Management Practice Complementarities
Adopting individual operational practices in isolation yields minimal performance improvements because management systems rely on complementary interactions between measurement, analysis, and action protocols.
Picture this
Imagine buying a high-tech dashboard that flashes red lights whenever a car engine overheats, but failing to hire a mechanic or buy tools to fix the engine. Merely collecting and staring at error logs does not prevent breakdowns; the dashboard only creates value when paired with a trained repair team and scheduled fix-it routines.
What the evidence says
Control plants adopted data collection practices increasing practice scores by 12.0 percentage points, but achieved negligible productivity improvements compared to treatment plants, which implemented full complementary review systems and increased TFP by 16.6% (p = 0.061).
- Who
- 28 manufacturing plants across 17 multiplant textile firms near Mumbai, India.
- How
- Randomized Controlled Trial (RCT) comparing control plants receiving diagnostic defect recording against treatment plants adopting integrated review, defect analysis, and action planning routines.
What to do
Pair all data tracking systems with daily review meetings and formal action plans to ensure collected operational metrics drive corrective interventions.
From the source
"Implementing these practices to monitor and electronically record data without implementing the complementary practices to use and act on these data is intuitively likely to have more limited effects."
541 Management in India QJE.pdf