Title: Investigating causal relations between labour productivity and JIT in SMEs

Authors: Seyed-Mahmoud Aghazadeh

Addresses: Department of Business Administration, School of Business, State University of New York at Fredonia, Fredonia, NY 14063, USA

Abstract: The inventory-productivity relationship has been described in many studies but never examined statistically. This paper uses historical data for 33 Small and Medium Enterprises (SMEs) from various manufacturing industries in the USA. In this exploratory analysis, a model is developed and tested to determine the correlation between labour productivity and Just in Time (JIT) minimising inventory. We approach this model in two different ways. The results of the first approach indicate that a higher inventory or Work in Process (WIP) inventory, each tested separately, has a positive effect on labour productivity, which was not expected. A higher WIP/sales ratio, however, has a negative effect on labour productivity, as expected. The results of the modified model demonstrate that a higher capital investment per employee and a higher WIP/sales ratio have a negative impact on labour productivity.

Keywords: small and medium-sized enterprises; SMEs; labour productivity; just in time; JIT; work in process; WIP; inventory; performance; manufacturing industries; USA; United States; sales.

DOI: 10.1504/IJGSB.2008.018100

International Journal of Globalisation and Small Business, 2008 Vol.2 No.4, pp.362 - 370

Published online: 01 May 2008 *

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