Directory UMM :Data Elmu:jurnal:I:International Journal of Production Economics:Vol65.Issue3.May2000:

Int. J. Production Economics 65 (2000) 243}255

Manufacturing practices and performance:
Comparisons between Australia and New Zealand
Danny Samson*, Steve Ford
Department of Management, University of Melbourne, Parkville VIC 3052, Australia
Received 11 November 1998; accepted 25 March 1999

Abstract
This study compares and contrasts manufacturing practice and performance variables in two neighbouring countries
with broadly similar cultures and histories, but only one of the countries has undertaken substantial economic reform.
A large, representative sample of manufacturing sites was examined in Australia and New Zealand in order to compare
the manufacturing management practices and performance of the better performing sites in each country. New Zealands
manufacturers came out ahead on most dimensions, particularly the management of people, leadership and quality
management factors, whereas in these factors Australia's lack of labour market #exibility was found to be a barrier to
progress. ( 2000 Elsevier Science B.V. All rights reserved.
Keywords: Manufacturing management; Manufacturing performance; Quality management; Australia; New Zealand

1. Introduction: The business context
of manufacturing
Manufacturing companies that consider locating

plants in particular countries must consider local
conditions and norms of manufacturing practices
and the impact of these on manufacturing performance. Hence, it is worthwhile to study the comparative di!erences between countries in terms of
the manufacturing practices and performance that
exist in those countries.
Australia and New Zealand's economies have
been characterised historically as having strong
agricultural industries, with Australia also being

* Corresponding author. Tel.:#61-3-9344-4108; fax: 61-39349-4293.
E-mail address: d.samson@ecomfac.unimelb.edu.au (D. Samson)

abundant in mineral resources, but with small
populations and hence small and somewhat fragile
domestic markets. Until a decade ago, manufacturing industries in both countries have been traditionally small, domestically focussed and protected
by import tari!s and quotas.
Australian and New Zealand's manufacturing
industries have comprised substantially branch
plants of foreign transnational or multinational
companies. For example, unlike the USA, Britain,

France, Italy, Germany, Spain, Russia, Japan,
Korea and a host of other countries, there are no
domestically owned automobile assembly companies in Australia or New Zealand, but rather
branch plants of Ford, GM, Toyota and Mitsubishi. The competitiveness of these operations is
constantly reviewed by their parent companies that
make strategic facility location decisions based on
cost, quality and overall shareholder wealth considerations. In the automobile assembly industry,

0925-5273/00/$ - see front matter ( 2000 Elsevier Science B.V. All rights reserved.
PII: S 0 9 2 5 - 5 2 7 3 ( 9 9 ) 0 0 0 7 6 - 6

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D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

Nissan, Volkswagen, Chrysler and others have
withdrawn from local manufacturing as part of
rationalising their manufacturing, and become
importers into these markets. Other key industries
are similarly structured, such as electronics in

which global corporations such as Alcatel, Ericsson, NEC, and Siemens operate plants that are
important to the local economies, but which could
from a shareholders' perspective be closed or substantially downsized without much loss of shareholder value. The local branch plants of these
companies seem always to be on a knife edge of
competitiveness and hence survival.
On the other hand, these industries have
spawned solid numbers of smaller companies, such
as in automobile componentry, which not only
support local assemblers but also in recent times
have successfully exported to Asia, Europe and the
USA. The reduction of tari!s has caused many of
these component manufacturers to adopt modern
manufacturing practices, and like everywhere else,
success has been mixed, although there have been
many notable successes.
For companies that want to operate in these
markets, they must decide whether to ship the
product in or set up local manufacturing, and a key
determinant of this is the local practices and economic, political and business environment as well
as the workplace culture, local practice norms and

technological base.
The structure of the local economies of New
Zealand and Australia makes it particularly important that manufacturing practices that will lead to
world class levels of competitiveness are adopted.
The implications of not achieving and sustaining
high levels of competitiveness are clear, namely the
loss of the wealth-creating manufacturing sector to
countries which do successfully implement these
practices and which may have signi"cantly lower
cost structures of both labour and overhead.
New Zealand and Australia have proceeded differently during the past 20 years in terms of the
national policy framework that governs the business environment. During the past 15 years, both
the Australasian economies have been restructured
although this has proceeded much more pervasively and somewhat faster in New Zealand. Australia
has not succeeded in the accomplishedment of the

government sector and microeconomic reform to
the extent that New Zealand has, nor has it extensively freed up its labour market and competition
policy framework. The much stronger level of reforms in New Zealand followed a deep recession
during the late 1980s, during which it substantially

transformed itself from an inward focused, bureaucratic structure to a #exible, entrepreneurial and
export oriented business sector. Australia is about
"ve times the scale of New Zealand, but has accomplished only some of the restructuring, and was
late in beginning this process. As of 1998, Australia
still does not have a Goods and Services Tax, but
rather an old fashioned, complex tax system with
high personal income tax rates. Tari! protection in
Australia on manufactured products is being reduced from very high levels to levels of about 15%,
whereas New Zealand has gone faster and much
further on this. In both the countries, many companies are facing lower real prices for their manufactured products and their local manufacturing
operations are either signi"cantly improving their
competitiveness or closing down. For example,
productivity in the automobile industry for both
the countries has risen solidly during the past decade but from a relatively low base, and a part of the
industry has moved out.
The rest of this paper is organised as follows: we
"rst examine the overall business environment of
the two countries using comparative data from the
IMD Yearbook [1]. Then the manufacturing practices and performance data set is described. The
analysis and results are presented of ANOVAS on

these two countries using a wide range of practice
and performance measures, with the aim of understanding speci"cally the nature and extent to which
New Zealand may be ahead of Australia in its
manufacturing sector. Conclusions are then drawn.

2. Macro-level comparisons of New Zealand
and Australia
The World Competitiveness Report Yearbook
[1] provides rigorous assessments of many aspects
of national factors that drive competitiveness.
Table 1 shows comparisons for Australia and New
Zealand of the key factors from that report. The

D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

245

Table 1
Overall competitiveness rankings in Australia and New Zealand!
Competitiveness element

Australia

New Zealand

Overall competitive performance (1997)
Overall competitive performance (1996)
Domestic economy
Internationalisation
Government
Finance
Infrastructure
Management
Science and technology
Freedom from national protectionism
People

18
21
22

14
14
18
8
19, up from 25 the previous year
24, down from 21 the previous year
24th
14, up from 18 the previous year

13
11
34, down from 10 the previous year
22, was 14 in 1995
3 (since 1994)
15
13, down from 7 the previous year
11, down from 7 the previous year
16, up from 22 the previous year
2nd
8, up from 13 the previous year

!Signi"cant changes are noted in this table from the previous year. Some of these changes re#ect the economic and related changes
in#uencing each country.
Source: IMD (1987)

rankings in Table 1 are from 46 industrialised
countries including all OECD countries and many
newly developed countries such as the Asian
nations. Table 1 also shows recent signi"cant
changes in rankings.
From Table 1, it can be seen that New Zealand is
ranked well ahead of Australia on most of the key
criteria. Although the gap narrowed down from
1996 to 1997, Australia was behind in the aggregate
measure of &Overall Performance'. While New Zealand's domestic economic strength slumped in
1997, falling from 10th strongest to 34th, basic
factors of competitiveness were generally stronger
in New Zealand, particularly management, government and people factors, as also in technological
strength and investment.
In order to develop an understanding and views

of the business environment in these countries, one
further level of detail is instructive in terms of the
drivers of competitiveness. New Zealand ranks
relatively poorly (30th) in terms of exchange rate
stability. Australia ranked 15th on this measure.
The New Zealand economy is generally subject to
more #uctuation from outside, such as an economic
crisis in Asia, because of the small domestic economy there and the free market approach to
economic control. Given these factors, one would
expect New Zealand's manufacturers to pursue
&best practices' with a relatively high degree of
vigour.

New Zealand ranked 3rd on `The image of your
country abroad supports the development of businessa while Australia was 19th. Government subsidies to public and private companies in Australia
were 1.65% of GDP, ranking well behind New
Zealand's 0.26%, which was the fourth lowest of 46
countries.
New Zealand's labour market #exibility led to its
ranking of 1st in the dimension `Labour regulations are #exible enougha, while Australia ranked

34th from the 46 countries. Similarly, in the area of
`Competition laws do prevent unfair competition
in your countrya, New Zealand ranked 3rd, with
Australia 13th.
Australia's overall labour productivity was
well ahead at US$47,000 against New Zealand's
US$37,000, re#ecting the super-e$cient mining industry in Australia and other scale advantages.
Does this lead to the adoption of more or less
advanced practices in the manufacturing sectors of
these countries, particularly given the protectionist
policies of a series of Australian governments?
Australia had an average labour hourly compensation of US$15.22 in 1996, which was 50% higher
than in New Zealand. Labour cost competitiveness
in Australia is seen as a real problem, and this issue
is certainly not unrelated to the lack of labour
#exibility there. Only European countries and
Japan had signi"cantly higher labour costs than
those in Australia.

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D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

In terms of corporate performance, New Zealand
ranked a creditable 7th in the time-to-market
dimension: `Launching a new product into the
market generally takes less time than in the case of
foreign competitorsa, while Australia was ranked
20th on this measure. New Zealand ranked 6th out
of 46 countries on both `Price/quality of domestic
products is superior to foreign competitorsa and
`Domestic companies emphasize customer satisfaction adequatelya. Australia ranked 22nd on price/
quality and 13th on customer orientation. New
Zealand's sweeping changes and improvements led
it to be ranked 2nd on corporate board practices
with Australia 10th. New Zealand was 3rd on
entrepreneurship with Australia ranked a relatively
lowly 28th. Similarly, New Zealand was ranked 5th
while Australia 22nd on the availability of competent senior managers. New Zealand was also ahead
(14th) of Australia (23rd) on the international business experience of managers.
On the industrial relations front, Australia had
a large numbers of days lost per 1000 inhabitants,
measured at 31, which was nearly three times as
high as that in New Zealand. Australia ranked very
poorly (36th) on management}employee relations,
with New Zealand at a ranking of 8th on this scale.
Related to this, New Zealand ranked 10th on
worker motivation with Australia a lowly 34th.
In terms of technological strength, New Zealand
ranked very highly (3rd) on the legal support for the
development and application of technology, with
Australia 18th. New Zealands annual average compound growth rate in patents granted was 9% with
Australia's at negative 0.87%.
In terms of the education investments made in
their people, Australia had 15% less relevant age
group people receiving full-time education than
New Zealand, and New Zealand had a 4th ranking
of 58% of 20}24 year old in higher education compared with Australia's 12th ranking of 42%.
On a societal values question, `Values of the
society support competitiveness (such as hard work
tenacity or loyalty)a, New Zealand was ranked as
7th in the world, ahead of countries such as Taiwan
and the USA, while Australia ranked a lowly 35th.
Given these circumstances of economic revitalization in New Zealand, with the freeing up of the
economy and labour markets and the government

stepping out of the way of the business sector and
allowing a renewed spirit of business competitiveness and entrepreneurship, what manufacturing
practice di!erences would be expected between
Australia and New Zealand? Despite New Zealand's smaller scale, or indeed partly because of it,
one would generally anticipate a stronger propensity there to implement newer practices in areas
such as quality management.
One would expect generally that a comparison of
the better performing companies in the two countries would "nd New Zealand's manufacturing
enterprises ahead on the factors where manufacturing managers and their workforces can control or
in#uence. It is proposed that New Zealand would
be &ahead' on aspects of leadership, customer focus
and management of people, which are the three
major categories of quality award frameworks most
closely associated with superior business performance [2]. It is proposed that New Zealand's better companies would have higher adoption rates of
modern manufacturing management practices and
systems such as JIT and MRP, higher employee
morale, faster process change-over times and better
quality performance indicators than Australia's.
Hence the null hypothesis is H : that Australia
0
and New Zealand do not have di!erent extents of
the adoption of modern manufacturing management practices and systems. The alternative hypothesis is H : that New Zealand has a greater extent of
1
adoption of modern manufacturing management
practices and systems. This hypothesis was tested
through decomposing the term &modern manufacturing management practices and systems' into parts
and into individual items within these parts. The
parts were planning, manufacturing structure,
leadership, people management, customer focus,
quality processes, manufacturing scheduling and related performance measures. In addition, comparative measures of barriers of performance that hold
back companies from progressing were measured.

3. Manufacturing practices and performance
comparison: Empirical study
The policies, systems, techniques and actions of
manufacturing managers drive a set of shop #oor

D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

practices and a work culture that governs the
outcomes of manufacturing operations. These outcomes are generally measured in terms of cost,
productivity, quality, #exibility, reliability, innovativeness and other dimensions. This study empirically investigates the relationship between practices
and performance in Australia and New Zealand,
focusing particularly on aspects of international
comparisons. Although the economies are closely
tied together and Australia generally has scale
advantages, the deeper, earlier restructuring that
occurred in New Zealand is expected to have led to
the more widespread adoption of modern manufacturing practices, and further, this should have
driven manufacturing operational performance
further forward.
This section reports on observed manufacturing
practices in Australia and New Zealand, using
a large strati"ed sample of manufacturing sites.
Manufacturing site managers made assessments of
the strength of manufacturing practices and performance. Some of these were on Likert type scales and
others, particularly the performance variables, were
on ordered scales. Previous examinations of total
quality management practices, quality certi"cation
and technology management practices have already
shed light on the relationships between various practices and performance in Australia. For example,
Terziovski et al. [3] found virtually no signi"cant
relationship between quality certi"cation status and
quality performance. Challis and Samson [4] found
that technological strength was signi"cantly and
positively related to manufacturing business performance for companies that were strong in their quality practices, but not for those that were weak in
their quality. Dow et al. [5] found that some components of the quality awards frameworks were
strongly related to quality performance, such as
leadership and people management, while others
were only weakly or not related to performance.

4. Research methodology
4.1. Sample
An initial strati"ed, random sample was drawn
from manufacturing sites in Australia and New

247

Zealand. Each manufacturing site was registered
with the Australian Bureau of Statistics or Statistics
New Zealand in 1993, and had at least 20 employees. The strati"cation by industry and size
(number of employees) was intended to ensure
representativeness.
This initial sample of approximately 4000 sites
across Australia and New Zealand were mailed
a comprehensive questionnaire (described below)
on manufacturing strategy, practice, operating performance, and business performance. The Chief
Executive O$cer or a member of the Senior Management was requested to complete part of the
questionnaire and manufacturing site managers
completed the main section. Responses were received from 1289 sites; 962 from Australia and 327
from New Zealand; yielding response rates of 32%
and 38%, respectively. All responses were returned
within a ten-week period.
Of these, the top 40% from each nation on
a manufacturing practice index were selected for
the "nal sample (348 Australian sites, 118 New
Zealand sites). The selection process and rationale
are outlined in greater detail below.
4.2. Survey instrument
The survey was constructed on the basis of
a model of &Best Practice' designed to re#ect the
major issues and linkages between manufacturing
strategy, practice, operations, and business performance [6]. This was critical to ensuring content
validity of the questionnaire, i.e. the extent to which
the empirical measurements re#ects the speci"c domain of content under consideration. The model
provided a descriptive framework for ensuring that
the issues pertinent to manufacturing performance
were included in the study.
The survey items were developed by a panel of
academics in the manufacturing "eld, manufacturing executives and site managers, and members of
the Australian Quality Awards Foundation. This
cross-section of backgrounds and expertise further
ensured that the content of the survey was pertinent
and was not driven by idiosyncratic views, and that
items were not phrased in idiosyncratic language.
This also enhances the construct validity of the
questionnaire. Sources such as the Baldrige Awards

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D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

criteria, the Deming Prize Criteria, the European
Quality Award, and the Australian Quality Award
criteria were also used to guide construction of the
questionnaire. In addition, careful reference was
made to the literature of manufacturing strategy
[7,8] and the Global Manufacturing Research
Group survey and methodology [9] and the pioneering work of Voss [10].
This added further precedence for the items on
the "nal survey instrument. The questionnaire was
piloted on six sites in Australia, with subsequent
minor modi"cations.
The "nal questionnaire contained 246 questions.
The response scales varied; many were Likert scales
(1}5 point scales), others were rankings, and some
were requests for percentage estimates or counts,
such as defect rates. The response tags varied considerably across the items. These will be identi"ed
in relation to the presentation of results in the
Results section. Where possible, however, the response scales were anchored by objective criteria;
that is a series of percentage estimates, to increase
the objectivity of responses. The variation in response scales and tags assists in reducing response
bias and method variance.
4.3. Data analysis
4.3.1. Sample selection and &best practice' index
development
To select the top 40% of manufacturing sites
from each nation, a &best practice' index was developed by aggregating a number of items related
to strategy and practice. A panel of experienced
academics and practitioners in manufacturing selected these items. They were drawn together having taken into account the "ndings of other studies
of manufacturing and quality management practices in terms of what constitutes the practices of
leading "rms in a &modern manufacturing' or &best
practice' sense [10,11]. Although many other studies have examined quality practices, relatively few
have closely examined practices and performance
on an international basis such as in the present
study in which two closely associated countries are
compared for their similarities and di!erences.
Black and Porter [11] as well as Saraph et al. [12]
used factor analysis to produce construct measures

of the elements of quality management. Ahire et al.
[13] did the same, but none of these researchers
neither focus on international comparison nor considered organisational performance in either an operational or business sense. Adam [14] found some
connections between quality practices and performance, but the results were patchy in terms of
strength of connection. Flynn et al. [15] and the
further validations made by Black and Porter [11],
Saraph [12], and Ahire [13] were useful studies of
quality management practices, but generally did
not extend more broadly into other areas of manufacturing management.
The data set has been substantially discussed in
[3}5]. These items ranged across the facets of
planning, manufacturing structure, factory operations, leadership, people practices, customer focus,
quality processes, benchmarking, and technology.
Items were not weighted. No attempt was made to
demonstrate the unidimensionality of this index
because it was regarded as a multifaceted aggregate
of performance based upon conceptually agreed (by
leading practitioners and researchers) criteria of
best practice. The index re#ected the items shown
in Tables 2}8.
Not all respondents provided valid responses to
the items forming the index; however, 95% of the
sample had only two missing scores or less out of
the 60 items comprising the index. Therefore, sites
with fewer than three missing responses were
replaced by the sample means for the item. The
remaining sites were excluded from the sample.
The details of index construction are shown in the
Australian Government Report, `Leading the Way:
A Study of Best Manufacturing Practices in Australia and New Zealanda [6]. Comparisons made
in this report between leading and poorly performing Australian and New Zealand's manufacturers
certainly showed that leading companies (de"ned
in terms of their manufacturing performance) in
both places were more likely to use certain practices than the rest of the pack. In this study, we
address the research question of whether there is
a pattern of di!erences between the respective leading companies in the two countries.
The top 40% of sites from each nation were
selected based on the &best practice' index. This
allowed comparisons between the top 40% of

D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

Australian sites and that of New Zealand sites. The
choice of the top 40% was an attempt to exclude
those sites that were not performing according to
the best practices index with the rationale that
lagging sites may obscure the di!erential performance of the manufacturing sectors in both countries. Furthermore, the study of &leaders' is of
greater substantive and practical value than studying those who are not demonstrating leadership.
A smaller subset of sites was not chosen to ensure
that sample sizes were su$cient to enable generalization. Greater focus would also defeat the purpose
of such an extensive survey sample, returning to the
problem, so common in business research, of having small sample sizes thereby reducing generalization. Also, the New Zealand sample was only
a third of the size of the Australian sample which
bounded the percentage selection criteria; that is,
a smaller percentage would result in an uncomfortably small sample size for New Zealand which
would shrink further since respondents did not
answer all the performance items. A larger sample
size also ensured a reasonable degree of statistical
power.
4.3.2. Statistical analyses
Given that the focus was on di!erences between
Australian and New Zealand manufacturing practices and performance, the most appropriate analyses were ANOVAs. This approach will invite
criticisms over potential Type 1 error rates with the
number of dependent variables under examination;
however, the rationale was carefully considered,
and its limitations acknowledged. Typically,
MANOVAs are recommended to reduce Type 1
errors in this situation, however, MANOVAs
examine a fundamentally di!erent question compared to ANOVA, that being what weighted combination of variables best di!erentiates between the
independent variables. Determining which variables contribute to the di!erences depends on
many methodological issues similar to those encountered with regression (such as order of entry).
ANOVA examines the unweighted di!erence of
a dependent variable according to the independent
variable, and therefore helps pinpoint the nature of
the di!erences. Some attempt to aggregate the performance factors was made by using exploratory

249

and con"rmatory factor analysis to determine the
performance factors underlying the performance
items. The drawback of aggregation, however, is
loss of detail.
The sample size disparity between the two national samples also jeopardizes the results of
ANOVA; so the experimental method of ANOVA
(SPSS 7.0) was used. This approach minimizes the
problems with disparate sample sizes.

5. Results
5.1. Strategy and practice
While the central interest was in the di!erences in
performance, the di!erences in strategy and practice were also of interest. Therefore, many of the
items on these facets were examined. The di$culty
encountered with these analyses was the potential
for restricted range of results given that the top
40% were chosen on the basis of the aggregate of
many of these items. It was reasonable to expect
that most sites had high scores on many of these
items and with Likert scales the sensitivity to di!erences in the upper range may be weakened. In this
respect, signi"cant di!erences may be di$cult to
"nd. This o!sets the risk of Type 1 error to some
extent.

5.1.1. Planning
Table 2 shows the comparisons on the "ve-point
scales for strength of practice in planning elements.
All variables were scaled by participants on
"ve-point scales, from a score of 1 (representing
&strongly disagree') to 5 (representing &strongly
agree').
As indicated in Table 2, New Zealand was directionally superior on all but one item; however, the
only item reaching statistical signi"cance was for
the operation of a more structured approach to
planning in New Zealand Industry (p(0.05).
From this we conclude that there was generally
little di!erence in the nature and strength of manufacturing planning between leading companies in
the two countries.

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D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

Table 2
Means, sample size and ANOVA signi"cance for Planning variables

Table 3
Means, sample size, and ANOVA signi"cance for Manufacturing structure

Variable

AUST NZ

F sig

Variable

AUST NZ

F sig

PL1: Mission communicated
and supported

3.98
(348)

4.11
(118)

p"0.154

MS3A: Size advantage

3.17
(341)

3.55
(116)

p"0.002

PL2: Structured planning
process

4.06
(347)

4.25
(118)

p"0.020

MS3B: Process technology
advantage

3.70
(344)

3.62
(117)

p"0.443

PL3: Focus on best practice

4.17
(348)

4.13
(118)

p"0.650

MS3C: Skills advantage

3.93
(348)

4.02
(117)

p"0.326

PL4: Plans include customer,
supplier, community

4.23
(348)

4.34
(118)

p"0.174

MS3D:Materials Management
advantage

3.40
(343)

3.42
(117)

p"0.855

3.84
(348)

3.98
(118)

p"0.174

MS3E: Production planning
advantage

3.66
(345)

3.61
(117)

p"0.545

PL5: Clearly articulated
strategy

4.17
(348)

4.22
(118)

p"0.511

MS3F: Quality procedures
advantage

3.98
(345)

4.07
(117)

p"0.304

PL6: Operations aligned
with mission

4.44
(348)

4.49
(118)

p"0.536

MS3G Supplier relations
advantage

3.49
(339)

3.59
(116)

p"0.244

PL7: Manufacturing central
to success

MS3H: New product
development advantage

3.56
(340)

3.60
(117)

p"0.775

MS3I: Raw material advantage

3.27
(342)

3.07
(115)

p"0.069

MS3J: Distribution advantage

3.67
(343)

3.64
(118)

p"0.776

MS3K: Marketing advantage

3.74
(342)

3.69
(118)

p"0.632

MS4A:Making too many
products

2.71
(340)

2.87
(118)

p"0.188

MS4B: Addressing several
diverse markets

3.14
(348)

3.35
(118)

p"0.094

MS4C: Too many technologies
to develop & maintain

2.26
(348)

2.23
(118)

p"0.765

MS4D: HRM clearly focused

3.90
(347)

3.83
(118)

p"0.432

MS4E: Too many improvement
initiatives

2.72
(346)

2.58
(118)

p"0.247

5.1.2. Manufacturing structure
In general, the manufacturing structure was
found to be similar across the two nations. The
only signi"cant issue was a perceived size advantage by New Zealand (p(0.05). Australia also had
a raw material advantage according to the means;
however, the result was not signi"cant (Table 3).
5.1.3. Leadership practices
As re#ected in Table 4, New Zealand sites report
being stronger on leadership relative to Australia.
Many of the mean di!erences were of sizable magnitude; however, only one result was statistically
signi"cant. New Zealand sites reported more
proactively pursuing continuous improvement
(p(0.05).
5.1.4. People management practices
Site managers in New Zealand reported as being
superior in inculcating the internal customer concept, top-down and bottom-up communications,
and have more formal processes for assessing employee satisfaction (See Table 5). This set of vari-

ables shows that New Zealand's manufacturing
managers had been making more progress in implementing the newer management practices, which
is consistent with the di!erences in the business

D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255
Table 4
Means, sample size, and ANOVA signi"cance of Leadership
practices

251

Table 6
Means, sample size, and ANOVA signi"cance of Customer focus
Variable

AUST NZ

F sig

CF1: Know our customer
requirements

3.92
(346)

3.97
(117)

p"0.554

p"0.898

p"0.102

CF2: Customer requirements
disseminated

3.57
(348)

3.73
(117)

p"0.093

3.90
(118)
3.73
(117)

p"0.075

CF3A: Use domestic customer
requirements in design

4.34
(343)

4.29
(114)

p"0.425

3.57
(346)
4.05
(348)

4.28
(118)

p"0.004

CF3B: Use overseas customer
requirements in design

3.62
(309)

4.04
(108)

p"0.001

LE4: Proactively pursue
continuous Improvement

4.13
(347)

4.23
(118)

p"0.112

CF4: Design products to match
our capabilities

3.62
(347)

3.62
(118)

p"0.972

LE5: Shop #oor ideas used by
management

CF5: Have a process to resolve
customer complaints

4.22
(348)

4.39
(118)

p"0.013

Table 5
Means, sample size, and ANOVA signi"cance on People management practices

CF6: Use complaints to initiate
improvements

4.22
(348)

4.37
(118)

p"0.046

AUST NZ

F sig

CF7: Measure customer
satisfaction

4.03
(347)

4.03
(118)

p"0.994

Variable
PE1: Internal customer concept
understood

3.89
(348)

4.10
(118)

p"0.015

PE2: Organisation wide training 3.43
& development
(347)

3.53
(117)

p"0.257

PE3: Top-down & Bottom-up
communication

3.76
(347)

3.93
(118)

p"0.026

PE4: Employee satisfaction
measured

3.32
(348)

3.54
(118)

p"0.029

PE5: Occupational health &
safety excellent

4.00
(348)

4.07
(118)

p"0.452

Variable

AUST NZ

F sig

LE1: Management encourages
trust & involvement

4.25
(348)

4.26
(117)

LE2: Have eliminated barriers

3.75
(348)

LE3: Use &champions of change'

environments of the countries. Australia's manufacturing managers have been more constrained by
the lack of #exibility in employee relations and
therefore have been less sucessful than their
counterparts from New Zealand in trying to seek
competitive advantage through their people.
5.1.5. Customer focus
Some di!erences were evidenced in favour of
stronger customer focus in New Zealand, mainly

regarding the use of customer complaint programs,
and customer involvement in product design, particularly from overseas customers. This is consistent
with the export orientation associated with the
more open trading environment in New Zealand
and the fact that the smaller domestic market there
leads the superior companies to focus strongly on
export sales (Table 6).
5.1.6. Quality processes
Again there is a strong trend across most of the
quality process items in favour of superior progress
in New Zealand (Table 7). Signi"cant di!erences
were found for mutual cooperation with suppliers
to improve each others processes, document their
procedures, and drive the responsibility for quality
down the chain to employees.
5.1.7. Manufacturing planning and scheduling
For the programs most closely aligned with quality management, there was signi"cant di!erence in
the use of just-in-time principles, and materials

252

D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

Table 7
Means, sample size, and ANOVA signi"cance on Quality processes

Table 9
Means, sample size, and statistical signi"cance on Composite
performance factors

Variable

AUST NZ

F sig

Variable

AUST

NZ

F sig

QP2: Suppliers assist in product
development

3.44
(345)

3.56
(118)

p"0.256

Cost performance

14.39
(298)

15.45
(110)

p"0.004

QP3: Work with suppliers to
improve each others processes

3.48
(348)

3.71
(118)

p"0.009

Lead times

14.34
(213)

14.43
(82)

p"0.810

QP4: Suppliers measure quality
of materials they send to us

3.69
(348)

3.75
(118)

p"0.479

Teamwork

7.69
(218)

7.98
(105)

p"0.491

QP5: Have established quality
measures

4.23
(348)

4.36
(118)

p"0.061

Quality

6.64
(301)

6.06
(100)

p"0.032

QP6: Have documented
procedures

4.17
(348)

4.41
(118)

p"0.006

Overall performance

20.75
(338)

21.80
(115)

p"0.003

QP8: Quality is each employees
responsibility

3.61
(898)

3.82
(315)

p"0.000

same success, or pervasiveness. This is consistent
with the more advanced human resources elements
of practice observed in New Zealand.

Table 8
Means, sample size, and ANOVA signi"cance Manufacturing
planning/scheduling
Variable

AUST NZ

The following are on a scale of 0}3
TE1Od: TQM used at site
1.63
(345)

F sig

1.78 p"0.200
(118)

TE1Pd: JIT

1.01
(342)

1.42 p"0.000
(118)

TE1Qd: MRP

0.92
(342)

1.19 p"0.019
(118)

resource planning. Both these results indicated
a greater use by manufacturers in New Zealand.
Surprisingly, there was no signi"cant di!erence in
the use of TQM for the two nations (Table 8).
Given the number of di!erences in favour of New
Zealand that relate to quality management, it
would have been reasonable to expect a greater
di!erence in these variables. The result implies that,
while Australian manufacturers use TQM to an
extent similar to that New Zealand, they may not
be implementing their quality programs with the

5.2. Operational and business performance
The performance measures were analyzed using
exploratory factor analysis which revealed "ve
factors: quality, cost performance, lead-times, teamwork, and overall business performance. Composite scores were generated to re#ect these factor
scores. The results on these factors are presented in
Table 9.
While there were no di!erences between the nations' better manufacturers on teamwork and lead
times, there were signi"cant di!erences on quality,
cost performance, and overall business performance. For the quality performance index, the scale
is reversed, such that a low score is better. Likewise
for cost performance where a high score indicates
lower costs relative to direct competitors. Thus,
New Zealand is superior on each of the statistically
signi"cant scales. The result for the quality index is
particularly important as the response scale is
a more objective measure, indicating warranty
claims, and cost of quality as a percentage of total
sales, and defects as a percentage of production
volume.

D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

253

Table 10
Means, sample size, and signi"cance for cost performance variables

Table 11
Means, sample size, and ANOVA signi"cance for quality variables

Variable

AUST NZ

F sig

Variable

AUST

NZ

F sig

PO1A: Relative material costs

2.90
(329)

2.94
(116)

p"0.676

PO8A: Defect rates

2.83
(328)

2.54
(113)

p"0.033

PO1B: Relative labour costs

2.85
(329)

3.22
(115)

p"0.000

PO8B: Warranty costs

1.73
(320)

1.58
(106)

p"0.126

PO1C: Relative overhead costs
per unit

2.82
(314)

3.11
(115)

p"0.005

PO8C: Cost of quality

2.06
(325)

1.99
(110)

p"0.545

PO1D: Relative marketing,
distribution, administration
costs per unit

3.03
(311)

3.11
(113)

p"0.421

PO1E: Relative total costs
per unit

2.88
(326)

3.10
(115)

p"0.032

5.2.1. Cost performance
Examination of the cost-related variables revealed that some di!erences exists in the cost structures of sites in the two nations. Speci"cally, New
Zealand's leading manufacturers claim superior
cost performances on labour costs (a high score
indicates lower costs), overhead costs, and thus
overall total cost relative to industry competitors
(Table 10).
These results are again consistent with the higher
degree of labour market deregulation in New Zealand. One would expect this condition to lead to
more variance in labour costs and hence more
scope for comparative advantage in leading companies, than in a more constrained system, such as
Australia.
5.2.2. Quality performance
Again, New Zealand sites report a trend towards
superior quality performance (a low score indicates
superior quality). However, only defect rates was
statistically signi"cant, although warranty cost was
also close to signi"cance (Table 11).
5.2.3. Overall business performance
Apart from increased expenditure on training
employees, Australia lagged behind New Zealand
in reported process changeover time, productivity,

cash#ow, and employee morale. These outcomes
indicate very di!erent facets of business or manufacturing performance, suggesting the generality of
the New Zealand manufacturing industries' superior performance overall. The higher reported
training expenditure in Australia may well be because the government there mandated minimum
training expenditure rates during the mid-1990s
(Table 12).
5.2.4. Barriers to performance
Table 13 presents the results concerning the extent of the barriers on performance as identi"ed by
each nation. While these issues are generally beyond the control of manufacturing sites, they do
indicate the contextual issues that a!ect manufacturing plants in each country. They also o!er competing explanations for the variable performance
between the two nations. The major barriers for
New Zealand relative to Australia were: exchange
rates and the availability of skilled people. In contrast, the major barriers for Australia were national
infrastructure costs, government policies, and external in#uences on employee relations (most probably unions).

6. Summary
In summary, New Zealand appears to be signi"cantly ahead of Australia on many facets of manufacturing practice, and performance. The null
hypothesis H is rejected. This was particularly in
0
the human resources area, which also carried over

254

D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

Table 12
Means, sample size, and signi"cance for Overall business performance variables

Table 13
Means, sample size, and signi"cance for the barriers to performance

Variable

AUST NZ

F sig

Variable

AUST NZ

F sig

PO1I: Relative order to
delivery time

3.43
(325)

3.46
(114)

p"0.738

PO6A: Exchange rates

3.28
(343)

3.69
(117)

p"0.001

PO7A: Customer satisfaction

3.04
(348)

3.03
(118)

p"0.967

PO6B: Ability to utilise leading
edge technology

3.08
(343)

3.17
(116)

p"0.418

PO7B: Average process
changeover time

3.07
(344)

3.31
(118)

p"0.025

PO6C: Availability of skilled
people

3.03
(345)

3.32
(117)

p"0.022

PO7C: Employee morale

3.39
(348)

3.75
(118)

p"0.000

PO6D: Availability of "nance
for capital equipment

2.95
(346)

3.01
(117)

p"0.653

PO7D: Productivity

3.72
(347)

3.90
(118)

p"0.034

PO6E: Availability of "nance
for operations

2.80
(344)

2.85
(117)

p"0.682

PO7E: Cash#ow

3.62
(345)

3.97
(117)

p"0.000

PO6F: Ability to implement
change by senior management

2.76
(347)

2.85
(116)

p"0.473

PO8E: Training expenditure

2.74
(342)

2.12
(113)

p"0.000

PO6G: Ability to implement
change by middle management

3.01
(344)

3.11
(117)

p"0.394

PO8F: Stock turns

3.08
(315)

3.01
(106)

p"0.532

PO6H: Ability of production
operators to implement change

3.05
(347)

3.03
(116)

p"0.921

PO8J: % in full-on-time

3.89
(729)

3.83
(253)

p"0.599

PO6I: External in#uences on
employee relations

3.03
(346)

2.78
(115)

p"0.030

PO8K: Age of equipment

3.04
(338)

3.01
(114)

p"0.834

PO6J: Parent company
restrictions

2.60
(342)

2.53
(111)

p"0.570

PO8L: Ratio of QC inspectors
to operators

2.97
(338)

2.93
(114)

p"0.737

PO6K: Our company's
knowledge of best practice

2.72
(347)

2.80
(117)

p"0.427

PO6L: Access to international
markets

3.06
(247)

3.10
(86)

p"0.750

PO6M: National infrastructure
costs

3.56
(347)

3.22
(117)

p"0.001

PO6N: Government policies

3.48
(201)

3.06
(84)

p"0.005

to quality management practices and quality performance. Dow et al. [5] and Terziovski et al. [3]
have already demonstrated this relationship between quality practices and quality performance,
and this evidence from comparisons of Australia
and New Zealand supports the fact that this exists
in an international cross-sectional context. The
evidence "rmly supports the connection between
the macro-environment (by which we mean business, government and economic factors) and the
manufacturing practices that local companies adopt. Despite (or perhaps due to) the small economy
and domestic market as well as the lack of raw
materials in New Zealand, their manufacturing sector has gone ahead of the Australian counterpart in

the adoption of modern manufacturing management practices in areas such as management of
people and quality. The crisis that led New Zealand
to restructure its economy a decade ago has
provided the environment in which it has achieved
more widespread &best manufacturing practices'
than in neighbouring Australia.

D. Samson, S. Ford / Int. J. Production Economics 65 (2000) 243}255

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255

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