NBER WORKING PAPER SERIES
DO INDUSTRIAL RELATIONS AFFECT PLANT PERFORMANCE?: THE CASE OF COMMERCIAL AIRCRAFT MANUFACTURING
Morris M. Kleiner Jonathan S. Leonard Adam M. Pilarski
Working Paper 7414 http://www.nber.org/papers/w7414
NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 November 1999
This study was supported by a grant from the Alfred P. Sloan Foundation. The authors thank Neil Chaffee, Sandy Donovan, Adrienne Howard, Yongjin Nho, Yonglin Ren, Keith Vargo, and Donghoon Yang for their assistance with this study, as well as comments from participants at seminars at the University of Minnesota and the NBER. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research. © 1999 by Morris M. Kleiner, Jonathan S. Leonard, and Adam M. Pilarski. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.
Do Industrial Relations Affect Plant Performance? : The Case of Commercial Aircraft Manufacturing Morris M. Kleiner, Jonathan S. Leonard, and Adam M. Pilarski
NBER Working Paper No. 7414 November 1999 JEL No. J5, J3, L2 ABSTRACT This study analyzes the impact of major industrial relations variables on productivity within a plant that assembles large commercial aircraft. The analysis combines the deep firm-specific knowledge of management and labor typical of the best of traditional industrial relations with formal statistical tests. We use a before and after research design over an 18-year period with monthly data, as well as information from the participants in the industrial relations events. Our approach is unusual in showing that by focusing only on managerial factors or the learning curve, and omitting factors such as union leadership and related labor relations events, estimates may mis-specify impacts on firm performance. Strikes, slowdowns, and tough union leaders influenced the productivity of this plant by both large percentages and absolute dollar amounts during the period they were occurring. In contrast with much of the firm performance literature, we find small initial productivity impacts of movements from traditional adversarial management, which is the norm in this industry, to total quality management (TQM) and back again. How and why TQM is adopted may be just as important as whether it is adopted. Finally, simulations from a counterfactual case show that major industrial relations events like strikes, slowdowns, and the TQM program did not have long term productivity effects, and that the firm we studied returned to pre-event levels of production within one to four months. Morris M. Kleiner Humphrey Institute of Public Affairs and Industrial Relations Center University of Minnesota Minneapolis, Mn. 55455 and NBER
[email protected] Adam M. Pilarski AVITAS,DNV 1835 Alexander Bell Drive, Suite 200 Reston, Va.20191
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Jonathan S. Leonard Walter A. Hass Graduate School School of Business University of California, Berkeley Berkeley, Ca. 94720
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