MIT Reports to the President 1996-97


The MIT Industrial Performance Center is dedicated to the study of industries in the United States and in other advanced economies. The Center brings together the intellectual resources of the Institute in a search for fresh insights into the nature and origins of successful industrial performance. Through our research we seek to help leaders in business, labor, government, and the universities better understand global industrial developments and to work with them to develop practical new approaches for strengthening public policies, business strategies, technical practices, and educational programs. With the participation of about 30 faculty members and more than 50 students from the Schools of Engineering, Management, Humanities and Social Sciences, Science, and Architecture and Planning, the Center today serves as a listening post on industry, monitoring patterns of organizational and technological practice, interpreting them for our partners and sponsors, and feeding our observations and insights back into the core disciplines and educational curricula of the Institute.


The Industrial Performance Center received a major grant from a consortium of industrial, trade and government organizations in Hong Kong to conduct a one-year study of the role of industry in the future development of the Hong Kong economy. The project, entitled "Made By Hong Kong", provided an understanding of how a society with a strong manufacturing past can develop new strengths and new activities; how industries operating in the larger China region can utilize the advantages presented by the proximity of a large market, low-cost labor, and access to emergent strengths in advanced technology; and how economic capabilities, employment, and social well-being can be maintained even as many of society's production facilities move outside domestic territory. These are challenges that confront not only Hong Kong over the next decade, but that in some measure are faced by all advanced industrialized countries today. The study was undertaken by a cross-disciplinary team of twenty-three faculty, staff and student researchers drawn from across the Institute. The project leaders were Professors Suzanne Berger and Richard Lester. Other senior researchers included Professors Alice Amsden, Andrew Bernard, Rafael Reif, Charles Sodini, and Daniel Wang and Drs. David Tennenhouse and Victor Zue. The results of the research were presented at two major conferences in Hong Kong during 1997, and were published as a book, Made By Hong Kong (Oxford University Press, 1997), which has received wide attention in Hong Kong and elsewhere (and was a best-seller in Hong Kong during the summer of 1997.)

Also during 1996-7, a major grant was received from the German-American Academic Council Foundation to conduct a new study of international changes in industrial research and development. This work, conducted jointly with the Fraunhofer Institute for Systems and Innovation Research (ISI), Karlsruhe, Germany, will examine changing patterns of industrial innovation and the implications for university-industry relations. The project grows out of the IPC Faculty Seminar on the same topic, conducted during 1995-96. The research will be led by Professor Richard Locke (Political Science and Management), Professor Ed Roberts (Management), and Professor Richard Lester (Nuclear Engineering).

New books published by IPC-affiliated faculty during the year included Teaching the New Basic Skills, by Richard Murnane and Frank Levy, and National Diversity and Global Capitalism, edited by Suzanne Berger and Ronald Dore.


The Center's research program is organized around four major themes: (1) Technology and the American Worker; (2) Measuring Industrial Performance, (3) New Approaches to Organizational Integration, and (4) Globalization and the Location of Core Productive Functions. Several research projects addressing specific topics under these themes are underway.

Professor Frank Levy is continuing his research on the impact of information technology on the content and productivity of specific occupations and on the demand for skills, education, and training. As part of this research, Levy organized a seminar series on this topic during the academic year which brought several leading practitioners to the Institute.

Professor Richard Lester, Professor Michael Piore and their graduate students are continuing their studies of design and product development. Their main focus is on the development of a new theory of interpretive organization applicable to product development and more generally to the management of modern business enterprise. Their research is built on an empirical foundations of case studies of new product development in the cellular telephony, apparel, medical device and automobile industries.

Professor Erik Brynjolfsson's studies of the impact of information technology on business practice and productivity have recently focused on the relationship between information technology (IT) and the organizational architecture of firms, and the effect of this relationship on firm productivity. His latest research (carried out in collaboration with IPC Doctoral Fellow Loren Hitt) suggests that greater use of IT is associated with greater decentralization of decision rights, greater investments in human capital, and increased use of subjective incentive systems. He further finds that firms adopting this decentralized work system show higher productivity from their IT investments.

Professor Andrew Bernard has continued his research on the performance of U.S. exporters. In collaboration with Bradford Jensen of the Bureau of the Census, he found that the recent U.S. export boom is primarily attributable to changes in exchange rates and rises in foreign income, while productivity increases in U.S. plants have played a relatively small role. Bernard has also studied the performance of German manufacturing exporters.

As part of his project on technology supply chains, Professor Charles Fine and his students have been comparing the make-buy decisions of similar companies facing similar choices. They find that very different patterns of interdependencies along companies' supply chains result from these decisions. To explain the differences, Fine and his collaborators have proposed a framework that integrates ideas about core competencies, the product development process, systems engineering, product architecture and modularity, and supply chain design.

Professor Richard Locke and his students are studying the rich array of experiments with new practices and organizational forms now underway in a broad range of local and international labor unions. They are analyzing the organizational and institutional factors that promote and hinder innovation in the American labor movement.


The Center sponsors a Doctoral Fellowship program that provides opportunities for highly qualified doctoral students to pursue independent thesis research in fields related to the Center's mission. Candidates are selected on a competitive basis and are drawn from across the Institute. To date, 16 fellowships have been awarded.

The Center also sponsors a variety of research seminars. During the course of the last year, seminar series have been organized on "Producing in Asia", "Computers and Work", and "Interactive Approaches to Management: The Role of Narrative."

The Center also continues to play a role in helping to develop intellectual connections and research collaborations among the Sloan Foundation's national network of Industry Studies. The Center is responsible for the Sloan Human Resources Network, which was created to support research and to encourage communications among those doing human resources-related research with the Industry Studies. The summer 1996 issue of Industrial Relations contained a symposium of papers on the topic of "What Works at Work?" These papers were authored by participants in the HR Network and are drawn from several Sloan industry projects.

More information about the Industrial Performance Center can be found on the World Wide Web at the following URL:

Richard K. Lester

MIT Reports to the President 1996-97