Towards an Economic Theory of Lean

Overview & Synopsis

For more than 40 years, researchers have studied the operations management practices of Toyota and their application in different companies and industries, most notably under the heading of lean operations. Even though lean has become an integral part of the operations management curriculum and corporations such as Danaher have embraced it as their “way of doing business”, lean has yet to truly breach the executive echelons of most firms and as such fails to reach its true potential as an alternative, people-centric, and sustainable business model. To address this gap, we have carried out an extensive literature search on the subject and conducted several interviews with C-suite executives from lean firms. Our findings point us in the direction of an underlying economic theory of lean, based on the business model and associated practices of the Toyota Motor Corporation. Furthermore, we present three exemplary case companies which have adapted some or all of these practices under the guise of lean production.