The Implications of New Organizational Techniques for Developing Countries

The paper examines the nature of the changes occurring in industrial organisation in the 1990s and the experience of developing countries (LDCs) in adopting the emerging form of organisation or 'mass customisation'. These changes include a drive towards product heterogeneity and innovation, and enhanced levels of product quality without sacrificing price competitiveness; the use of flexible machinery, often involving electronics-based automation technologies; the introduction of new forms of work organisation involving teamwork, the multi-directional flow of information, and delaying of managerial hierarchies; the search for firm economies of scope; and the pursuit of 'systemic optimisation' in efficiency, involving closer horizontal and vertical ties and collaboration between firms. It finds that only a few leading firms in LDCs have been successful to any degree in adopting the new form of industrial organisation; most firms continue to produce under traditional forms of industrial organisation. The study accounts for these results by noting the lack of necessary educational and training levels (although significant advances could be achieved even with existing levels), poor supplier capability and physical infrastructure, and lack of managerial commitment to change due to family ownership and outdated management training. The paper recommends government intervention in the supply and demand of the new industrial organisation through awareness and pilot schemes, visits to successful firms, financing, introduction of relevant educational and training programmes and the promotion of appropriate consulting services. Governments should also provide a stable macro-economic environment for firms to adopt 'mass customisation' and should operate at both the national and the local level.