Lean production systems and financial performance: a configurational fuzzy-set approach

Building on Shah & Ward’s (2007:791) seminal intuition that lean production systems are organizational configurations and drawing upon recent development in lean and behavioral operations literature, this study poses that: a) lean production systems as organizational configurations span the boundaries of lean operations practices and include a larger set of behavioral and structural variables; and b) there is variation within lean production system as different combinations/bundles of variables that might have differential performance effects or be equifinal. The study applies regression and fuzzy set qualitative comparative analysis to investigate the determinants of successful implementation of lean production systems. It analyzes why industry normalized financial performance improvements of firms implementing lean production systems vary and explains this cross-firm variation as the effect of different combinations of: a) level of adoption of lean operations and high involvement human resource management practices; b) lean management behaviors; and c) lean infrastructure and strategic commitment to lean thinking. Differently from existing empirical work, the study shows that the adoption of lean operations and high involvement human resource practices does not represent a sufficient condition to sustainably improve financial performance. A long term strategic commitment to lean thinking and the adoption of consistent lean management behaviors are also necessary to drive financial performance improvements.