Path-dependent product development and Fiat's takeover of Lancia in 1969: meta-routines for design selection between synergies and brand autonomy

Abstract

Fiat's acquisition of Lancia in 1969 represented an opportunity for Fiat to strengthen its position in the upper end of the European market. However, Lancia lost its brand identity as a high quality car manufacture, while the Fiat Group remained focused upon the lower end of the market. This article addresses why path-changing opportunities towards more flexible output-mix strategies that emerged at Fiat before and after acquiring Lancia did not unfold. It identifies and analyses the meta-routines for new design selection as the dynamic link between initial conditions of path dependence (development of design hierarchies at Fiat) and lock-in (an output-mix skewed towards utilitarian cars).

Keywords:

• Fiat
• Lancia
• path dependence
• reinforcing mechanisms
• lock-in
• meta-routines
• new design selection

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

^1.Freyssenet, “Wrong Forecasts,” 7–12.

^2. Becker, 2004, “Organisational Routines”; van Driel and Dolfsma, “Path Dependence.”

^3.Amatori, “per una storia,” Impresa, and “Gli uomini”; Castronovo, 1977 and Fiat.

^4.Volpato, Il case Fiat; Greggio, Fiat una crise; Maielli, “The Machine.”

^5.Sydow, Schreyögg, and Koch, “Organizational Path-dependence.”

^6. van Driel and Dolfsma, “Path Dependence.”

^7.Freyssenet, “Wrong Forecasts.”

^8.Freyssenet, “Wrong Forecasts”; We refer to “Taylorian–Fordian” models of mass production as “time-spaced” variants of the “Taylorist-Fordist” framework (Freyssenet, 2000 and 2009; and Boyer and Freyssenet, 2002), and to “Fordism” as the broad set socio-institutional underpinnings of Fordian modes of production (Gramsci, 1977; Aglietta, 1979).

^9. Chandler, 1990.

^10. A production line is balanced if all stages are performed within the target cycle time. Cycle time (CT) =  throughput time/work in progress. A reduction in CT would cause lower per unit production costs and a higher production rate.

^11.Freyssenet, “Wrong Forecasts.”

^12.Piore and Sabel, The Second.

^13.Aglietta, A Theory.

^14.Boyer and Freyssenet, The Productive Models; Freyssenet, “Wrong Forecasts”; Most manufacturers pursued a “volume and diversity” strategy based on synergy while others (Honda) pursued a “flexibility and innovation” strategy. Toyota kept pursuing cost reduction at constant volumes.

^15.Amatori, “Per una storia” and Impresa; Greggio, Fiat una crise.

^16.Volpato, Il case Fiat; Maielli, “The Machine.”

^17.Bhaskar, The Future.

^18.Greggio, Fiat una crise.

^19.Maielli, “The Machine.”

^20.Sydow et al., “Organizational Path-dependence.”

^21. van Driel and Dolfsma, “Path Dependence.”

^22.Sydow et al., “Organizational Path-dependence.”

^23.Sydow et al., “Organizational Path-dependence.”

^24.Mahoney, “Path Dependence.”

^25.Katz and Shapiro, “Network Externalities.”

^26.Nelson and Winter, An Evolutionary Theory.

^27.Sydow et al., “Organizational Path-dependence.”

^28.Vergne and Durand, “The Missing Link.”

^29.Rothman, “Exploring Stability.”

^30.Ambrose and Carroll, “Medical Malpractice.”

^31.Henderson and Clark, “Architectural Innovation.”

^32.Abernathy and Utterbeck, “Patterns.”

^33.McKelvey and Holmen, Flexibility.

^34.McKelvey and Holmen, Flexibility.

^35.Garud and Karnøe, “Path Dependence.”

^36.Garud and Karnøe, “Path Dependence,” 762.

^37.McKelvey and Holmen, Flexibility.

^38.Sydow, Windeler, Schbert, and Möllering, “Organizing.”

^39. van Driel and Dolfsma, “Path Dependence.”

^40. van Driel and Dolfsma, “Path Dependence,” 52–53.

^41.Nelson and Winter, An Evolutionary Theory.

^42. van Driel and Dolfsma, “Path Dependence,” 51.

^43. van Driel and Dolfsma, “Path Dependence,” 51.

^44. The Fabbrica Italiana Automobili Torino was founded in 1899 by a group of investors, including Govanni Agnelli. For a detailed history of Fiat's early years see Castronovo (1999).

^45.Giacosa, Progetti; Dante Giacosa started his career at Fiat in 1927 as a designer and retired as Technical Director in 1970. He signed off some of the most successful Fiat cars including the iconic 500 (1952). His memoir represents a very detailed source concerning product design, new design selection and problem solving.

^46. Tarquilio Zerbi and Antonio Fessia were technical directors at Fiat in the 1930s and 1940s. Alessandro Genero was Director of Operations between 1929 and 1940 and a member of the Administration Board from 1946 to 1970. Fessia and Zerbi had a five-year university degree in engineering, while Genero had a high school technical diploma.

^47.Giacosa, Progetti, 66–67.

^48. See Slack et al. (2010), “Operations Management”.

^49. In the Operations Management literature, performance objectives refer to the production process and are classified as: quality, speed, flexibility, dependability and cost. These affect product competitive factors such as quality, variety, prices etc..

^50.Giacosa, Progetti, 71.

^51.Giacosa, Progetti, 47–59.

^52.Giacosa, Progetti, 47–59.

^53.Giacosa, Progetti, 47–52 and especially 174.

^54. There are numerous references to the routine of calculating revenues per Kg in the in the Fiat Administration Board Meeting Reports throughout the 1950 and 1960. See: Archivio Storico Fiat, Administration Board Meeting Reports, 1898–1966 Books 1–37.

^55.Giacosa, Progetti, 50.

^56. The unibody design gave the advantage of assembling mechanical components directly on the body of the car without a separate chassis. Originally Genero opposed it (Giacosa, 1988, p77), but eventually Fiat followed Opel and Citroën.

^57.Amatori, “Per una storia.”

^58. Agnelli co- founded Fiat in 1899 and become Fiat's CEO in 1902.

^59. For the history of Fiat's managerial structures, see Amatori (1999) and Castronovo (1999).

^60.Amatori “Per una Storia,” 324–336.

^61.Amatori, “Per una storia.”

^62.Amatori, “Per una storia,” 303–305.

^63.Amatori, “Per una storia,” 337.

^64. The Lingotto plant was completed in 1922 (with a usable surface of 153,000 squared meters) and doubled in 1925. The Mirafiori plant was completed in 1939 (with a usable surface of 330,000 squared meters) and employed 22.000 of the 48,359 Fiat workers (Archivio Storico Fiat, 1996, pp. 27–35 and 140).

^65.Nieuwenhuis and Wells, “The All-steel Body.”

^66.Volpato, Il caso Fiat; Maielli, “Spot-welding.”

^67. The stamping process of the body sides for the Fiat 500 (1957) is a typical example of the simplification of body shape towards manufacturability. Contrary to previous methods, where the doors and the sides were processed in separated stamping processes, each side/door was processed in a single stage, leading to less machinery and less material waste.

^68. For the history of Lancia see Amatori, F. (1990 and 1996).

^69.Foschi, “La parabola storica,” 188–189.

^70.Greggio, Fiat una crise.

^71. Weernink, 1991, “La Lancia,” 88–110.

^72.Amatori, “Per una storia,” 82.

^73. Archivio Storico Fiat (1996). Fiat also produced 3,407 commercial vehicles in 1929 and 2,843 in 1939.

^74.Amatori, “Per una storia,” 82.

^75. It was produced in 113,000 units between 1932–1937, while total production was 200,250 units in the same period (Ibid).

^76.Amatori, “Per una storia,” 38.

^77.Foschi, “La parabola storica.”

^78. Carlo Pesenti, President of Lancia from 1958 to 1967.

^79.Foschi, “La parabola storica,” 230.

^80.Giacosa, Progetti, 113.

^81. Weerrnink, “La Lancia,” 178.

^82. Weernink, “La Lancia,” 237.

^83.Clark, “Superfactuals.”

^84. In particular, see Archivio Storico Fiat, Administration Board Meeting Report, January 1967, Book 37, 155.

^85.Maielli, “The Machine,” 254–258.

^86.Maielli, “The Machine,” 254–258.

^87.Maielli, “The Machine.”

^88.Amatori, “Per una storia, “ 330–342; Greggio, 2003, 69.

^89. Delibera del Professor Valletta (Fiat internal Document) in Giacosa (1988, pp.202–207).

^90. See also the organisational flow chart showing that the Officina is controlled by Centro Stile Giacosa (1988, pp. 202–207).

^91. Fiorelli was Head of both the Automotive and Commercial Vehicle Divisions while Giacosa was Head of a Directorate (ibid).

^92.Giacosa, Progetti, 269.

^93. “The Director of S&RD and that of the Automotive Division will keep continuous contact. […] Of course decisions concerning new products will also be examined in specific meetings by the Directors. Conclusions will be forwarded to the Presidency.” Fiat internal document in Giacosa, Progetti, 285.

^94.Greggio, Fiat una crise, 63.

^95. Delibera N. 29337, Fiat internal document.

^96. This facilitated the restructuring of the Fiat Group during the 1970s, through the establishment of IVECO (Industrial Vehicles Corporation) in 1975, and Fiat Auto in 1978; see Eniretti et alt, (1992).

^97.Giacosa, Progetti, 297.

^98.Giacosa, Progetti, 308.

^99. Weernink, “La Lancia,” 289.

^100.Greggio, Fiat una crise, 138.

^101.Greggio, Fiat una crise, 138–142.

^102. Umberto Agnelli was the brother of Giovanni.

^103.Greggio, Fiat una crise, 139.

^104.Gennaro and Scifo, Parabole, 79–87.

^105. This refers to the combined output of Fiat, Lancia and Autobianchi.

^106.Maielli, “The Machine.”

^107.Greggio, Fiat una crise, 147.

^108.Clark, “Superfactuals.”

^109.Greggio, Fiat una crise.

^110.Maielli, “The Machine.”

^111.Sydow et al. “Organizational Path-dependence.”

^112. van Driel and Dolfsma, “Path Dependence.”

^113.Clark, “Superfactuals.”

Additional information

Notes on contributors

Giuliano Maielli

Giuliano Maielli is a Senior Lecturer in Operations Management at the School of Business and Management, Queen Mary, University of London. His research revolves around issues of path dependence and evolutionary organizational and technological change. Giuliano has published in several journals including Business History, Competition and Change, Management and Organisational History, the International Journal of Innovation Management, and Organization Studies. Giuliano is currently engaged in various research projects focusing on the relationship between architectural knowledge and power across supply chains.