyundai has developed a production model that deviates from

TPS, even though it has tried to emulate TPS via replication of a manufacturingprototype, technical consultancies, and benchmarking over time. Hyundai’s

emulation of TPS is characterized as being (1) a selective and graduated adoption,

linked to the expansion of manufacturing capacity, (2) technology-driven

radical innovation (Fujimoto 1999, Liker et al . 1999), and (3) an engineer-led and

worker-exclusive approach.

4. Factors distinguishing HPS from TPS

As exemplified in table 3, HPS is quite distinct from TPS in the core aspectsof production management, as laid out by Sugimori et al . (1977). While TPS

primarily is governed by ‘pull’ production, based upon JIT process control and

flexible labour utilization, HPS is a ‘push’ production model, utilizing centralized

IT-driven process control. On the technical aspect, HPS and TPS both have pursued

the reduction of operational cost, though in a contrasting manner. The most crucial

difference between HPS and TPS is observed in the way of utilizing worker

capabilities: HPS has relied on engineer-driven workplace innovations and operation

control, rather than the full utilization of worker capability and involvement,

highlighted by TPS.

What has made the Hyundai production model deviate from TPS over its 40-yeardevelopment? The differences at Hyundai can be explained by several inter-related

factors. First, unlike Toyota, Hyundai management has emphasized high utilization

of production capacity under a supplier-dominated market condition, rather than

stressing flexible responses to customer demands. This business orientation, which

has led Hyundai management to stick to the push production model, is associated

with its dominant position in the domestic market and its sustained growth overseas.

Second, the poor technical capability of auto parts suppliers has been a key

source of uncertainty in Hyundai production processes. Most auto parts suppliers

are small- to medium-sized firms, which lack the resources (i.e. capital and

Table 3. Comparison of production management between Hyundai and Toyota.

Hyundai Toyota

Production mode PUSH PULLProduction control tool MRP system JIT (Kanban)Operational goal Planning-led production Minimization of inventoryProduction management Hourly plan-based process;

management controlled byproduction engineer division

Flexible control of productionprocess at the level of production departments

Production condition High uncertainty and

fluctuation

Low uncertainty and stable

repetitiveness

Source: HMC internal document.


https://www.researchgate.net/publication/239727308_The_Evolution_of_a_Manufacturing_System_at_Toyota?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/239727308_The_Evolution_of_a_Manufacturing_System_at_Toyota?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/239727308_The_Evolution_of_a_Manufacturing_System_at_Toyota?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/239727308_The_Evolution_of_a_Manufacturing_System_at_Toyota?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==


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highly-educated labour) to develop and maintain flexible and defect-free production

processes to meet automaker work orders (Lee and Lee 2005). Thus, Hyundai

management, as well as suppliers, cannot maintain a buffer to protect against defects

and the untimely delivery of supplied parts, thereby preventing HPS from adopting

the pull-mode JIT principle.Third, and most importantly, confrontational labour-management relations

at Hyundai have been a major constraint (Cho and Lee 1989, Jo 2005). Labour–

management cooperation and worker collaboration is a key pre-condition of the

operation of the JIT production principle at Toyota (Forza 1996). The problematic

labour relations climate at Hyundai has been derived from worker mistrust of the

labour-exclusive management style. In the pre-democratization period (until 1987),

Hyundai management, aided by an authoritarian government’s labour control policy,

forced low wages and harsh working conditions on workers, who organized a militant

labour union in late 1987. In 1998, the massive downsizing which Hyundai

management undertook during an unprecedented economic slump, caused workers

to feel even more alienated from management. Given its deep distrust of management,

the labour union has prevented management from adopting performance-based

human resource management (HRM) practices and from flexibly utilizing labour. In

the mid 1990s, for instance, Hyundai management failed to implement performance-

based HRM plans, modelled on the career and compensation system of Toyota, due to

opposition from the labour union, which preferred an egalitarian system of wage

determination and job promotion (Lee 1997). The labour union also has interfered

with management’s policy to promote workplace innovation and flexible job rotation,

thereby resulting in rigid and Kaisen-free working practices on the shop floor. In fact,

the labour union forced management to reduce the items of TQC from 30 to 10, and to

use an increasing number of irregularly-contracted workers in the early 2000s. Giventhe degree of mutual distrust between the militant labour union and Hyundai

management, management has been unable to promote any systemic flexibility in

terms of labour utilization and workplace innovation, aided by the performance-based

HRM schemes, which are a key part of and a prerequisite for TPS, thereby moving

further towards an engineer-led production model.

In summary, both external (i.e. a supplier-dominated market, the authoritarian

government’s labour control policy, part suppliers’ poor technical capabilities,

and the recent economic crisis) and internal factors (i.e. top management’s emphasis

on high utilization, a militant labour union, and worker distrust) have combined

to contribute to a technology-driven and ‘push-mode’ production model at Hyundai,which has, over time, deviated further from TPS, despite the company’s unceasing

efforts to emulate it.

5. Comparing Toyota and Hyundai production performance

Hyundai management’s efforts to emulate TPS, which have evolved into its unique

production model, have been remarkably successful in boosting the company’s

manufacturing competitiveness to the level of Toyota’s. Drawing upon the recent

manufacturing performance of Hyundai, HPS can be compared to TPS. As shownin figure 3, HPS has enhanced its utilization ratio up to 95.6%, close to that of TPS

(97%), over the past 5 years. It also has improved product quality (measured by the


https://www.researchgate.net/publication/242019880_Work_Organization_in_Lean_Production_and_Traditional_Plants_What_Ere_the_Differences?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/242019880_Work_Organization_in_Lean_Production_and_Traditional_Plants_What_Ere_the_Differences?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==


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sign-off ratio) up to 92.3%, drawing near Toyota levels (94–95%), over the same

period. In particular, Hyundai’s improvements in quality can be evidenced by the

recent favourable recognition of overseas markets; for instance, its passenger cars

rank as one of highest quality products in JD Power’s IQS (initial quality

satisfaction). Moreover, despite its push-mode production system, Hyundai has

reduced its inventory of parts delivery to 2 hours, comparable to Toyota, through

tight control of parts suppliers. These notable accomplishments mainly are

attributable to the company’s great efforts in engineer/technology-driven production

management innovation.

At the same time, HPS has a crucial problem in its labour productivity.

As illustrated in figure 3, the allocation ratio at Hyundai assembly plants has

declined from 75.8% in 2000 to 67.4% in 2005. A rough comparison of labour

productivity, measured in terms of production units per worker, reveals that

Hyundai’s (31.9) productivity was less than half that of Toyota (65.6) in 2003.

This problem could be explained by rigid work practices and little worker

involvement in shop-floor innovations, against a backdrop of confrontational

labour-management relations and employee mistrust of corporate management.

Nonetheless, as shown in table 4, since labour costs at Hyundai are around 40%those at Toyota (as of 2003), the former has been able to maintain its price

competitiveness, despite poor labour productivity.

In short, Hyundai has achieved fairly good manufacturing performance (in terms

of utilization, product quality, and parts inventory) with its own production model,

HPS, despite experiencing declining labour productivity, caused by deviations

from TPS, which is worker-exclusive production management.

6. Conclusions

Over the past 40 years, Hyundai has developed its own production model, HPS,

initially emulating TPS, followed by re-interpreting and modifying TPS to adapt to

Figure 3. Manufacturing performance of Hyundai (unit: %).Source: HMC internal document.

‘Sign off ratio’ is the aggregate index calculated by multiplying OK rates at the four inspectionspots: assembly line, final test, water-proof test, and ore-shipping test.

‘Allocation ratio’ is the relative ratio of net assembly working hours out of total assembly

working hours by production workers at the assembly plants.



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the company’s unique circumstances. In other words, HPS is a mutated form of TPS.

Although it deviates from the ideal model of TPS (JIT pull production, equipped

with flexible human buffers and incremental innovation capacity), HPS (based on

technology-driven push production) has gained a remarkable competitive advantage

in terms of manufacturing utilization, product quality, and inventory management,

thereby overcoming limitations caused by the pre-existing low wage business model,

as indicated by Womack et al . (1990). Of course, it also should be noted that HPS

entails a labour-exclusive manufacturing approach, derived from the company’s

authoritarian management style (reflecting the owner-driven governance structure

and, as a consequence, ignoring the voice and interests of other stake-holders,

such as workers and the labour union) and unstable labour relations, contrary

to TPS.

Our case study addresses several implications for future research on the

dissemination mechanisms of TPS.

First, the Hyundai case reveals that the adoption of TPS involves a complexevolutionary process of organizational learning and interpretation, as indicated by

Bartezzaghi (1999) and Liker et al . (1999). In contrast to the convergence perspective

that stresses the universal transferability of TPS in a simplistic manner, emulating

TPS involves complicated interactions between management’s strategic choices

and both internal and external factors, so that the manufacturing arrangement at

recipient sites ultimately may evolve into a unique production model, deviant from

the original form of TPS, that is better suited to the recipient’s environment. In this

light, future study of TPS dissemination needs to further explore the recipient

company’s active role and strategic capabilities in transmuting or ‘mutating’ TPS

principles to meet that company’s idiosyncratic circumstances, something whichlargely has been overlooked in existing literature.

Second, the Hyundai case sheds light on the possibility of various paths toward

lean production. Of course, TPS represents an exemplary lean manufacturing

paradigm in the post-Ford era. However, as Lewis (2000) points out, a variety of

lean production models, capturing the essential virtues of TPS, can be developed

as diverse workable configurations of the manufacturing system. Indeed, HPS has

embodied lean manufacturing via its own way of radical innovation, evidenced

by its notable operational performances, although it is constrained by low labour

productivity, mainly derived from confrontational labour relations. Therefore,

another future task is to examine commonalities and differences between various‘lean production’ models among firms emulating TPS, going beyond our single

case study.

Table 4. Comparison of operational performance between Hyundai and Toyota.

Hyundai Toyota

2000 2001 2002 2003 2000 2001 2002 2003

Labour cost per worker 34 888 32 401 40 245 40 128 96 059 88 824 91 507 104 046Production unit per worker 25.2 30.3 37.0 31.9 62.1 60.3 62.5 65.6

Source: HMC internal document.Unit: US dollar.


https://www.researchgate.net/publication/235275646_The_evolution_of_production_models_Is_a_new_paradigm_emerging?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/235275646_The_evolution_of_production_models_Is_a_new_paradigm_emerging?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/235275646_The_evolution_of_production_models_Is_a_new_paradigm_emerging?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/230770969_Lean_Production_and_Sustainable_Competitive_Advantage?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/235275646_The_evolution_of_production_models_Is_a_new_paradigm_emerging?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==https://www.researchgate.net/publication/230770969_Lean_Production_and_Sustainable_Competitive_Advantage?el=1_x_8&enrichId=rgreq-4b0b5f4c-31f2-4422-b91a-5eab03df21f8&enrichSource=Y292ZXJQYWdlOzI0NTMzMDkwNjtBUzoxMzAxOTgwNzA2MzI0NDhAMTQwODA1MzA0NzYwNw==


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Third, the Hyundai case demonstrates that both external and internal factors

combine to form a complicated causal chain, influencing the ‘mutated’ emulation

of TPS and generating a certain pattern of path-dependence in the evolutionary

trajectory of a particular production model. This possible combination of external

and internal factors can be sorted out via analytical typology, which categorizesvarious causal patterns of an examined phenomenon (i.e. TPS emulation) into

stylised types and, therefore, helps explain and predict the development of distinct

production models emulating TPS, as noted by Bartezzaghi (1999).

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