When solving ongoing operational problems, organizations must balance the costs of complexity while harnessing the learning benefits over time. While complexity is likely to raise coordination costs of executing routine tasks, over time, complexity should also increase organizations' ability to learn, which should improve operational performance. We study how U.S. manufacturing facilities, from 1991 to 2014, improve operational performance by examining how learning and complexity interact and influence performance over time. Results show that complexity has a direct negative effect on performance; however, more experienced facilities'specifically in terms of cumulative waste produced'are able to withstand the costs of complexity to improve operational performance. These results suggest that there are benefits to complexity when solving operational problems that may have long term benefits for firm adaptation.
Complex learning: evidence from U.S. manufacturing
Dutt, Nilanja;
2018
Abstract
When solving ongoing operational problems, organizations must balance the costs of complexity while harnessing the learning benefits over time. While complexity is likely to raise coordination costs of executing routine tasks, over time, complexity should also increase organizations' ability to learn, which should improve operational performance. We study how U.S. manufacturing facilities, from 1991 to 2014, improve operational performance by examining how learning and complexity interact and influence performance over time. Results show that complexity has a direct negative effect on performance; however, more experienced facilities'specifically in terms of cumulative waste produced'are able to withstand the costs of complexity to improve operational performance. These results suggest that there are benefits to complexity when solving operational problems that may have long term benefits for firm adaptation.
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