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Transferring the Toyota lean cultural paradigm into India:

implications for human resource management

Article  in  The International Journal of Human Resource Management · August 2014

DOI: 10.1080/09585192.2013.862290

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Transferring the Toyota lean cultural paradigm into India: implications for human resource management Reynold Jamesa & Robert Jonesa

a Faculty of Business and Enterprise, Swinburne University, Melbourne, Australia Published online: 09 Dec 2013.

To cite this article: Reynold James & Robert Jones (2014) Transferring the Toyota lean cultural paradigm into India: implications for human resource management, The International Journal of Human Resource Management, 25:15, 2174-2191, DOI: 10.1080/09585192.2013.862290

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Transferring the Toyota lean cultural paradigm into India: implications for human resource management

Reynold James and Robert Jones*

Faculty of Business and Enterprise, Swinburne University, Melbourne, Australia

This paper argues that the successful international transference of Japanese lean manufacturing practices in general, and the ToyotaWay and Toyota Production System (TPS) in particular, is in varying degrees contingent upon the sociocultural, historical and environmental context of the host nations into which such transfer occurs. This has significant implications for human resource management policies and practices. The paper contends that lean manufacturing is not simply a set of concepts, techniques and methods that can be implemented by command and control. In the course of transferring lean practices from Japan into overseas affiliates, either an absence of due consideration or disregard for a host nation’s unique sociocultural and environmental factors could lead to unproductive organisational outcomes for the parent company. This viewpoint is examined through a case study analysis of the Indian affiliate of the Japanese automobile industry giant Toyota Motor Corporation, namely Toyota Kirloskar Motors, located at Bidadi, near Bangalore, India.

Keywords: India; lean manufacturing; motor assembly industry; Toyota Production System (TPS); Toyota Way

Introduction

This paper analyses the attempt by the Toyota Motor Corporation (TMC) to transfer

its cultural managerial paradigm into a different sociocultural context, namely its

international affiliate Toyota Kirloskar Motors (TKM) located near Bangalore in India.

This transference has had significant implications for the human resource management

adaptations necessary to effect a successful transition into India. TMC came into existence

in Japan prior to the Second World War and has since grown into a multinational motor

vehicle manufacturer enjoying unprecedented success since its formation. Outside Japan,

the company has a total of 51 overseas manufacturing companies in 26 countries. In 2006,

its production crossed the 8 million vehicles mark, with a global workforce comprising

350,000 people. In 2009, it overtook General Motors to become the world’s largest motor

vehicle producer (TMC 2010).

TMC promulgates its own unique way of doing business through the concept of the

Toyota Way – a set of beliefs and values that underlies its managerial approach and

production system. The Toyota Way is supported by two main pillars – continuous

improvement and respect for people (TMC 2001). The Toyota Way is perceived by the

company as a universal, a-cultural, prescriptive, one-best-way approach to doing business:

‘the concepts that make up the Toyota Way transcend language and nationality, finding

application in every land and society’ (TMC 2001, p. 3). Based on this ethnocentric

disposition, TMC insists that its subsidiaries in various parts of the world adopt the Toyota

Way in totality, together with its associated unique form of production called the Toyota

Production System (TPS). Consistent with this belief, TMC has established affiliate

q 2013 Taylor & Francis

*Corresponding author. Email: [email protected]

The International Journal of Human Resource Management, 2014

Vol. 25, No. 15, 2174–2191, http://dx.doi.org/10.1080/09585192.2013.862290

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companies located across the industrialised and industrialising nations, with major

affiliates located in the USA, Canada, Europe, Australia, Asia-Pacific, India and China

(TMC 2011). Further emphasising TMC’s ethnocentric disposition is the fact that the

company’s Japanese leaders ’never relinquished the iron grip they exercised over the

company’s worldwide operations . . . instead of globalizing, Toyota colonized’ (Quality

Advisory Panel 2011, p. 23).

There exists a considerable literature on TMC. Its success has been intensively

researched and painstakingly documented in various works, for example Kamata (1983),

Liker (2004), Mehri (2005), Liker and Meier (2007), Magee (2007), Liker and Hoseus

(2008), Osono, Shimizu and Takeuchi (2008), Sato (2008), Rother (2010), Gronning

(1997), Taylor (2006), Towill (2006) and Kageyama (2004). Further, the literature is rich

with case studies and analyses of the transference of Toyota values and practices into other

countries and cultures. Examples include: the USA (Wilms, Hardcastle and Zell 1994;

Besser 1996; Mishina 1998; Shook 1998; Vasilash 1998); the UK (Winfield 1994; Pardi

2005); China (Liu andBrookfield 2006); Thailand (Petison and Johri 2006); and Turkey and

the Czech Republic (Kumon 2007). However, the literature dealing with the transference of

the Toyota Way into India is fragmented and analytically thin. Mathew and Jones (2012)

provide an analysis of employee relations at TKM from the viewpoint of satyagraha (non-

violent protest), but, in general, the literature is largely unhelpful in providing in-depth

academic analysis of TKM and its operations since its establishment in 1999. With the

exception of a few descriptive case studies (Majumdar 2006; Mikkilineni 2006; Ray and

Roy 2006) and some book chapters (Mooij 2005;Das andGeorge 2006), there is a need for a

more comprehensive analysis of TKM’s operations and the dynamics surrounding the

human resource management implications of the transference process. This is a critical

omission given the significant role that TKM now plays in Toyota’s strategic global plans.

This paper is important in being conducted at this time in order to aid theorists and

practitioners to understand the forces inherent within such international transfer situations,

leading to smoother introduction of human resource management policies and practices

across national boundaries, especially motor vehicle manufacturers in industrialising

countries. However, several authoritative sources have indicated that very few of these

overseas affiliates have been successful in implementing the pure form of lean

manufacturing and TPS despite the best efforts of large numbers of Japanese trainers and

executives located within the facilities (Florida and Kenney 1991; Abo 1994; Liker, Fruin,

and Adler 1999). Invariably some form of hybrid system has been implemented which

amounts to a considerable compromising of the overall system. Recently, TMC has taken

steps to reduce the prevalence of these compromised systems within its overseas affiliates

and has commenced the process of creating a stronger pure and standardised version of

TPS across all its international affiliates. This is planned to be achieved through the

implementation of the Floor Management Development System to ensure a standardised

interpretation of continuous improvement systems through more emphasis on

‘visualisation’ methodology and implementation as close as possible to the source of

the action on the assembly floor (Liker and Franz 2011).

Toyota’s emphasis on universalistic application of its paradigm across international

and cultural boundaries stands in contradiction to the thrust of the literature on this topic.

A review of the international transference and diffusion literature reveals a number of

important concepts, most notably the application-adaptation dilemma model (Abo 1994);

strategic, social or political design perspectives (Westney 1999); imposition versus

borrowing (Ward 1999); actors pulling in and goodness of fit (de Jong, Lalenis and

Mamadouh 2002); and context-free or context-bound viewpoints (Elger and Smith 1994).

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Thus, Abo (1994) noted that transplanted organisations face a dilemma – on the one hand

they attempt to introduce superior elements of their system(s) to the maximum extent

possible (application), but on the other hand, they must modify those same systems in an

effort to adapt to local environmental conditions (adaptation). This is called the

application-adaptation dilemma model. Westney (1999) sees transplanted organisations as

representing any of three different design perspectives: strategic, social or political.

The strategic design sees organisations primarily as systems consciously constructed for

the efficient accomplishment of certain tasks; the social design sees organisations

primarily as ideational constructs defined by shared interpretations, meaning and value;

and the political design sees organisations as arenas for, and tools, of power and interests.

Ward (1999) stresses the two forces of imposition and borrowing – the former refers to the

parent nation as being the driving force, whilst the latter refers to the host nation as

being the driving force. De Jong et al. (2002) analyse the relative forces of ‘actors pulling

in’ (the amount of room for manoeuvrability possessed by local actors) and ‘goodness

of fit’ (the amount of neglect for the local situation). Finally, Elger and Smith (1994) stress

the balance between context-free and context-bound policies in the transplantation agenda

and call for more detailed examination of the historical and temporal dynamics of

diffusion and how elements of the corporate repertoire are selectively received, adapted

and deployed. The authors stress the need for more nuanced studies on the dynamics of

transference situations paying attention to the role of propagandists and mediators in the

process. It is against the background of this issue that the research question of this study

has been posed, namely ‘how has Toyota managed the process of transferring its cultural

paradigm into the different sociocultural context of India?’

Lean production and the Toyota cultural paradigm

TMC is widely regarded as the originator of the lean production system which is now

imitated across the globe by all other leading motor vehicle producers. The term ‘lean

production’ first appeared in the book The Machine that Changed the World according to

which:

Lean production is lean because it uses less of everything compared with mass production – half the human effort in the factory, half the manufacturing space, half the investment in tools, half the engineering hours, to develop a new product in half the time. Also, it requires keeping far less than half the needed inventory on site, results in many fewer defects, and produces a greater and ever-growing variety of products. (Womack, Jones and Roos 1990, p. 13)

Lean production centres around the relentless pursuit of the elimination of all non-value-

adding aspects within an organisation. Proponents of this philosophy refer to lean as being

synonymouswith dramatic improvements in the performance of the system in areas including

productivity, quality and flexibility. The lean concept lends itself to two interpretations in the

literature. First, that lean production is an efficient, humanistic machine and that lean

(rational) organisations are ethical, with distributive justice flowing out of them. This

viewpoint is popular amongstmanagerialists, engineers, consultants and popular writers in an

apologist vein (for example Hummels and Leede 2000; Liker andHoseus 2008). Second, that

lean production is a very sophisticated prison, and that lean manufacturing equals mean

manufacturing – a viewpoint popular amongst critical theorists (Kamata 1983; Parker and

Slaughter 1988; Parker and Slaughter 1994), who allude to it as a dehumanising system that

sacrifices human dignity and safety for productivity and commercial gains.

TPS was developed by the Vice-President of TMC, Taiichi Ohno, during the 1950s.

According to Ohno (1988), waste is attributable to seven sources, namely: over-

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production, inventory, waiting, processing, motion, conveyancing and correcting. Waste

reduction is facilitated through the combined use of a wide range of tools and techniques.

He founded TPS on concepts designed to maximise flow, eliminate waste of all kinds and

ensure respect for people. The basis of the concept rests on efficient use of resources to

produce materials within a repetitive, reliable system. Non-value-adding physical activity

is eliminated from the system through the use of continuous improvement (kaizen),

automation and a multi-functional labour force. Also central to TPS and its successful

implementation is the role of teams, cooperative labour–management relations, careful

selection and training of workers, fewer hierarchical levels and providing workers with

authority to ensure safety and quality are not compromised. It was under Ohno’s guidance

and the effort of many others, particularly the company’s founder, Eiji Toyoda, that this

unique production system has become deeply rooted within TMC during the past half-

century. Various versions of the TPS training programme have been developed during

different stages, but the following have remained as the essential elements of TPS: just-in-

time production, jidoka, standardised work and kaizen (Moden 1983, 1998; Graham 1988;

Shigeo and Dillon 1989; Womack et al. 1990; Zaman 1993; Womack and Jones 1996).

According to Preece and Jones (2010) and several like-minded researchers (for

example Forrester 1995; Macduffie and Pil 1997; Delbridge 2003; Genaidy and

Karwowski 2003; Worley and Doolen 2006), a successful transition towards a lean system

involves a substantial change in direction, as compared with more traditional work

systems. HR-related developments under lean production include integration of conception

and execution of tasks within flexible cell-based production areas; devolved

responsibilities and empowerment to multifunctional team-based direct workers on the

workshop floor who take on many of the responsibilities that are the prerogative of

specialist support functions in traditional mass production (maintenance, simple repairs,

quality, indirect services); autonomation (automation with a human touch – stopping the

machines when there is a defect); all workers multi-skilled and multitasked; job rotation;

reduction in job classifications; fewer functional specialists; investment in the development

of people; continuous improvement and learning processes through quality circles and

suggestion schemes; group-based problem identification, resolution and implementation;

more lateral communication across functional boundaries; multi-directional information

systems; high trust; high commitment and a sense of obligation to the company.

The sociocultural context of lean manufacturing

The centrality of the role of Japanese cultural institutions to the growth and deployment of

lean systems is well documented in the literature (Sugimore, Kusunoki, Cho and

Uchikawa 1977; Womack and Jones 1996; Liu and Jones 2005; Jones, Betta and Latham

2009). These authors emphasise the role of the social context within which lean systems

operate and argue that the efficacy of the latter is dependent on the former. Recht and

Windorom (1998) contribute to this line of thinking by arguing that it is the Japanese

sociocultural environment that supports efficacious deployment of lean work practices

through factors such as constrained natural resources; a homogeneous culture; a single

language and religious background (which facilitates close familiarity between Japanese

people); family unity that extends itself into the larger community and workplace; and a

command-and-control culture involving obedience by subordinates of superiors’ orders

and directions. It would thus be a mistake to regard lean manufacturing as simply a set of

concepts, techniques and methods that can be implemented by management dictate. Spear

and Bowen (1999) found that TPS and the scientific methods that underpin it were not

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imposed on the workforce. The system grew naturally out of the workings of the company

over five decades, so that the thinking and behaviour of Toyota employees have been

moulded continuously by the developing norms of the company.

The interplay between the ideal lean environment and trade unionism is clarified by

Jones, Betta and Latham (2009) who claim that unitarist considerations are central to lean

systems. Such organisations see themselves as families characterised by high levels of

trust, commitment, involvement and concern for the company’s success, as a consequence

of pulling together in the same direction. As such, working groups with a differing agenda,

including external trade unions, are inconsistent with the environment of a lean system.

Trade unionism introduces an unnecessary form of pluralism and antagonism into the

system.Within a lean system, trade unions invariably take the form of an internal company

union (sometimes called sweetheart unions), although isolated exceptions are sometimes

observed in Toyota affiliates (most notably in India, Australia and at the former NUMMI

joint venture in the USA).

Methodology and data collection

Qualitative data were collected for this case study by the authors during three separate field

trips to India during the period 2008–2011. In addition, data were also collected during a

field trip to Bangkok during 2009. Bangkok is the location of the Toyota Asia-Pacific

headquarters as well as hosting three large manufacturing plants in and around the city.

During these trips, a total of 31 personal interviews were conducted with a wide range of

respondents including the vice chairman of the joint venture company; three senior Indian

managers; two middle managers; the principal of the training institute; three union shop

stewards; two external trade union officials (both interviewed twice); a former senior

company executive; a long-term employee from the shop floor; eight business journalists

from local newspapers; two senior managers from a supplier company; an India-based

German senior executive in a rival company in the automobile industry; a senior Indian

academic; a senior trainer with Toyota Asia-Pacific, Bangkok; a senior manager with

Toyota Asia-Pacific, Bangkok; and a standardised work manager with Toyota Asia-

Pacific, Bangkok. All interviews were tape-recorded and transcribed and lasted between

30 minutes and two hours in length.

In addition, the authors visited the company’s corporate head offices and the marketing

division, as well as touring the production facilities and the training institute. During these

visits, personal observations were made and written up as field notes immediately

afterwards, thus adding to the database of qualitative information. Finally, the authors

conducted an Internet search using the keywords ‘Toyota Kirloskar Motors’. This revealed

a large amount of information that was downloaded and arranged into chronological order,

thus providing a longitudinal account of major developments at the company.

The data were analysed by carefully reading the transcribed interviews, field notes and

Internet documentation, and organising the data according to major themes as they

emerged from the analysis (Saldana 2009). This form of analysis is known as conceptual

ordering and defined as ‘the organization of data into discrete categories . . . and then

using description to elucidate those categories’ (Strauss and Corbin 1998, p. 19). As shown

below, three main themes emerged from our data analysis: industrial relations; decision-

making; and work ethics and motivation. These themes emerged through the technique of

open coding (Strauss and Corbin 1998) which involves fracturing the data into coded

concepts and ideas. Initially, the researchers identified over 200 codes. Some examples

included ‘political trade unions’, ‘protective labour laws’, ‘telling lies’, ‘suppression of

R. James and R. Jones2178

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Indian managers’, ‘family relationships’ and ‘time laxity’. By grouping similar codes

together into sub-categories and constantly comparing all sub-categories with one another,

it was possible to merge them into progressively smaller categories for the purpose of

descriptive elucidation. Thus, by way of illustration, the category of industrial relations

contained ‘political trade unions’ and ‘protective labour laws’, amongst others; the

category of decision-making contained ‘telling lies’ and ‘suppression of Indian managers’,

amongst others; and the category of work ethics and motivation contained ‘family

relationships’ and ‘time laxity’, amongst others.

As with all qualitative analysis, such categorisations represent the end result of an

interpretative process between the data itself and the unique attributes of the research

analysts. For this reason, Guba and Lincoln (1981) recommend that researchers give an

account of themselves and their backgrounds so that readers can understand the nature of

any potential researcher bias. The first author is of Indian cultural heritage, born and

educated in India, but now a global citizen resident in Australia. The second author is of

English heritage, born and educated in England, but now a resident in Australia and a

specialist in qualitative methodology. Between them, they performed all the interpretation

and analysis in this research study, working separately much of the time, but coming

together at frequent intervals to find overall consensus. The different backgrounds,

experience and skills of the two researchers provided contrasting lenses through which the

data could be analysed and interpreted.

The researchers spent a prolonged time in the field, spread over three years, and

involving three separate trips to India and one to Bangkok. The concept of theoretical

sampling (Strauss and Corbin 1998) was employed whereby data were analysed on an

ongoing basis and emergent themes were used as the basis for further interviews. Thus,

during the first trip to India, very broad questions were presented to participants such as

‘tell me about the issues involved in transferring the Toyota process into India’. As themes

emerged from the analysis, these were checked against data from subsequent interviewees,

who also provided additional richer data which, in turn, provided further themes which

were checked and expanded upon by subsequent interviewees. In effect, this approach

allowed the researchers to conduct continuous member checking whereby participants

were able to verify (or not) emerging themes whilst constantly adding to the richness and

depth of the data. At the end of the study, we were invited to the home of a long-serving

Indian manager at the plant who had recently moved to another company. We spent

several hours with him during which we shared our analysis and conclusions and were

gratified to find that he concurred with our findings. It is noticeable that as the interviews

progressed, the questions we asked became increasingly narrower and more focused as we

sought out denser data from the participants. For instance, we asked for illustrations of

particular examples of significant themes, such as ‘can you give us specific examples of

how Indian managers were suppressed in the decision-making process?’ and ‘how did

Japanese managers react to the political demands of the external trade union?’.

Lincoln and Guba (1985, p. 290) ask ‘how can an inquirer persuade his or her audience

(including self) that the findings of an inquiry are worth paying attention to, worth taking

account of?’ With specific reference to case study analysis, Stake (1995, p. 107) asks

researchers to ponder questions such as ‘do we have it right?’, ‘are we generating a

comprehensive and accurate description?’ and ‘are we developing the interpretations we

want?’ In this respect, concepts of reliability and validity are critical. Reliability refers to

concepts such as dependability, stability, consistency and predictability (Lincoln and

Guba 1985, p. 290). Yin (1994, p. 36) states that ‘if a later investigator followed exactly

the same procedures as described by an earlier investigator and conducted the same case

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study all over again, the later investigator should arrive at the same findings and

conclusions’. Thus, the general way of approaching the reliability problem in a case study

analysis is to carefully document the procedures and operational steps so that the case

study can be repeated. Lincoln and Guba (1985, p. 317) refer to this as an ‘inquiry audit’

relating to both the process and product of the analysis. Validity refers to ‘judgements

about whether you are measuring or explaining what you claim to be measuring or

explaining’ (Mason 1996, p. 146). In the words of Lincoln and Guba (1985, p. 301) it is

important for researchers to utilise activities ‘that make it more likely that credible

findings and interpretations will be produced’. Such activities include prolonged

engagement, peer debriefing, participant checking and triangulation of multiple data

sources.

In this case study. we have attempted to ensure reliability by carefully explaining the

procedures and operational steps we undertook in the form of conceptual ordering, open

coding, theoretical sampling and types of questioning, in order to lay out a clear inquiry

audit. We have also attempted to ensure validity by detailing our prolonged engagement in

the field (three years and four separate trips), our process of peer debriefing between the

two researchers in order to encourage reflexivity and debate, the ongoing process of

participant checking of findings and interpretations through theoretical sampling and a

final member check, and triangulation between three different sources of data (interviews,

documentation and personal observations).

Findings: from Toyota Production System to Toyota Indian Production System

A significant finding of this paper is that the transference of the Toyota Way and TPS into

India has been beset by problems. This has necessitated considerable adaptation by TKM

involving significant human resource management changes. These problems emanate

from incongruence between the vagaries of the Indian context and the particular

requirements of the Toyota Way and TPS. The extent of this incongruence was not

anticipated by TKM at the commencement of operations in India, and the company was

slow to learn from the difficulties it experienced during the early days.

TMC commenced production in India in 1999 through the vehicle of a joint venture

company called TKM. High aspirations were held of capturing 10% of the market by 2010

(Bhatnagar 2006). This failed to materialise. Strikes, lockouts and industrial unrest have

punctuated most of its decade-long experience. Market share in 2006 was only 2.5%, with

no signs of the target being met. A statement from the managing director at the end of 2006

that the company ‘was in the process of studying how to grow in the Indian market’

(Tribune 2006) seemed to indicate the company’s lack of certainty about its knowledge of

Indian conditions. In 2008, the most senior Indian executive at TKM abruptly parted ways

with the company after many years with the company. Soon after, a new Japanese

Managing Director, Hiroshi Nakagawa, was appointed, who immediately announced that

the objective of achieving a 10% market share had been put back from 2010 to 2015,

admitting that ‘we did not have much experience in the past ten years; now is the time for

us to jumpstart’ (Business Line 2008). Other TKM executives soon started to adopt the

same rhetoric, so that the new slogan of a jumpstart decade for the company quickly

became ubiquitous (Financial Express 2008).

In the face of such problems, the company was forced to rethink its entire process of

doing business in India. Commencing as from 2007–2008, and with its market share still

hovering stubbornly around the 2–3% level, the company has undertaken a progressive

series of measures that have seriously compromised its pure TPS philosophy. In an attempt

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to reconcile its approach with those of Indian cultural and societal norms, the system of

TPS has now (unofficially) been transformed to Toyota Indian Production System (TIPS).

As earlier discussed, the system of TPS was developed within the unique culture and

context of Japan. This ideal environment, however, is not experienced within India and the

argument can be advanced that several crucial aspects of Indian social and cultural mores

appear to clash dramatically with the requirements for TPS. India is an extremely

heterogeneous country. It represents a multi-cultural, multi-ethnic, multi-religious, and

multi-linguistic federation of many different states, which collectively impact upon the

complexity of social and cultural values, work practices and human resource management

to be found in India (Jain 1987; Sinha and Sinha 1990; Tripathi 1990; Schwartz 1999;

Budhwar 2003; Becker-Ritterspach 2005; Chatterjee 2007; Gupta 2008). By analysing the

data obtained from respondent interviews, field notes and documentation at TKM, three

major themes emerged which demarcated the difference between the Japanese and Indian

work context: industrial relations; decision-making; and work ethics and motivation.

These themes are discussed below.

Industrial relations: Whilst Japanese companies stress enterprise-level (company)

unions that operate in an atmosphere of cooperation with management within a unitarist

culture, Indian companies stress external unions, often affiliated to political parties, which

operate in an atmosphere of confrontation with management within a pluralist culture.

Managing union–management relations in India, especially for overseas-headquartered

companies, can often be a trying experience. The structure of unions, and their tendency to

affiliate with larger political organisations, allows for plant-level people issues, if

mismanaged, to escalate into national issues, at times even necessitating federal

government intervention.

In addition, TPS is associated with the concept of demand-driven flexible production

and flexible labour organisation enabling workers to be hired and fired to facilitate

levelling of production. This flexibility caters to the need to eliminate all forms of waste

and explains the large numbers of temporary or contract workers usually employed in lean

systems. However, this requirement is inconsistent with the existence of inflexible labour

laws that have traditionally dominated the Indian industrial relations scene under which

workers are assured of long-term, permanent employment. Indian labour laws have

traditionally been highly protective of labour, and labour markets have been relatively

inflexible. Multinational companies such as TKM have sought labour market flexibility

which has invariably translated into precarious working conditions in such companies.

Attempts to dismantle labour laws relating to retrenchment, closure, contract workers and

collective labour activities have met with severe opposition from organised labour.

With respect to TKM, industrial relations problems dogged the company almost as

soon as it commenced operations in Bangalore. The company refused to recognise an

external trade union, underestimated the power and influence wielded by trade unions in

India and failed to understand their structure, dynamics, political and community linkages,

and constitutional and legal standing. The fast pace of work within the factory, lack of job

security and disagreements over the operation of the performance appraisal system led to

immediate demands from workers for the company to recognise an external trade union.

TKM resisted these demands and attempted to establish an internal company union as a

substitute. Attempts to suppress pluralist tendencies organic to the Indian workforce

through an anti-union stance and attempts to achieve flexible production outcomes in the

absence of cooperative labour–management relations led to a progressive deterioration in

the overall industrial relations climate. Strikes occurred in 2001, 2002 and 2004. Workers

were dismissed or suspended, with union agitators in particular targeted for disciplinary

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action. This situation eventually resulted in a strike and lockout during 2006 in association

with a bitter community campaign against TKM in Bangalore. Workers occupied the

factory and threatened to commit suicide after they had entered the LPG area and warned

that they would ignite the gas cylinders. Other workers were arrested after they

demonstrated outside the factory and in the streets of the city.

Decision-making: The concepts of education, communication, consultation,

participation, involvement, empowerment, facilitation and support are all evident within

the Japanese (Ringi) system of group-oriented, consensus-seeking decision-making,

designed to integrate worker and company interests. Group work and cohesion are

stressed. Responsibility is delegated to groups to perform and design tasks, identify

problems, make improvements and monitor quality. Exploring and learning together

between managers, supervisors and employees is a critical objective. On the other hand,

one of the more pervasive attributes of Indian workers is that they are socialised to be

servile to their superiors whilst displaying an arrogant attitude towards subordinates

(Bhadury 1991). This context has a strong impact on the nature of decision-making. Indian

companies prefer centralised decision-making, emphasising bureaucratic and hierarchical

relationships between different groups. There tends to be limited delegation and tight

controls. Decisions are made by authority figures, often surrounded by strict secrecy (Jain

1987). The common style of leadership is paternalism, invariably exhibited by superiors

who are older, more experienced and ‘wiser’, and is concerned with guidance, protection,

nurturance and care towards the subordinate. In return, the subordinate offers deference,

loyalty and respect to the superior. Excessive use of bureaucracy exists within Indian

industrial organisations.

With respect to TKM, management failure to recognise the nature of decision-making

led to a series of misunderstandings. Non-hierarchical, consensus decision-making in the

form of concepts such as quality circles and continuous improvement (kaizen) did not

come easily or naturally to Indian workers who expected their superiors to be responsible

for making such decisions. There is a strong tendency for Indian workers to always want to

please their boss, and this often results in such workers reporting that they have no

problems or that their work is on track when in actuality they may be suffering severe

problems in understanding or application. This Indian cultural habit was often

misinterpreted by Japanese managers and trainers who regarded such behaviour as

dishonesty or telling lies. The paternalistic nature of traditional Indian workplaces resulted

in management painstakingly explaining to workers what was to be done and how it was to

be completed, following which workers were expected to comply with these instructions.

The TKM approach, however, stressed adherence to the Toyota Way and TPS, and this

one-best-way approach was inculcated into the Indian workforce. However, a senior

Indian manager in the plant observed that the ubiquitous use of the term ‘The Toyota Way’

during training sessions and team leader briefings was construed as ‘a convenient cover-up

for a lack of knowledge on various matters and an inability to explain finer details as and

when required’:

So when somebody comes along and says ‘no’ I expect you to work like this and like that then he does not appreciate that, but if you tell him that there are reasons why I expect you to do it, and as a result what will happen to you, you will get this benefit and that benefit, then you can start connecting with that individual, so it is a learning process for the Japanese.’ (Interview with senior manager).

This was compounded by the fact that the concept of ‘one-best-way’ is not well understood

or practiced in Indian society. Because of the shortage of resources, Indians have become

adept at ‘making do’ by a variety of means. There are many ways to solve a problem and as

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long as the solution works, that is considered acceptable. This approach is known as

‘jugaad’ – quick, alternative ways to approach a difficult situation. Such an approach is

anathema to the Japanese concept of standardised work.

An endemic feature of TKM human resource management practices was the refusal of

Japanese managers to give any credence to Indian managers in the plant. There is evidence

that only lip service was paid to any expertise that such managers may have possessed.

One senior Indian executive in particular had stayed with TKM from its early days in 1999

but eventually left the company after 10 years, disgruntled by the treatment he had

received from Japanese managers. A senior industrial journalist commented that this was

an open secret amongst people associated with the plant:

He told me, and these are only allegations, that the Japanese did not trust senior managers from India, there was this basic mistrust, how they tried to impose certain things on the people of Indian origin, he had all these kind of issues, and he left in a huff. (Interview with senior industrial journalist)

Work ethics and motivation: The concepts of loyalty and identification with the company

are stressed in Japanese systems, accompanied by devotion to one’s work. However, in

Indian culture, loyalty to one’s family is the main priority. Employees are oriented more

towards personalised relationships than productivity (Gupta 2008). Motivational tools in

Indian companies are less oriented to increases in productivity, cost reductions or quality

improvements; rather they emphasise social, interpersonal and even spiritual relationships

with one’s colleagues. Respondents referred to such factors as the importance of the

family and respect for age and hierarchy. Indians were described as informal, emotional,

sensitive and with a lack of discipline in relation to the necessities of industrial life, such as

the requirements to be punctual, precise, measured and systematic. One Indian manager

commented: ‘there is no discipline built into the Indian psyche – we are more emotionally

involved with people rather than having a very business-like approach’. All of these

factors ran counter to the needs of an environment conducive to the successful

implementation of TPS.

With respect to TKM, it took many years before company management was able to

come to grips with the unique nature of Indian work ethics and motivation. Whereas

Japanese workers are extremely time conscious, the concept of timeliness is less well

understood or appreciated within the Indian context. One respondent noted: ‘if you take a

bus in Japan then 8.45 means 8.45, it does not mean 8.44 or 8.46, but when we Indians say

8.45 it could mean 8.40 or 8.50, we are pretty lax’ (interview with senior Indian TKM

manager). The unpreparedness and lack of planning of many workers in India were also

remarked on by the same manager by using an analogy of an Indian plumber attending

your home to fix a leaky tap:

You ask for the plumber to come, and he gives you a time but he won’t show up, or maybe he will show up two hours later, but then he will not come with all the tools of his trade, and then he will ask you for sandpaper, it’s not that he comes and you let him in and show him the tap leaking and he does his job and goes away – it does not work like that in India. Now our friends from Japan come here and they expect things to be different and it’s a source of frustration for the Japanese and I can understand that. And they say ‘what kind of a country is this’ and I have to stop them and tell them that ‘we know what kind of country it is, but you don’t……if it was like Japan then we don’t need you to come here and set up a car plant’. (Interview with senior Indian TKM manager)

The hard, disciplined and relentless pace of industrial work within TKM was a cultural

shock that the young and inexperienced workforce found difficult to adapt to. Union

sources described TKM as ‘a nazi camp’ (interview with external union organiser).

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The usual practice in traditional Indian workplaces was for workers to complete assigned

tasks in their own time, whilst attending to other social needs during work hours.

To compensate, they would often volunteer to work overtime with no extra pay. TKM

management, however, failed to understand this need of Indian workers to simultaneously

address work and social needs. Work hours were fixed, with little time to escape from the

line, except during stipulated breaks. Accordingly, Indian workers were viewed as slack

and undisciplined. This attitude often resulted in frustration when Japanese managers and

trainers would abuse and shout at workers. In one incident, a trainer snatched a cap from a

worker’s head and threw it to the floor whilst shouting ‘you Indians!’ Strained relations

were also caused when Indian workers refused to clean their work areas or mop the floor.

Such attention to detail and cleanliness is a vital part of TPS. However, such menial work

is regarded as degrading for Indian men to perform. Such work is deemed to be women’s

work or else to be performed by lower caste workers (dalits).

The evidence presented above suggests that the magnitude of TKM’s failure to

understand and appreciate the subtleties, nuances and major sociocultural and

environmental factors in India led to considerable dissonance between Indian workers

and TKM management. TKM was at a loss to understand people issues within the plant

and the sociocultural issues in the region. The company never expected to encounter the

number of pitfalls it did, or the extent of learning (and unlearning) it would need to

undergo in India. A senior Indian manager stated that despite making an excellent product,

TKMmanagement ‘displayed poor people skills’ within the Indian context – ‘they have to

get used to how we do things here and it takes time for them to do that’. The new rhetoric

of a ‘jumpstart decade’ was only adopted from 2008 with the appointment of a new

Japanese managing director. The miscalculation made by TKM of the time needed to

adapt to Indian conditions was emphasised by a senior manager: ‘I think a decade was not

in their mind . . . with industrial relations I think they realised that India needs more time’.

When TKM commenced operations in Bangalore in 1999, its workforce was primarily

composed of young men drawn from the surrounding villages. Such workers were

inexperienced in industrial work, being more familiar with the kinship nature of

agricultural work. In such socially determined work organisations, the nature of family

roles largely prescribes work structures. Because work organisation is closely tied up with

the social setting, such organisations tend to suffer from low levels of efficiency,

effectiveness and innovative capacity. They also tend to be extremely stable, thus making

the transition to industrial and production-determined work organisations very difficult

(Udy 1970). Such a transition would involve disengagement from the social setting. Udy

(1970) suggests that such a process would encompass an initial move to contractually

based work, reinforced by a subsequent three-stage process involving employer-specific

contracts, job-specific contracts and occupationally based contracts. External conditions

can play a critical role in this process and in particular the timing of such external

interventions. Premature arrival may turn what otherwise may have been positive external

influences into negative ones.

In the case of TKM, it could be argued that the entry of the company in 1999

constituted a premature arrival with initial negative ramifications. The (socially

determined) workforce was not in a state of readiness, and significant human resource

management adaptations would have to be undertaken to facilitate the transition to a

(production-determined) workforce. After many years of industrial unrest, a flashpoint

was reached in 2006 involving a strike, violence, community agitation and a subsequent

lockout initiated by TKM management. This event turned out to be epiphanous within

TKM’s history, following which the company recognised the trade union and commenced

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negotiations with it in an attempt to secure industrial harmony. A senior industrial

journalist commented that ‘they realised after a period of time that they needed an

emotional touch for the labour’. This was confirmed by a senior Indian executive in 2011

who stated that many issues were now being developed in TKM, working with, and not

against, the Indian mind: ‘they are working as per our requirements by understanding

Indian minds, Indian ways of working, so some of us are very closely involved in that

programme’. As part of this reconciliation, changes were effected to the standard TPS

approach in order to make it more compatible with the Indian context. According to a

union shop steward at the plant, ‘TPS has been transformed into TIPS’. The main features

of this remodelled system are discussed below.

Recognition of the trade union: TKM recognised a trade union with external links and

agreed to take back workers who had been suspended over the years for agitating for a

trade union. These workers were subsequently elected to senior union positions within the

plant. A policy was instituted of negotiating wages, working conditions and production

issues with the union. In 2011, 10 permanent and full-time union officials operated in the

plant with no duties other than union issues and paid by the company. TKM management

accepted that union officials could consult outside the plant with the Centre of Indian

Trade Unions during working hours on full pay. However, outside officials are not allowed

inside the plant, nor can they take part directly in negotiations with TKM management.

Substantial wage increases: TKM workers secured substantial increases in their pay,

elevating them to the second highest-paying manufacturing organisation in Bangalore.

This was achieved despite a 30% reduction in TKM production during 2009.

Foregrounding Indian managers and backgrounding Japanese managers at senior

levels: A shift in policy was adopted in order to move Indian managers into higher level

senior roles previously occupied only by Japanese personnel. Simultaneously, Japanese

trainers and managers were moved into the background to occupy only advisory and

coordination positions.

Steeper organisational hierarchy: Additional levels were added to the managerial

organisational chart to satisfy the Indian managers’ desire for enhanced status through job

titles in the hierarchy.

Appointment of a new managing director: A new managing director was appointed in

2008 who was generally perceived to be more union and worker empathetic (through

strong grass-roots experience) than his two former colleagues at this level, both of whom

were perceived to lack credibility and were linked with mishandling previous events

within the company.

Acceptance of a fixed ratio between the takt (production cycle) time and the number of

workers on the line and per each individual station: This means that increases in takt time

would have a corresponding increase in the number of workers on the line. This is a

significant departure from Toyota global practices, signifying acceptance of the Indian

social norm that work does not lie at the centre of daily living. Social, relationship and

family needs should be accorded a similar consideration as production-related needs.

Elsewhere in Toyota’s operations, increased production has invariably implied increased

takt times with an unchanged number of line workers, resulting in intensification of work

and greater worker stress.

Discussion and conclusion

Based upon significant studies from the transplantation literature reviewed earlier in the

paper, several key summary points can be advanced.

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. Institutional diffusion can be either imposed or borrowed. The relative strengths of

donor and host nations must be assessed. Innovations are often hybrid, in the sense

that they borrow aspects from both the donor and host environments (Ward 1999).

. Successful transplantation adjustments should take cognisance of two aspects:

leaving room for local actors to manoeuvre (actors pulling in) and making careful

choices with the characteristics of the host country in mind (goodness of fit) (de

Jong et al. 2002).

. Production and management systems cannot be transferred across national

boundaries without considerable difficulty. The importance of place has an enduring

quality. Friction and strained relationships create dynamism between the integration

logic of parent companies and the localisation logic of subsidiaries, forcing systems

to undergo some degree of revision. This can be referred to as the application-

adaptation dilemma (Abo 1994).

. Greater insight can be obtained into the processes of hybridisation by regarding an

organisation as the simultaneous embodiment of a strategic design, a social

construct and a political entity (Westney 1999).

. The dichotomy between the concepts of context-free and context-based is

needlessly dualistic. The relative forces of shaping, and being shaped by, are critical

in this dynamic. However, merely stating that each transfer is a unique creative and

adaptive process does not take us very far. We need to go beyond this by analysing

more clearly those mediating practices of agents who select, interpret, codify and

manage the innovating diffusion. Studies should concentrate on case studies in

developing and developed nations paying attention to enterprise, sectoral, regional

and temporal contingencies (Elger and Smith 1994).

This paper has analysed the difficulties experienced by the TMC in attempting to transfer

its lean cultural paradigm into its Indian affiliate company, TKM, over the period since 1999.

Qualitative data have been collected froma number of sources, including personal interviews,

field visits and documentation, and analysed by means of conceptual ordering through

thematic categorisation. Three themes emerged from the data: industrial relations; decision-

making; and work ethics and motivation. The paper finds that these three themes

problematised the transfer of the Toyota paradigm into India. TKM misread the Indian

cultural and social environment, and mishandled its people management portfolio, despite

bringing new technology and a superior product into the country. This lack of adaptation

causedmanyyears of industrial unrest. Eventually,TKMwas forced to compromise and adapt

its beliefs and practices to become more accommodating of the local context.

At TKM, an authoritarian imposition (Ward 1999) was attempted from the outset.

Employing Abo’s (1994) concept of ‘application’, we hypothesise that this approach was

adopted because of the issue of hubris of success, in the sense that at the time of entry into

India in 1999 TMC was riding the wave of international success in terms of market share

and managerial confidence in its corporate paradigm. Combined with its own inherent

ethnocentric disposition, this comprised a compelling mixture of factors. Any attempts at

accommodating or compromising on differences were only observed when the company

was forced into a corner by contextual pressures. These pressures arose from sociocultural

differences relating to industrial relations, decision-making, and work ethics and

motivation. Key propagandists (Elger and Smith 1994) in this pressure were the organised

labour movement and community opposition. In other words, the authoritarian imposition

was subsequently modified to a ‘contested’ imposition, and eventually into a ‘negotiated’

imposition as TKM responded to organisational resistance by means of a negotiated

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compromise process involving the movement from TPS to TIPS. Key mediators (Elger

and Smith 1994) in this process were the new Japanese managing director, newly

appointed senior Indian managers and the newly elected union shop stewards. In addition,

Westney’s (1999) concepts of strategic, social and political designs emphasise the

importance of transplant agents adopting a multi-framed approach. It is argued that TKM’s

attempt to seamlessly transplant a system from one context to another ran the risk of only

Processual movement from authoritarian to negotiated imposition

Stage 2: Contested imposition (resistance)

Reasons:Cross-cultural differences regarding: industrial relations, decision making, and work ethics and motivation

Stage 1: Toyota Way + Toyota Production System

Authoritarian imposition (Ward, 1999)

Application (Abo, 1994)

Strategic design (Westney, 1999)

Context-free (Elger and Smith, 1994)

Reasons: Japanese ethnocentrism + hubris of success

Stage 3: Toyota Indian Production System

Negotiated imposition (Ward, 1999)

Adaptation (Abo, 1994)

Social and political design (Westney, 1999)

Context-bound (Elger and Smith, 1994)

Comprising: New HRM policies more accommodative of social, cultural, and political factors

Propagandist agents

Organised labour; community opposition

Mediating agents

New Japanese MD; newly-elected shop stewards; newly-appointed senior Indian managers

Figure 1. Processual movement from authoritarian to negotiated imposition.

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viewing the world through the lens of strategic design, thus ignoring the veracity of both

the social and political frames. In the Indian context, we have seen that social, cultural and

political factors cannot be divorced from workplace realities. It is the incorporation of

these issues into the essence of the negotiated compromise of TIPS that has ensured a more

cooperative climate within TKM since 2007. This dynamic process involving a movement

from authoritarian imposition, through contested imposition, to negotiated imposition is

summarised in Figure 1.

Three important implications flow from the findings of the paper. First, we have

extended the work of Udy (1970) by suggesting the types of human resource management

adaptations that could be undertaken when an external intervention (in this case the entry

of a lean Japanese organisation into India) intrudes prematurely into the transition from

socially determined to production-determined work organisations. Second, any attempt to

regard the lean system as a set of practices and technical objects, devoid of context, that

can be divorced from cultural and historical issues, should be resisted. Third, this

argument implies that the paradigm is not easily amenable to transference anywhere in the

world. When transferred overseas, the efficacy of the paradigm is contingent upon

the unique cultural, social, historical and environmental factors peculiar to the host

country. Environments with unitarist leanings, characterised by union-free culturally

homogeneous settings, are most conducive to successful implementation of lean cultural

systems. Conversely, countries with strong pluralistic inclinations and with strong

traditions of unionism, such as India, are not naturally amenable to adaptation of the

system. In such situations, trust and commitment are usually replaced by suspicion and

resistance unless specific actions are taken by management to alleviate such tendencies.

One of the lessons learned by TKM was that any successful implementation of the system

in India would depend upon a compromise of the pure system espoused by the ToyotaWay

and TPS, and this was eventually achieved through the negotiated introduction of the TIPS

and a new jumpstart decade after many years of industrial relations turmoil. In the absence

of such negotiated compromises, the transference of lean systems into other sociocultural

environments will probably encounter problematic outcomes.

One of the limitations of this research study is that it analyses a single case study of one

lean Japanese company in a specific industry at a single site in India. Several possibilities

exist for other researchers to extend these boundaries. For example, other lean companies

could be studied in India, either in the automobile industry or in other industries. One

suggestion would be an analysis of the Suzuki joint venture with the Indian company

Maruti, situated at Manesar near Delhi, which during 2012 has also suffered similar labour

difficulties to Toyota and would provide a comparative exercise for extending the findings

of the present study.

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Breakthrough Leadership Skills MN7028

Topic 2: Organisational Design

Topic 1: Introduction to Leadership

Breakthrough Leadership Skills

MN7028

Breakthrough Leadership Skills MN7028

Session 10: Negotiation: Priorities, Processes, Strategies

Breakthrough Leadership Skills MN7028

Topic 3: Transformational Leadership – Harnessing Motivation

Breakthrough Leadership Skills MN7028

Topic 11: Diversity and Inclusive Leadership

Breakthrough Leadership Skills MN7028

Topic 8: Interpersonal Communication