Working Paper: CEPR ID: DP18370
Authors: Achyuta Adhvaryu; Vittorio Bassi; Anant Nyshadham; Jorge Tamayo; Nicolas Torres
Abstract: We use daily administrative data from a leading automobile manufacturer to study the organizational impacts of introducing new models to the auto assembly line. We first show that costly defects per vehicle spike when new models are introduced. As a response, the firm trains in problem-solving skills and promotes lower- and mid-level employees to solve the more complex problems that arise, thus moving to a less pyramidal knowledge hierarchy with fewer layers. We develop an extension to the classic theory of knowledge-based hierarchies that reconciles our novel empirical results by allowing the firm to also invest in its training resources.
Keywords: product quality; upgrading; product cycles; organizational behavior; knowledge hierarchies; training; worker skills; auto manufacturing; Argentina
JEL Codes: D22; M12; M53; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| spike in defects per vehicle (dpv) (L15) | enhancement of training programs (M53) |
| enhancement of training programs (M53) | increase in problem-solving skills among lower and mid-level employees (M54) |
| increase in problem-solving skills among lower and mid-level employees (M54) | flattening of organizational hierarchy (L22) |
| introduction of new models (O41) | increase in problem-solving reports from lower and mid-level workers to upper management (M54) |
| enhancement of training programs (M53) | promotion of lower-level workers to higher positions (J62) |
| introduction of new models (O41) | spike in defects per vehicle (dpv) (L15) |