Revision de Appelbaum Et Al 2000 Por Harrel Cok

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Manufacturing Advantage: Why High-Performance Work Systems Pay off by EileenAppelbaum; Thomas Bailey; Peter Berg; Arne L. KallebergReview by: Gloria Harrell-CookThe Academy of Management Review, Vol. 26, No. 3 (Jul., 2001), pp. 459-462Published by: Academy of ManagementStable URL: http://www.jstor.org/stable/259189 .

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2001 Book Reviews 459

new business idea, especially in the case ofstart-up firms. The issue of resources is not triv-ial, and directing entrepreneurs better in thisarea-with more tips and by referring them toexpert sources of information-would have

made this book more complete.Despite these minor weaknesses, The Entrepre-neurial Mindset can be viewed as a cure for someof the critical shortcomings in entrepreneurshipand strategy literature and education. On the onehand, entrepreneurship literature and educationtypically emphasize the creative side of starting anew business, without fully embracing the rigor-ous steps and analytical thinking involved in con-verting a creative product or service idea into aprofitable business. The living proof of this igno-rance is the failure of numerous dotcom compa-

nies. On the other hand, while strategic manage-ment education and literature conceptuallyemphasize analytical thinking, profitability, andtaking calculated steps, they are far from ade-quate in providing managers with concrete, pow-erful, and user-friendly techniques to generatenew business ideas and to enact them. The strat-egy literature has offered a number of powerfultechniques and frameworks, such as matching in-ternal strengths and weaknesses with externalopportunities and threats (e.g., Andrews, 1976),Porter's five-forces industry analysis and genericstrategies (Porter, 1980), the VRIO framework (Bar-ney, 1997), and the positioning/activity map (Por-ter, 1996), but these techniques are not sufficient inthe competitive environment of the twenty-firstcentury. In fact, most of the techniques involveanalysis at the industry or firm level, whereas firmcapabilities are often created at the functionallevel, and an entrepreneurial insight is developedat the product level. A major contribution of TheEntrepreneurial Mindset is the techniques pro-vided for developing entrepreneurial insight atthe product level-the level at which the entrepre-neur and customers connect--as well as the tech-niques taught for executing an entrepreneurialagenda that balances rigor and flexibility. Thus,The Entrepreneurial Mindset is a book I woulddefinitely consider for teaching both strategicmanagement and entrepreneurship.

REFERENCES

Andrews, K. 1980. The concept of corporate strategy. Home-wood, IL: Irwin.

Barney, J. B. 1997. Gaining and sustaining competitiveadvantage. Reading, MA: Addison-Wesley.

Porter, M. E. 1980. Competitive strategy: Techniques for ana-lyzing industries and competitors. New York: Free Press.

Porter, M. E. 1996. What is strategy? Harvard BusinessReview 74(6): 61-78.

Manufacturing Advantage: Why High-Performance Work Systems Pay Off, byEileen Appelbaum, Thomas Bailey,Peter Berg, and Arne L. Kalleberg.Ithaca, NY: Cornell University Press,2000.

Reviewed by Gloria Harrell-Cook, Mississippi StateUniversity, Mississippi State, Mississippi.

Manufacturing Advantage is an intensive ex-amination of the effects of high-performanceworkplace practices in three industries: steel,apparel, and medical electronic instrumentsand imaging. The study is immensely impres-sive in its comprehensiveness and magnitude.The authors include multilevel data collectionfrom both managers and workers from numer-ous sites in each industry in an attempt to un-cover the contents of the black box of the high-performance work systems (HPWSs) or humanresources systems-firm performance relation-ship. Thus, the book provides a valuable contri-bution to both academics and practitioners, il-lustrating interesting insights into how soundhuman resources management contributesvalue to organizations. The black box has beenthe subject of much theoretical speculation, butin few, if any, previous works have researchersconducted empirical analyses to support thatspeculation.

Eileen Appelbaum, Thomas Bailey, Peter Berg,and Arne L. Kalleberg draw from Bailey (1993) for

the theoretical underpinnings of their research.They, like Bailey, posit that it is through theeffective elicitation of discretionary effort thathuman resources management will positivelyinfluence firm (or, in this research, plant) perfor-mance. In technical terms, discretionary effort isexpected to mediate the relationship betweenthe human resource management or work sys-tem and performance. In order to educe discre-tionary effort, however, the work system mustcontain three essential components: opportunity

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460 Academy of Management Review July

to participate, incentives, and skills. These arethe three independent variables that composethe HPWS used in the study. Discretionary effortis that contribution of effort above and beyondwhat is called for in the job description, accord-

ing to the authors. In this research the authorsview it as the opportunity for nonmanagerialemployees to exert that extraordinary effortthrough participation in shop floor problemsolving and decision making.

Appelbaum and her colleagues further con-tends that such a work system could have apositive impact on worker outcomes, proposingthat, in addition to increasing worker wages, theHPWS would increase worker trust and intrinsicrewards and that trust and intrinsic rewardswould mediate positive relationships between

the HPWS and organizational commitment andjob satisfaction. They also expect the HPWS todecrease workplace stress-an expectation con-trary to some previous theoretical arguments.

The empirical analyses in the book are pre-ceded by a history of each industry, in whichtraditional work organization and the move ofsome plants in the industries to a participatorywork system are detailed. In the steel and ap-parel industries, this change in work organiza-tion meant a move away from the principles ofscientific management-long thought to be themost efficient way to organize-to a system ofgroup or teamwork involving problem solvingand decision making. The evolution of partici-patory work organization in each industry was aresponse to changing competitive pressures, es-pecially globalization and the internationaliza-tion of markets. Indeed, in the steel and apparelindustries, where cheap imports and dumping offoreign-made steel were threatening firm viabil-ity, it was a seen as a fight for the very survivalof the business.

The empirical analyses provide evidence thatthe institution of HPWSs did indeed have a pos-itive effect on the competitiveness of the adopt-ing firms, increasing efficiency but also provid-ing for greater firm capacity for responsivenessto their consumers, for customization of productand delivery to suit customer needs, and forhigh-quality production. In their discussion theauthors argue that HPWSs, because of their verynature, also could increase productivity by in-creasing the effectiveness of the individualworker and providing new opportunities for or-ganizational learning. The increase in individ-

ual effectiveness derives from the contributionof discretionary effort, while enhanced organi-zational learning is a result of the high levels ofboth inter- and extra-group communication re-quired by a participatory work system.

While the extensiveness of the analyses islaudable, it also precludes the detailing of re-sults in this review. However, although the out-comes varied somewhat for each industry, ingeneral, Appelbaum et al. found support fortheir hypothesized effects, providing the mostcompelling evidence to date that HPWSs domake a positive difference for both the organi-zation and the workers. The authors refer to thisas the win-win outcomes for plants and work-ers.

The authors comprehensively address the po-

tential weaknesses of their research and cave-ats of their findings, which I do not detail here.Indeed, given the quality and magnitude of thestudy, it is difficult to describe the work as any-thing other than outstanding research that con-tributes greatly to the understanding of a rmach-debated topic in organizational science. Thereare a few issues, however, that beg comment.

The first of these is the issue of discretionaryeffort. I found it very disappointing, given theprominent role that discretionary effort plays inthe theory development of this work, that contri-bution of discretionary effort was not measuredor, if measured, was not included in the empir-ical analysis. Therefore, while it played a medi-ating role in the model, since it was not includedin the analysis, the reader can only assume thatit was discretionary effort through which theHPWS had its effect on plant outcomes. Al-though the omission of this variable is unfortu-nate, there is sound theory to support the as-sumption that discretionary effort does indeedplay the mediating role, given the characteris-tics of the HPWS.

The authors explain that work reorganizationwas undertaken by managers as an effort toimprove firm performance, in keeping with thestrategic human resources management or sys-tems perspective. The objective, then, was incontrast to the objective of such initiatives un-dertaken previously in U.S. history, where workreorganization was instituted in the interest ofworker welfare and satisfaction. While manage-ment intent in this research was clearly in theinterest of improving performance, worker per-ceptions of the changes in human resource prac-







2001 Book Reviews 461

tices may also have had an impact on the work-ers' willingness to contribute discretionaryeffort.

Opportunity to participate implies that the or-ganization trusts and values the input of the

employee and that the worker is seen as a re-source rather than a commodity. To the worker,being valued and trusted are important and sat-isfying benefits granted by the employer. Fur-ther, many of the incentives included in thisanalysis (e.g., employment security, promotionopportunities, assistance with work-family is-sues, and increased wages) are very strong in-dicators (whether intentional or not) of the organ-ization's concern for and commitment to thewelfare of the employee. Employers, throughprovision of these scarce incentives (in today'swork world), may actually be seen by employeesas benefactors. Blau's (1963) concept of socialobligation shows that it is quite plausible (per-haps made more likely because of diminishingexistence of the traditional psychological con-tract) that human resource practices perceivedby employees to be of high value will elicit fromthose employees the desire to enjoy the contin-ued benefit of such practices. Such continuedbenefit is dependent upon their continued em-ployment with the employer, and continued em-ployment is dependent on the contribution thatemployees make to the organization. Therefore,it is in the employees' best interests to performand contribute in such a manner as to ensurethe continuation of these benefits-in short, tocontribute greater or discretionary effort.

Further, social reciprocity norms have beenposited to facilitate the attainment of commit-ment and behavior consistent with that commit-ment (Howard, 1995). Reciprocity has been sug-gested to be a ubiquitous and powerful socialconvention (Webley & Lea, 1993), as well as anantecedent of positive organizational behaviors(Brief & Motowidlo, 1986). Intuitively, it seemsclear that social obligation will be engenderedthrough the perception of the organization as abenefactor to whom some degree of allegianceand loyalty, in the form of performance and con-tribution, is owed. The greater the perceivedcommitment of the benefactor organization tothe employee, the stronger the influence of rec-iprocity norms is on employees to provide dis-cretionary effort. So, in addition to the opportu-nity to contribute greater effort, employees maybe psychologically compelled by factors inher-

ent to incentives to contribute their discretion-ary effort.

A second thought-provoking issue ariseswhen reading Manufacturing Advantage. Theresearchers gathered data about the time period

during which the HPWSs went into effect in theorganization, yet this information was not uti-lized in the analyses, nor was it reported in thediscussion. In Griffin's (1991) research, signifi-cant improvements in performance due to workredesign were not recognized until four yearsafter the reorganization was undertaken. De-pending on the amount of time between institu-tion of HPWSs and data collection, then, would itnot be possible that even greater effects on per-formance might have been forthcoming in theseindustries? If so, the argument to managementto adopt innovative work reorganization andHPWSs as an alternative to more economicallydestructive cost-cutting measures (or movingproduction offshore), as discussed by the au-thors in the last chapter of the book, may beeven more compelling.

A final notion, and tangential to the above, isthe fact (discussed by the authors) that in spiteof improved competitiveness in the steel andapparel industries, the positive effects of HPWSsmay not be sufficient to ensure the viability ofthese industries in the United States. Cost cut-ting, through moving production to less devel-oped countries, has numerous and not necessar-ily positive implications for the U.S. economy. Asnoted above, the authors call for greater consid-eration by managers of more innovative andless economically negative approaches to im-prove competitiveness. They also call for mac-roeconomic and institutional pressures to in-duce managers into such consideration.However, the discussion of exactly what nega-tive implications might be expected because ofmanagement failure to pursue these ap-proaches is limited. If, indeed, there are seriousrepercussions of moving most of manufacturingabroad to take advantage of lower wages (andless constraining legal environments), then theargument against such actions could only bemade more compelling by definitively address-ing what those negative implications might be.If action is to be taken by any party-whethermanagement, government, or institutions-those compelling arguments need to be putforth. These authors have done a fine job ofinitiating that process.







462 Academy of Management Review July

In conclusion, the work of Appelbaum, Bailey,Berg, and Kalleberg takes research in the areaof human resources management and HPWSs toa higher level. The information is well re-searched and well presented. The book is inter-

esting and insightful reading, which should ap-peal to both academics and practitioners. I havealready recommended it as a must read to peo-ple in both categories.

REFERENCESBailey, T. 1993. Organizational innovation in the apparel

industry. Industrial Relations, 32: 30-48.

Blau, P. M. 1963. Critical remarks on Weber's theory of au-thority. American Political Science Review, 57: 305-316.

Brief, A. P., & Motowidlo, S. J. 1986. Prosocial organizationalbehaviors. Academy of Management Review, 11: 710-725.

Griffin, R. W. 1991. Effects of work redesign on employeeperceptions, attitudes, and behavior: A long-term inves-tigation. Academy of Management Journal, 34: 425-435.

Howard, D. J. 1995. Chaining the use of influence strategiesfor producing compliance behavior. Journal of SocialBehavior and Personality, 10: 169-185.

Webley, P., & Lea, S. E. 1993. The partial unacceptability ofmoney in repayment for neighborly help. Human Rela-tions, 46: 65-76.

Multinationals As Flagship Firms, byAlan M. Rugman and Joseph R. D'Cruz.Oxford: Oxford University Press, 2000.

Reviewed by Timothy M. Devinney, Australian Grad-uate School of Management, Sydney, Australia.

In Multinationals As Flagship Firms Rugmanand D'Cruz encapsulate a framework they havebeen developing for most of the last decade. Asa general integration of this work, the book is afine addition to the literature and serves to pro-

vide the reader interested in this research with aone-stop shop.

The authors offer their approach as an alter-native to the more familiar five-forces model ofPorter. In their framework-known as the fivepartners model -they posit the development ofclusters of flagship firms that operate with atight network of partners-made up of key sup-pliers, key customers, and selected competi-tors-and a nonbusiness infrastructure (e.g.,universities, governments, and so forth). The

model is, for the most part, descriptive and in-volves the integration of a number of theories-mainly network theory, the resource-based theoryof the firm, and transaction cost economics-tobuttress the structure. The framework is illus-

trated with a host of well-developed cases studiesspanning a number of different industries.

Just as Porter attempted to managerializeindustrial organization, one can say that Rug-man and D'Cruz are doing a bit of the same withthe loose collection of theories that attempt toexplain the complex structures we see operatingaround multinational enterprises (MNE). In thissense I would not view the flagship firm modelas an alternative to Porter but, rather, anotheruseful toolkit for trying to understand, in a con-sistent manner, how specific industries and sub-

groupings within industries are structured. As isrightly pointed out in the book, Porter's theoryloses validity when one tries to stretch it to ac-commodate the microlevel strategic concerns offirms. But Rugman and D'Cruz's approach alsosuffers when used to address issues that do notfit conveniently into the structure. This is not acriticism of their thesis as incorrect; rather, thebook does not complete the theoretical circle.Hence, we should view its publication as a mid-point in the development of the theory. Perhapsit will spark additional work to fill in the gaps

and push the authors' ideas further.We can see where there are gaps in the f ag-

ship firm approach by analyzing how the devel-opment of Microsoft would be dealt with. Ac-cording to the theory, the f flagship firm is in astrategic leadership position, maintaining re-sponsibility for the development and operationof the network. We could, quite easily, see howsuch an approach might fit with our understand-ing of the operations of Microsoft. However, if wego back to the 1980s, the flagship firm wouldhave been IBM, with Microsoft as one of the key

suppliers -whereas today IBM would be one ofthe key customers. At some point in the 1980s,this market changed, and the power position-the center of gravity, so to speak-flipped toMicrosoft's favor. This is a critical issue for thetheory. Like many approaches, it serves as anexcellent description of a static position butstrains to accommodate complex dynamic evolu-tion. Certainly, a story could be told that somehowmakes the Microsoft story fit the theory, but Rug-man and D'Cruz's framework has yet to be ex-





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Revision de Appelbaum Et Al 2000 Por Harrel Cok