TY  - JOUR
AU  - Helper,Susan
TI  - Complementarity and Cost Reduction: Evidence from the Auto Supply Industry
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6033
PY  - 1997
Y2  - May 1997
UR  - http://www.nber.org/papers/w6033
L1  - http://www.nber.org/papers/w6033.pdf
N1  - Author contact info:
Susan Helper
Weatherhead School of Management
Case Western Reserve University
11119 Bellflower Rd
Cleveland, OH  44106-7235
Tel: 216/368-5541
Fax: 216/368-5542
E-Mail: susan.helper@weatherhead.cwru.edu
M2  - featured in NBER digest on 1997-11-01
AB  - Over the last 20 years, the success of Japanese manufacturing firms has brought renewed attention to the importance of cost reduction on existing products as a source of productivity growth.  This paper uses survey data and field interviews from the auto supply industry to explore the determinants of average-cost reduction for a sample of 171 plants in the United States and Canada between 1988 and 1992.  The main result is that the determinants of cost reduction differ markedly between firms which had employee involvement programs in 1988 and firms that did not.  The two groups of firms achieved equal amounts of cost reduction, but did so in very different ways.  Firms with employee involvement saw their costs fall more if they also had such involvement gained no cost-reduction benefit from these programs; instead, their cost-reduction success was largely a function of increases in volume.  These results provide support for Milgrom and Roberts's concept that certain production practices exhibit complementarity.
ER  -