MIT Reports to the President 1998-99

INDUSTRIAL PERFORMANCE CENTER

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 development 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 School of Engineering, Management, Humanities and Social Sciences and Architecture and Planning, the center today serves as a listening post on industry, monitoring and interpreting industrial trends, techniques, and patterns of organization.

The IPC received a new multi-year base grant from the Alfred P. Sloan Foundation for core support of the center's programs; the third received by the IPC since 1992. The grant provides support for the center's educational programs, including the IPC Doctoral Fellowships, the Faculty Seminar Series, and the Doctoral Thesis Workshop, as well as a number of the center's new and continuing research initiatives.

The IPC also launched a major new research initiative, the IPC Globalization Project. A major three-year grant from the Chinese National Federation of Industries was received for the Taiwan component of this project.

New books published by IPC-affiliated faculty this year include: Clock Speed: Winning Industry Control in the Age of Temporary Advantage by Charles H. Fine, Forged Consensus: Science, Technology and Economic Policy in the United States 1921—1953 by David Hart, and The New Dollars and Dreams: American Incomes and Economic Change by Frank Levy.

The center's research is organized around four major themes: Technology and the Changing American Workplace; Organizing Innovation; Local Innovation Systems; and Globalization and its Consequences.

‘Globalization' refers to the set of changes in the international economy that are tending towards the creation of a single world market for capital, goods, and services. In each of these dimensions, globalization raises new challenges for sustaining innovation, growth, societal well being, and broad political legitimacy in the nations it encompasses. For several years the Industrial Performance Center has been exploring the impact of changes in the international economy on the domestic economies of advanced industrial countries. The distinctive approach of this research has been its focus on building from detailed firm-level studies carried out across different industrial sectors and different national settings to broader understandings of the process of globalization and its consequences.

We have recently launched a major new phase of this research. The multi-year IPC Globalization Project is studying the fragmentation and reintegration of production across national boundaries that is occurring in many industries in response to new technological and economic opportunities and the pressures of international competition. An interdisciplinary IPC research team, with the help of an international network of collaborating researchers, is studying the strategies, plants, and laboratories of leading firms in several industries (including electronics and semiconductors, pharmaceuticals and biotechnology, software, financial services, automobiles, textiles and apparel, and telecommunications) with home bases in the United States, Europe, Japan, and Taiwan. By comparing the different ways in which firms in these countries and industries are redistributing and relocating their productive activities between home and host societies, the research will shed new light on how different globalizations strategies will affect future innovation, growth, job content and skills, and societal learning. The IPC team is led by Professor Suzanne Berger, and includes Professors Don Lessard, Richard Lester, Michael Piore, Sonny Siu, Charles Sodini, and Ed Steinfeld. Several graduate students and post-doctoral associates are also participating in the research.

Professors Richard Lester and Michael Piore and their graduate students are continuing their studies of design and product innovation. 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 a series of case studies of new product development in the cellular telephone, apparel, medical device and automobile industries.

Also in the field of innovation research, a team of IPC investigators led by Professors Richard Lester and Ed Roberts has been carrying out a project on International Changes in Industrial Innovation: Consequences for the Research System. This is a collaborative project with the Fraunhofer Institute for Innovation and Systems Research of Karlsruhe, Germany. As part of this research, a major new survey of the technology strategy and management practices of the world's largest technology-intensive corporations was conducted during the past year. The results will be presented at a one day conference this Fall at MIT entitled The Strategic Management of Technology: Emerging Global Trends in Industrial Innovation.

In the field of technology's impact on the workplace, Professor Frank Levy continues his work with Professor Richard Murnane of the Harvard School of Education on the impact of computers on the demand for labor. In research that is also funded by the Russell Sage Foundation and the Ford-MIT Research Collaborative, Murnane and Levy are undertaking a series of case studies of this phenomenon, beginning with car dealerships (both service and sales) and check clearing operations.

The effective performance of high-human-capital professional research workers is also crucial to innovation and economic growth. IPC Doctoral Fellow Susan Eaton is studying the careers and life-paths of professional biotechnology employees in order to explore which workplace policies and practices, if any, make a systematic difference in increasing the responsiveness of work environments to professional researchers' personal needs, and in improving opportunities for integration between work and home demands.

An important empirical question concerns the extent to which so-called ‘high performance work systems' have diffused across the U.S. economy. With funding from the Industrial Performance Center, Professor Paul Osterman recently surveyed almost 700 business establishments with fifty or more employees, collecting data on the use of four key work practices — self-managed work teams, job rotation, quality circles or off-line problem solving groups, and Total Quality Management — as well as the percentage of core workers that were involved in each case.

In the field of regulatory and technology policy, Professor John de Figueiredo is carrying out research on how firms attempt to manipulate their competitive environment through non-market strategies — primarily lobbying, litigation, and regulation. The primary emphasis of de Figueiredo's research is an empirical study of the lobbying and litigation behavior of telecommunications firms at the FCC. Using a unique database which includes records of all 10,000 lobbying contacts at the FCC between 1996 and 1998 and all telecommunications litigation before the D.C. Circuit Court of Appeals between 1990 and 1998, de Figueiredo is testing new models which bring together the three key aspects of non-market strategy — lobbying, litigation, and regulation — in an integrated framework. Through this research, de Figueiredo seeks to show how competitive advantage in the marketplace can be obtained through developing unique capabilities with non-market instruments.

The center sponsors a Doctoral Fellowship program that provides opportunities for highly qualified doctoral students to pursue independent thesis research. Candidates are selected on a competitive basis and are drawn from across the Institute. This year the center awarded four Fellowships: Susan C. Eaton, Integrating Work and Family in Forms of the Future- How Firm Practices Affect Research Workers in BioTechnology; Teresa M. Lynch, After America- Foreign Production and Domestic Employment in U.S. Manufacturing; Aya Okada, Workers' Learning Through Inter-Firm Linkages in the Process of Globalization- A Case of the Automobile Industry in India; and J. Gunnar Trumball, The Politics of Market Regulation and its Impact on Product Innovation.

The IPC Faculty Seminar series continued with a series of research seminars focusing on Producing in Asia.

The center continues to play a role in helping to develop intellectual connections and research collaboration among the Sloan Foundation's national network of Industry Study Centers, primarily through the Sloan Human Resources and Globalization Networks. More information on the Industrial Performance Center can be found on the World Wide Web at http://web.mit.edu/ipc/www/.

Richard K. Lester

MIT Reports to the President 1998-99