Keeping pace with change: Organizational and technological imperatives

Manufacturing processes worldwide are being reconfigured by organizational innovations pioneered by the Japanese and by microelectronics-based technologies. We developed a cost model that simulated "factories" with several variations in production practices and technologies used. The results show that in a period of rapid technical change significant productivity differences can emerge between competing firms, even in "mature" sectors; these differences are amplified if learning across innovations is cumulative. The implications for developing countries are that efforts within the firm at organizational change need to be supplemented by close international relationships and appropriate infrastracture; a passive trust in the product cycle could be unhelpful.