Testing a theoretical model underlying the ‘Toyota Way’ – an empirical study involving a large global sample of Toyota facilities

Abstract

In this paper, we empirically test the theoretical model underlying the Toyota Way (TW), based on data obtained from Toyota’s logistics, sales and marketing functions across 27 countries. TW is the result of Toyota attempting to codify its culture to the global community. Using structural equation modelling techniques we show that the TW-associated measures challenge, kaizen, genchi genbutsu, respect and teamwork do adequately operationally define the TW; the first three measures corresponding to the construct ‘process improvement’ and the final two measures corresponding to the construct ‘people development’. Empirically, people development is found to have no direct effect on how the TW is deployed across a business unit. However, people development is found to be indirectly related to TW deployment through the mediating effect of process improvement. Our study provides quantitative evidence that while the intangible aspects of the TW (modelled as people development) may not directly relate to the results, they are an integral component of a complete implementation of the TW and related ‘Lean’ systems. By logical extension, this provides support for adoption of a holistic and long-term strategy, integrating soft and hard elements, by those organisations attempting to implement and sustain Toyota-style systems.

Keywords:

• Toyota Way
• continuous improvement
• people development
• intangible resources
• structural equation modelling