Lean management and innovation performance: Evidence from international manufacturing companies

The purpose of this paper is to explore the effects of innovation orientation (IO) on both the implementation levels of soft and hard lean management (LM), as well as innovation performance. It also aims at exploring the effects of soft and hard LM on innovation performance.

The study analyzes survey data collected as a part of a high-performance manufacturing (HPM) project from 238 international manufacturing companies in eight countries and three industries. Exploratory factor analysis and confirmatory factor analysis were applied to assess construct validity. The study hypotheses were tested using structural equation modeling.

The results demonstrated that innovation-oriented companies tend to adopt aspects of both soft and hard LM. However, the results revealed an insignificant effect of soft and hard LM on innovation performance. The study also showed that innovation performance is positively influenced by an IO. These results indicate that having an IO is vital for enhancing both LM as well as innovation performance. They also evidently suggest that LM is more related to continuous improvement (incremental innovation) rather than (radical) innovation and, as such, is not important for firm’s intent on enhancing their innovation performance.

The current study demonstrates that IO and LM are complementary and not contradicting strategies. The two strategies share many cultural aspects, similarities and commonalities. However, LM is not sufficient to predict innovation performance. Managers of the surveyed manufacturing firms are advised to focus on IO, as it has beneficial impacts on both LM (continuous improvement initiatives) as well as innovation performance. This clearly indicates that placing the emphasis upon radical (innovative) improvement rather than incremental improvement (LM practices) is believed to support continuous and innovative improvement alike.

The relationship between LM and innovation is debated in the existing literature, but the debate is characterized by a lack of empirical evidence. This is one of the first studies that empirically investigates the relationships between IO, LM and innovation performance. It identifies some new insights to direct future research, particularly regarding different innovation types as well as in service organizations.