Agile Against Lean : An Inquiry Into the Production System of Hyundai Motor

This book attempts to pry open the ‘black box’ of compressed growth for Hyundai Motor since the 1997 Asian Financial Crisis, with the company’s being on the verge of falling in the ‘middle-ranked carmaker’s trap in the 1990s, and critically examines the dual and contradictory nature of this leapfrogging catch-up instead of simply focusing on the company’s success story. This book presents the novel theoretical and empirical characteristics of Hyundai Motor’s ‘agile’ production system based on ‘authoritarian experimentalism’ characterized by the ability of engineers to solve problems in an improvisational manner, skill-saving work organization and segmented labor, and extended quasi-vertical suppliers’ relationships under the chaebol corporate governance. Preface Acknowledgments Contents About the Authors List of Figures List of Tables Part I Conceptual Blocks and Overview 1 Introduction—Building Conceptual Blocks for an Understanding of Catching Up, Chaebols, and Production Systems 1.1 Introduction 1.2 The Conceptual Blocks of Catching Up, Chaebols, and Production Systems 1.2.1 The Catch-Up of the Korean Economy 1.2.1.1 The Catch-Up Mechanism of the Korean Economy 1.2.1.2 Major Empirical Studies on the Korean Economy’s Catch-Up Process 1.2.2 Catching Up and Forms of Business Organization 1.2.2.1 The World of Marshallian SMEs 1.2.2.2 Chandlerian and Neo-Schumpeterian Evolutionary Big Firms 1.2.2.3 Hybrid Inter-Firm Relationships and Post-Chandlerian Business World 1.2.2.4 Chaebol Business Groups 1.2.3 Automotive Production Systems 1.2.3.1 Prior Literature on Automobile Production Systems 1.2.3.2 Concepts and Types of Automobile Production Systems 1.2.3.3 Operationalization of Automotive Production Systems 1.3 Conceptualizing Hyundai Motor’s Agile Production System as Authoritarian Experimentalism 1.3.1 Conceptual Map of This Book 1.3.2 Hyundai Motor’s Agile Production System: An Authoritarian Experimentalism 1.3.2.1 Agile Production Systems 1.3.2.2 Authoritarian Experimentalism 1.3.2.3 Hyundai Motor’s Agile Production System as an Authoritarian Experimentalism References 2 An Overview of Hyundai Motor’s Production System 2.1 Hyundai Motor’s Production System Before the 1997 Asian Financial Crisis 2.2 A Macro-institutional Overview of Hyundai Motor’s Production System After the 1997 Asian Financial Crisis 2.2.1 The ‘Middle-Ranked Carmaker’s Trap’ 2.2.2 Entrepreneurial Management Exploits ‘Windows of Opportunity’ 2.2.3 Corporate Governance Structure and the Chaebol System 2.2.4 Product Strategy and Profitability—The Pursuit of Flexible Scale-Diversity 2.3 A Micro Overview of Hyundai Motor’s Production System After the 1997 Asian Financial Crisis 2.3.1 Skill-Building in Engineers: Learning by Improvisation 2.3.2 Work Organization and Shop-Floor Workers: Flexible Automation, Skill-Saving, and Segmented Labor 2.3.3 Inter-Firm Relationships: Extended Quasi-Vertical Integration 2.3.4 Overseas Transplant Strategy: The Geographic Transfer of Hyundai Motor’s Production System References Part II Empirical Anatomy 3 Skill Formation in Engineers—Learning by Improvisation 3.1 Introduction 3.2 Crisis in the Business Environment and Construction of the Pilot Center 3.3 New Car Development and Intensive Problem-Solving Capacity 3.3.1 The Collective Skills of Engineers 3.3.2 The New Car Development Process and Intensive Problem-Solving 3.3.3 Comparison with Toyota 3.4 The Vertical Restructuring of Production Engineering 3.4.1 Horizontal Production Engineering at Hyundai Motor 3.4.2 Integrated Production Engineering in Japan 3.4.3 The Establishment of Hyundai Motor’s Agile Production System 3.5 Conclusion References 4 Work Organization and Shop-Floor Workers—Flexible Automation, Skill-Saving, and Segmented Labor 4.1 Introduction 4.2 Background to Skill-Saving Work Organization—Before the 1997 Financial Crisis 4.2.1 Development of Production Technology and Labor-Replacing Automation 4.2.2 A Failed Attempt to Build Workplace Skills 4.3 Full-Scale Flexible Automation and Skill-Saving Work Organization in the 2000s 4.3.1 Development of Modular Production 4.3.2 Flexible Automation and Informatization 4.3.3 Skill-Saving Work Organization 4.3.4 Multi-Tiered Quality Control 4.3.5 Skill-Saving Work Organization, Labor–Management Relations, and Labor Market Segmentation 4.3.6 Comparison with Toyota Production System 4.4 Conclusion References 5 Supplier Relations—Extended Quasi-Vertical Integration 5.1 Introduction 5.2 Formation of Extended Quasi-Vertical Integration—Before the 1997 Financial Crisis 5.2.1 The Formation of the Subcontracting System 5.2.2 Captive Relationships and Paternalistic Control 5.3 Systematization of Extended Quasi-Vertical Integration in the 2000s 5.3.1 Modular Production and Fostering Affiliate Modular Makers 5.3.2 Modular Production and Reorganization of the Parts Supply Structure 5.3.3 Comparison with Toyota 5.3.4 Quality Management and Systematic and Bureaucratic Control 5.4 Factors in the Formation of the Extended Quasi-Vertical Integration 5.5 Japan’s Keiretsu Network and Hyundai Motor’s Extended Vertical Quasi-Integration 5.6 Conclusion References 6 The Overseas Production Network—‘Model Factories’ and the Global Transfer of Hyundai Motor’s Production System 6.1 Introduction 6.2 Transplanting the Agile Production System Around the World 6.2.1 The ‘Model Factory’ Concept and Construction of Green Field Plants 6.2.2 The Application and Adaptation of Human Resource Management 6.2.3 ‘Follow Sourcing’ by Korean Parts Suppliers 6.3 Operating Organizational Capabilities on a Global Scale 6.3.1 Concentrating New Car Development at the Headquarters 6.3.2 Daily Plant Operations 6.3.3 Human Resource Management for Locally Hired Staff 6.3.4 The Parts Supply System 6.3.5 Comparison Between Hyundai Motor and Japanese Automakers 6.4 Conclusion References Part III Reflections and Prospects 7 Conclusions—Theoretical and Empirical Reflections and Future Prospects 7.1 Theoretical Contributions 7.1.1 The Catch-Up Process 7.1.2 The Chaebol System 7.1.3 The Automotive Production System 7.2 Empirical Findings 7.2.1 Skill-Building in Engineers 7.2.2 Work Organization and Shop-Floor Workers 7.2.3 Inter-Firm Relationships 7.2.4 Overseas Transplants 7.2.5 Comparison Between Hyundai Motor and Toyota’s Production Systems 7.3 Two Sides of Hyundai Motor’s Production System and Future Prospects 7.3.1 Two Sides of Hyundai Motor’s Production System 7.3.2 Future Prospects References Index “This is a remarkable book. Focusing upon Korea's Hyundai Motor Company, it provides an original account of the success of this company in the global automobile industry. Theoretically informed, cognisant of the academic literature, and insightful at every turn, this book will appeal to scholars across the social sciences including economics, economic geography, and economic sociology. The authors have key insights that will resonate with scholars interested in the global industrial champions of the 21st century. A wonderful achievement.” —Emeritus Professor Gordon L Clark, Oxford University, the UK “'Agile against lean'is a highly inspiring book for researchers and practitioners. It provides unique insights into the rise of Korean automotive companies, their production systems, and the political economy in which they are embedded. And it develops thought-provoking arguments about how authoritarian experimentalism shaped the agile production systems in the Korean automotive sector.” — Professor Dr. Martin Krzywdzinski, WZB (Berlin Social Science Center), Germany This book attempts to pry open the ‘black box'of compressed growth for Hyundai Motor since the 1997 Asian Financial Crisis, with the company's being on the verge of falling in the ‘middle-ranked carmaker's trap in the 1990s, and critically examines the dual and contradictory nature of this leapfrogging catch-up instead of simply focusing on the company's success story. This book presents the novel theoretical and empirical characteristics of Hyundai Motor's ‘agile'production system based on ‘authoritarian experimentalism'characterized by the ability of engineers to solve problems in an improvisational manner, skill-saving work organization and segmented labor, and extended quasi-vertical suppliers'relationships under the chaebol corporate governance. Hyung Je Jo is an emeritus professor of social science at the University of Ulsan,South Korea. Jun Ho Jeong is a professor in the college of social sciences at Kangwon National University, South Korea. Chulsik Kim is an assistant professor in the division of social science at the Academy of Korean Studies, South Korea