Drive out Fear (Unless You Can Drive It in): The Role of Agency and Job Security in Process Improvement

Nelson P. Repenning ()
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Nelson P. Repenning: Department of Operations Management/System Dynamics Group, Sloan School of Management, E53-339, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142

Management Science, 2000, vol. 46, issue 11, 1385-1396

Abstract: Understanding the wide range of outcomes achieved by firms trying to implement Total Quality Management (TQM) and similar process improvement initiatives presents a challenge to management theory: A few firms reap sustained benefits from their programs, but most efforts fail and are abandoned. In this paper I study one dimension of this phenomenon: the role of impending layoffs in determining employee commitment to process improvement. Currently, the literature provides two opposing theories concerning the effect of job security on the ability of firms to implement change initiatives. The "Drive Out Fear" school argues that firms must commit to job security, while the "Drive In Fear" school emphasizes the positive role that insecurity plays in motivating change. In this study a contract theoretic model is developed to analyze the role of agency in process improvement. The main insight of the study is that there are two types of job security, internal and external, that have opposing impacts on the firm's ability to implement improvement initiatives. The distinction is useful in explaining the results of different case studies and can reconcile the two change theories.

Keywords: process improvement; total quality management; downsizing; repeated games (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (8)

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