Learning Factories

The Nordic Model of Manufacturing

Halvor Holtskog, Elias G. Carayannis, Aris Kaloudis, Geir Ringen

• Publisher: Palgrave Macmillan
• Year: 2017
• ISBN:
  9783319418872
• Topic: Business
• Subtopic: Management
• Index: Business

This book examines how the norms, culture, and practices of the socio-economic Nordic model give them a competitive edge in globalized production chains. Using the Norwegian automotive industry – one of the most globalized industries in the world – as the empirical foundation of the book, it examines the strengths, tensions, and challenges the Norwegian work organization style meets in this particular business environment. It explores the current indicators of competitiveness, innovation, scientific excellence, and well-being as compared with the US, UK, EU, Japan, and elsewhere to address the hotly debated question of how institutions and culture contribute to or inhibit certain forms of work organization, learning, and economic performance.
Integrating action research, organization studies, and learning and innovation economics, this book provides a more precise understanding of how institutions and cultures at a macro level shape learning practices in a competitive industry.

© The Author(s) 2018

Halvor Holtskog, Elias G. Carayannis, Aris Kaloudis and Geir RingenLearning FactoriesPalgrave Studies in Democracy, Innovation, and Entrepreneurship for Growthhttps://doi.org/10.1007/978-3-319-41887-2_1

Begin Abstract

1. Introductory Chapter

Halvor Holtskog¹ , Elias G. Carayannis², Aris Kaloudis³ and Geir Ringen¹

(1)

Department of Manufacturing and Civil Engineering, Norwegian University of Science and Technology, Gjøvik, Norway

(2)

School of Business, George Washington University, Washington, District of Columbia, USA

(3)

Department of Industrial Economics and Technology Management, Norwegian University of Science and Technology, Gjøvik, Norway

Abstract

This chapter aims to provide deeper insight into how a modern and sophisticated management of employees plays an important and—in our view—key role for the successful reindustrialization of the Western world. There are important lessons to learn from high-cost countries that successfully compete in the global marketplace. In such contexts, the re-combination of tacit knowledge, people, competences and culture to create effective and efficient automated production is indeed essential.

End Abstract

Introduction

In both the USA and Europe, there are currently huge efforts to reindustrialize economies after decades of neglecting industry as the most important economic factor for society. Such a phenomenon is the starting point of this investigation. Specifically, Japanese ways of production have often been studied and—to some degree—copied by American and European firms whereby ‘Lean’ has become the de facto standard for effective and efficient production. Recently, however, new initiatives have emerged. Industry 4.0 is one of these, and it has a strong technological focus. It involves censors which gather data from every step of the automated production process, identifying each nut and bolt is prerequisite, as is the usage of big data. However, little attention is given to people and the knowledge-creation process.

This book aims to provide deeper insight into how the people-aspect plays an important and—in our view—key role for the successful reindustrialization of the Western world. It argues that there are important learning points from high cost countries that successfully compete in the global marketplace. In such contexts, the re-combination of tacit knowledge, people, and culture to create effective and efficient automated production is indeed essential and visible.

The Norwegian labor market and work organization are similar to those of Denmark and Sweden, its Nordic neighbors. This socio-economic organization is often labeled ‘the Nordic model,’ the result of four key institutionalized societal mechanisms:

• Centrally led wage negotiations between trade unions and employer federations
• Safety nets of health insurance, welfare benefits, and pensions to all citizens
• Labor market flexibility, that is, a high degree of job mobility and career experimentation combined with a high degree of job safety
• Democratic decision processes and high employee participation in organizing work tasks at all levels

This book claims that the above-mentioned mechanisms produce a specific style of collaboration and learning at work which significantly differs from work organization styles observed more generally in the European Union (EU), UK, USA, Japan, or elsewhere. We empirically examine the strengths, tensions, and challenges that the work organization style meets in the automotive industry—probably the most globalized industry in the world.

The automotive industry provides precisely the type of business environment that allows studies of how work organization practices—partly shaped by strictly defined legislation and centrally negotiated rules—adjust to global economic forces and mechanisms. Yet, precisely what types of tensions and redefinitions of work practices and styles do we observe when learning in a Norwegian automotive company that meets the global marketplace?

Moreover, there is another—equally important—rationale for writing this book. In many developed countries, the question of reindustrializing the economy is becoming extremely important. Societal and economic spillovers from manufacturing industries are now better understood, and there is the increasing awareness of the fact that competitive, modern economies require strong manufacturing sectors as the precondition for globally competitive services. Thus, this book enlightens such a discussion by examining how aspects of the Nordic model create competitive advantages in high-cost countries such as Norway. We argue on the evidence provided in this book that a democratic, flexible, and adaptive organizational form of learning is an important contributing factor to the creation of competitive advantage.

As we live in a world that is steadily becoming more globalized and interactive, the business environment has evolved to become more globally orientated and competitive. Such changes have led to more rapid technological development as well as changes in the societies where the companies operate. Therefore, capabilities that companies rely on must be designed in a way that can keep up with this rapid transformation in a globalized world (Levinthal, 2009). These capabilities include organizational knowledge , or what the organization knows and can use in its operations, in order to be successful (Dosi, Nelson, & Winter, 2009) and form competitive advantage: ‘The importance of knowledge as a key source of competitive advantages is now well established in management studies’ (Nonaka & Nishiguchi, 2001, p. 3). This strategy tradition focuses on management and how new management ideas, processes, and organizational design can become strategic resources (Argyres, Felin, Foss, & Zenger, 2012). In addition, Argyres et al. (2012) demonstrate that management possesses the most valuable knowledge, supporting the top-down approach to its spreading. Garicano and Wu (2012) agree on this when they conclude that task orientation informs how knowledge is acquired. Specifically, task orientation concentrates on what each employee should and must learn in order to do a good job; the management of tasks is therefore essential along with building a knowledge hierarchy.

In many ways, Norwegian work–life research contrasts this strategic view of organizational management. Here, the roots of the tradition are firmly placed in human relations, where democratic and broad direct participation of all organizational levels dominate thinking (Gustavsen, Finne, & Oscarsson, 2001; Johnsen, 2001; Klev & Levin, 2009; Røvik, 1998). This tradition argues that autonomy in teams will bring innovation ideas from the employees from the bottom-up, termed ‘employee-driven innovation’ (EDI) (Pedersen, 2012). Central to EDI is that ‘learning can produce innovation’ and there is a ‘complex interplay of processes that include factors at the individual level as well as organizational culture’ (Pedersen, 2012, p. 4). Its motivation is captured in the following statement by Kesting and Ulhøi (2010, p. x): ‘Employees typically acquire exclusive and in-depth and highly context-dependent knowledge that managers often do not possess.’ Essentially, these authors posit that EDI-thinking occurs within two organizational roles: management and employees. And, although they highlight the need for close collaboration between the roles, the dichotomy remains. Further, high technological development creates exclusive and in-depth context-dependent knowledge (ibid.). However, employees working daily in the context, with the technology-like automated machines and so on, hold no such knowledge.

This book holds on to the Norwegian work–life tradition and importance of EDI , but it has a different viewpoint. In matrix organizations, the organizational roles are more diffused. A person can be both a leader and an employee in the same company, or one can have many bosses. In this understanding, the dichotomy makes little sense. Rather than holding on to the roles of employee–management, this book begins differently. Organizing product development projects , according to the matrix principle, is common (Cooper & Edgett, 2005; Morgan & Liker, 2006; Nishiguchi, 1996; Ottoson, 2010). Aligning to this principle, this book considers how industries create knowledge. Learning and innovation in such advanced organizational structures require some special foundations to be effective and efficient. Learning requires a special kind of leadership in the sense of leader roles and the ability to facilitate the learning process among organizational members. Further, organizational culture plays an important role in learning, and the structure and tools are the final dimensions. This multi-dimensional framework creates better understanding, increasing insight into how technologically and organizationally advanced companies learn and create knowledge in effective and efficient ways. This is, of course, based on high employee involvement using the context-dependent knowledge.

From a system perspective, this book is also important. Supplier companies are subsystems of various OEMs,¹ and these companies too are composed of multiple subsystems. Therefore, the challenge of management is to manage complex relations between subsystems within subsystems without having the company fall apart, adding yet another complication to the organizational learning model.

Assumptions and Theoretical Framework

This way of thinking is inspired by Cartesian doubt—thoughts form the epistemological foundation for the individual’s knowledge. However, Cartesius posed that there is always some skepticism present and doubt therefore becomes an effort to defeat such knowledge bases. Specifically, three distinct levels of doubt exist: perceptual illusion, the dream problem, and the deceiving God (‘Descartes: God and Human Nature,’ 2013). ‘Perceptual illusion’ means that our senses can play with us. Magicians are experts in illusion and the audience becomes astonished when impossible things happen on stage. In everyday life, our senses play a vital role in how we perceive things, but many times what we perceive turns out to be something else, such as often the case for first impressions. ‘The dream problem’ refers to the boundary between a dream-state and consciousness that can be difficult to separate. Psychology has proven that the human brain fills in blank spots and creates patterns. These pattern recognitions are well developed (Lehrer, 2012). However, this does not mean that the patterns, or the creative process, produce something close to what many regard as reality. ‘A deceiving God’ in Cartesian philosophy invites us to doubt our traditional beliefs. In his case, it was religion. Systematic doubt challenges existing knowledge and makes us rethink initial thoughts. In this way, new aspects are discovered. With a system perspective, or subsystems within subsystems, such doubt drives the investigation by assuming the conclusions are wrong which therefore creates the motivation to test them. In social science, systematic doubt is pursued in triangulation because it is void of laboratory control that allows us to refine the range. Therefore, the alternative is to look at something from various angles and hope to discover something about it.

Flick pointed out that qualitative research often focuses on multi-methods (Denzin & Lincoln, 1994; Flick, 1998, p. 229). The metaphor triangulation comes from military usage and naval navigation where multiple reference points were used to pinpoint, through geometry, the exact position of an object (Smith & Kleine, 1986). Thus, ‘[t]he ...