Firm-Level Productivity and Management Influence: A Comparison of U.S. and Japanese Automobile Producers

Abstract

This study compares the productivity of six major US and Japanese motor vehicle manufacturers—General Motors, Ford, Chrysler, Toyota, Nissan and Mazda—from the early 1950's through 1987. Techniques of productivity measurement, conventionally applied at the level of industries or national economies, are adapted for the analysis of individual firms. Several potential determinants of growth in productivity are evaluated, including economies of scale, adoption of “just-in-time” manufacturing, and changes in top management. The results show that productivity improvement by the six motor vehicle producers was attained primarily through more efficient utilization of labor; long-term growth in capital productivity was negligible for most firms. The three Japanese producers had achieved higher labor productivity than their US counterparts by the late 1970's. More recently, though, differences among firms within each country have become large relative to the gap between the US and Japan. Early productivity growth for Japanese producers was derived in part from the achievement of scale economies, but this source of improvement was largely exhausted by the mid-1960's. In both countries, significant shifts in the growth rate and level of firm productivity have followed changes in top management.