Working Paper: NBER ID: w31582
Authors: Achyuta Adhvaryu; Vittorio Bassi; Anant Nyshadham; Jorge A. 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: organizational responses; product cycles; training; automobile manufacturing
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) | Investment in training for lower and mid-level employees (M53) |
| Investment in training for lower and mid-level employees (M53) | Reduction in defects per vehicle (DPV) (L15) |
| Investment in training for lower and mid-level employees (M53) | Shift to a more rectangular hierarchy (L22) |
| Shift to a more rectangular hierarchy (L22) | Increase in reports of solutions from lower and mid-level workers to upper management (M54) |
| Increase in production volume of the same model (O41) | Monotonic increase in employment and knowledge layers (E24) |
| Introduction of new automobile models (L62) | Spike in defects per vehicle (DPV) (L15) |