Varieties of Digitalisation?

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Résumé:

Varieties of Digitalisation?

Martin Schröder, Marvin Müller, Takefumi Mokudai, Joachim Metternich

Purpose: It has been observed that automotive firms in Japan follow a distinct approach of using digitalisation (Mokudai et al. forthcoming). In particular, this approach is characterised by the usage of information generated by digital technologies to support shopfloor operators and white-collar staff in productive improvement (kaizen). Simultaneously, Japanese automotive firms in Central Eastern Europe have been described as deploying digital technologies in a way that is consistent with the German vision of Industry 4.0, that is increased automation and labour skill development for remaining operators (Olejniczak et al. 2020). This suggests that Japanese automotive firms per se are not opposed to the deployment of digitalisation. Further, the Japanese debate on digitalisation is focussed on artificial intelligence (AI) and the Internet of Things (IoT) but differing from Germany does not discuss the implications on industrial relations and management. Therefore, the question arises why Japanese automotive firms deploy digital technologies in a distinct way in Japan.

Design: Theoretical explanations for the distinct way in Japanese automotive firms deploy digital technologies in Japan will be explored and contrasted with the case of Germany. As firm strategy appears to differ between different locations, the Varieties of Capitalism (VoC) approach (Hall and Soskice 2001) is one analytical lens that may help to understand different firm behaviour and public discourse in both countries. While several institutions that were identified as characteristic for Germany by the VoC approach have undergone significant transformation (Baccaro and Howell 2017), tripartite cooperation between the state, employers, and unions in defining vocational training standards has remained unchanged. To narrow the discussion, we focus on the topics of digital technology deployment in kaizen and related competency development in Germany and Japan and how these topics may be related to the VoC approach.

Findings: According to the VoC approach, Germany and Japan are both coordinated market economies, that is firms do not mainly rely on competitive markets for coordination and instead utilise non-market relationships. However, Germany is characterised by industry-based coordination and Japan by group-based coordination. Industry-based coordination inter alia means that employer associations and labour unions engage the question how to deal with novel technologies such as digitalisation. Thus, regarding skill and competency[SM1] [1] development, one reason why the German debate is addressing questions such as industrial relations and management implications is that capital and labour seek to establish standard solutions at the industry level, e.g. by changing existing or creating new job descriptions grounded in skill requirements that form the basis of the dual education system which combines apprenticeship in a firm and vocational training in public schools. Conversely, the absence of such a debate in Japan may be explained by group-based coordination, that is issues related to novel technologies are addressed at the firm or firm-network (keiretsu) level. Case study evidence (Mokudai et al. forthcoming) suggests that keiretsu suppliers are indeed following the lead of their carmaker customers towards digitalisation. As for differences in kaizen, VoC does not seem to provide a satisfactory explanation[SM2] . Path dependency seems to prevail in both countries: The German approach of relying on experts that use specialised tools to identify improvement potential from massive data acquired by digital technologies stands in the tradition of expert-led kaizen with limited operator participation (Jürgens 1998; Gerst et al. 1999; Labit 1999). Similarly, operator involvement in kaizen is apparently so central to many Japanese automotive firms that data generated by digital technologies are provided to shopfloor operators. Further, some firms do not consider the acquisition of more complex data such as programmable logic controllers to search for improvement potential, suggesting that kaizen is not necessarily expert-driven.

Significance: Instead of praising or condemning a seemingly distinct approach, we seek to explore why firms follow such a distinct approach in the first place. From a theoretical perspective, embedding distinct digitalisation approaches into national contexts may allow to better identify elements of continuity and change instead of solely focussing on novel technologies. Understanding underlying conditions for seemingly distinct approach has also practical implications, namely would-be emulators of Japanese practice will understand that simply copying practices is likely to result in failure if institutional enabling conditions are absent. 

References

Baccaro, L. and Howell, C. (2017) Trajectories of Neoliberal Transformation. Cambridge: Cambridge University Press.

Gerst, D., Hardwig, T., Kulmann, M., and Schumann, M. (1999) ‘Group Work in the German Automobile Industry – The Case of Mercedes-Benz’, pp. 366-394, in: Durand, J.-P., Stewart, P., and Castillo, J.J. (eds.) Teamwork in the Automobile Industry. Houndmills: Palgrave Macmillan.

Hall, P.A. and Soskice, D. (2001) Varieties of Capitalism. Oxford: Oxford University Press.

Jürgens, U. (1998) ‘The Development of Volkswagen’s Industrial Model, 1967-1995, pp. 273-310, in: Freyssenet M., Mair, A., Shimizu, K., and Volpato, G. (eds.) One Best Way? Trajectories and Industrial Models of the World’s Automobile Producers. Oxford and New York: Oxford University Press.

Labit, A. (1999) ‘Group Working at Volkswagen: An Issue for Negotiation between Trade Unions and Management’, in: Durand, J.-P., Stewart, P., and Castillo, J.J. (eds.) Teamwork in the Automobile Industry. Houndmills: Palgrave Macmillan.

Mokudai, T., Schröder, M., Müller, M., Schaede, C., Holst, H., Sinopoli, R., Jürgens, U., Herrigel, G., and Aoki, K. (forthcoming) ‘Digital technologies as lean augmentation: A preliminary study of Japanese automotive manufacturers’, International Journal of Automotive Technology and Management 21

Olejniczak, T., Miszczynski, M., and Itohisa, M. (2020) ‘Between closure and Industry 4.0: strategies of Japanese automotive manufacturers in Central and Eastern Europe in reaction to labour market changes’, International Journal of Automotive Technology and Management 20:2, pp. 196-214