The Positive Sum Strategy Harnessing Technology for Economic Growth (1986) / Chapter Skim
Currently Skimming:
Dynamic Competition and Productivity Advances
Dynamic Competition and Productivity Advances
Pages 77-88
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 77... ...
Their performance was attributable to an impressive gain in the rate of productivity advance, which made possible Me selling of comparable products at lower cost or better products at more or less the same cost. It seems to be no accident Nat the successful industries were either those embodying new technology, such as semiconductors and computers, in which flexibility was all-important, or those in which plants tended to be relatively small and unspecialized, such as manufacturers of athletic equipment or scientific instruments.
|
From page 78... ...
on which productivity gains are premised, whether in the form of reduced labor costs or reduced input costs, come about in industries other than those in which the gains occur. However, productivity performance seldom depends on one critical technological ingredient; ordinarily it depends on several.
|
From page 79... ...
Hence, the first assumption—assumption because there is no way to establish its reasonableness definitely is that firms are in a NASH dynamic equilibrium an equilibrium wherein if one finn does not change its strategic policies with respect to risk taking other firms will have no incentive to change theirs. The second critical assumption is that a greater degree of risk taking will lead to a wider distribution of outcomes as measured by the degree of success fibs have in bringing about the cost reductions that, in turn, generate productivity gains.
|
From page 80... ...
80 ci ~ \ 91~H ~lAllOnCOUd \ I ~ cD G I tL 31~8 ~lAll~tl0OUd I , _ In G O H _ ,,, ~ o Id \ \ \ CO \ 1 31~H ~L'l\llonaoua en llJ O ~ _J C ~ C,0 _ O G ~ Q C' LL ~ O ._ :e ._ a; 5 c o c) :t Cat bled N1 PONCHO ~ ~ , 1~H All~llonaoud · ·· e _ _ bled N1 PONCHO ._ C)
|
From page 81... ...
, it can be predicted that the rate of productivity gain will depend on the value of PERK. If, as in the bottom panels of Figure 1, PERK declines, then the produchvity curve will slope off; that is, if we examine the slope of the curve for a variety of industries in which dynamic competition has declined, we can expect Mat the average rate of productivity gain will dampen—but not in every industry, because luck is also involved.
|
From page 83... ...
The main industries included basic materials of one kind or another—steel, aluminum, copper, cement, and a variety of metal products were the main ones. For the most part, these industries have not featured dynamic competition for some years.
|
From page 84... ...
Inasmuch as Group I industries suffered a smaller decline in equipment expenditures than either Groups II or III, while experiencing a sharp increase in He average rate of productivity gain and, as a consequence, a relatively small loss in He average output rate, it can be assumed Hat they were economizing on capital as well as labor inputs. In his diary, Sadi Carnot, who is now given credit for having discovered the Second Law of Thermodynamics, proposed a tax on the rent of French fanns, the purpose of which was to encourage large landholders to sell parcels to individual farmers, who would have an incentive to improve productivity in order, as Carnot wrote, "to excape the tax."3 Apparently, as of that time productivity on French farms was increasing so slowly that it was almost in a static equilibrium.
|
From page 85... ...
The main purpose of dynamic flexibility, however, is to make rapid changes in production technology for the purpose of lowering costs and thereby improving productivity. Almost every Japanese auto company has a large machine-tool operation in which 200 to 400 people do nothing but create new tools, which are quickly introduced into the production process.
|
From page 86... ...
He replied that his superiors wanted someone who was good at asking shard questions— and in the Amencan marketing division of Honda, from which he came, "We Japanese specialize in asking sharp questions'" Another respect in which Japanese auto plants are like Amencan farms is Hat there is a high degree of interaction between management and workers. For example, I asked an Amencan worker in charge of the painting line at He Honda motorcycle plant in Columbus, "What is it like to work for a Japanese firm?
|
From page 87... ...
As a result of subcontracting with Mitsubishi for parts to be used on the 757 and 767 airplanes, Boeing executives claim that Mitsubishi is a good parmer, because they operate in much the same way as Boeing. Moreover, engineers from the Sorry television plant located in San Diego claim that they not only make about 90 percent of Heir components, but by utilizing a highly skilled labor force Hey are able to operate quite as flexibly as comparable plants in Japan.
|
From page 88... ...
K] FIN NOTES 1 For a more detailed discussion of die statistical results, see Burton H
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.