While there is overwhelming support for the negative consequences of product recalls, empirical evidence of operational drivers of recalls is almost nonexistent. In this study, we identify product ...variety (measured as the number of factory installed options), plant variety (measured as the number of models per assembly line in a plant), and capacity utilization as drivers of subsequent manufacturing-related recalls. We examine their individual and joint effects using a unique data set compiled for a seven-year period by linking assembly line production data for North American automotive manufacturers with recall data from the National Highway Traffic and Safety Administration. We show that manufacturing-related recalls are positively associated with product variety and plant utilization, but not with plant variety. We also find that the joint effect of plant variety and utilization is positively associated with increased recalls. In quantitative terms, a one-standard-deviation increase in the number of options (four additional options) is associated with two additional recalls and costs $46.2 million to automakers over the sample duration. We observe similar results with plant utilization, and find that a car built in a plant that is being utilized above 100% capacity is associated with more than eight additional recalls corresponding to an incremental cost of $167 million.
This paper was accepted by Yossi Aviv, operations management
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Corporations, including automotive manufacturers, are increasingly exploring extended circular economy strategies as a means to enhance the sustainability of their products. The circular economy ...paradigm focuses on reducing nonrenewable materials and energy, promoting renewable feedstocks and energy, and keeping products/materials in use across the life cycle of a system. As such, life cycle environmental burdens associated with vehicle manufacturing, use, and disposal could potentially be reduced through circular economy strategies; however, no such comprehensive circular economy framework currently exists for the automotive industry. We develop the first circular economy schematic of automobiles, derived from the Ellen MacArthur Foundation's framework. Further, we characterize the current automotive circular economy using metrics of renewable energy and recycled materials. Specifically, for current U.S. average sedans, we find that internal combustion engine vehicles (ICEVs) use ∼6% renewable life cycle primary energy and 27% recycled materials; for battery electric vehicles (BEVs), these measures are ∼8% and 21%, respectively. On a vehicle‐miles‐traveled basis, BEVs use ∼47% less nonrenewable life cycle primary energy than ICEVs, highlighting the importance of electrification as a strategy for automotive manufacturers to reduce environmental burdens. Our proposed circular economy framework is then applied to Ford Motor Company's sustainability programs and initiatives as an example. This schematic aims to provide a starting point for the automotive industry to operationalize circular economy strategies, the application of which could advance its overall sustainability performance.
After decades of failure to reduce greenhouse gas emissions in the transport sector, several jurisdictions have in rapid succession announced future goals to phase out sales of internal combustion ...engine vehicles. This article argues that these announcements are predominantly a form of political signaling in a green industrial policy competition for alternative transport technologies, notably electric vehicles. We show that such signaling games in green industrial policy are likely to emerge when market growth for alternative technologies initiates industrial policy competition, which explains the clustered timing of political signals. A country’s position in the global auto industry, however, shapes the domestic political economy for announcing a phaseout goal. Countries with aspirations to develop export-oriented EV industries seek industrial upgrading; countries with existing export-oriented auto industries promote industrial renewal to maintain international competitiveness; and importing countries pursue phaseout goals primarily for environmental reasons. Our findings suggest that industrial upgraders can induce incumbent producer countries to participate in green industrial policy competition, leading to the “trading up” of energy technology policy goals. This contrasts with classic patterns of environmental policy competition, in which advanced industrialized nations are the pacesetters.
•Governments have announced goals to phase out internal combustion engine vehicles.•Announcements signal emerging industrial policy competition in electric vehicles.•States seek to build new electric vehicle industry or renew existing auto sector.•Emerging economies, notably China, are driving policy competition.
Research summary
In this study, we investigate reverse status transfer from foreign to home country markets. We argue that a positive product status accrued in a leading foreign country, or outside ...status, increases domestic market performance by providing home country audiences with a means of self‐enhancement. We predict that the impact of outside status will be stronger when the foreign and home countries have similar economic conditions, and when the products are high priced, luxury goods—as social approval and prestige‐seeking are important factors in purchase decisions for these products. We test our hypotheses using a sample of firms and vehicles in the automotive industry. Results from two‐stage multi‐level analysis support our arguments. Our results have several implications for research related to status transfer and international business.
Managerial summary
We look at how consumers in the home country of an automaker (Germany, Japan, and Korea) increase purchases of a car model that wins the J.D. Power APEAL award in the United States. Rather than telling those consumers anything new about the car's quality, the award bestows status on the vehicle from the leading outside market. (We call that reverse status transfer, as it flips the idea that domestic status helps firms competing in foreign markets.) Domestic consumers can share in some of that status by purchasing the vehicle, and they are especially likely to do so when it is a high priced or luxury model, as those aspects amplify the status effects, as does economic similarity between the United States and the home country.
This article provides the first in-depth historical case study of Honda’s assembly plant in Lincoln, Alabama. Established in 1999, the plant became one of the biggest auto factories in the US, ...employing over 4,500 workers. Drawing on a wide range of sources, including rare interviews with top company and state officials, it argues that the establishment of the plant did not just reflect financial subsidies, the prevailing view in the press (and limited academic literature). Other factors were crucial, including site location, the availability of a willing and qualified workforce, and union avoidance. The personal intervention of state leaders, especially Governor Don Siegelman, is also uncovered here. In a broader context, the article illuminates the globalization of the car industry. In 2018 foreign-owned companies accounted for half of US auto production, and Alabama was a leading producer. Despite this, the burgeoning sector has been overlooked by scholars compared to domestically-owned carmakers. Honda in Alabama has been particularly neglected, yet its story is significant and distinctive. A highly successful plant, Honda Manufacturing of Alabama had one of the highest levels of domestic content in the country, along with more American managers than Honda’s better-known factory in Marysville, Ohio, and a more diverse work force.
The study aims to identify and prioritize the criteria and sub-criteria dimensions essentials for green strategic sourcing. Data were taken from the experts working in the automobile industry. By ...applying the novel Grey-DEMATEL-ANP (GDANP) approach, we identified the technology and environmental management system as the key sub-criteria dimensions to be considered while selecting the supplier. Besides, we also found quality and delivery time as the important factors to be considered while selecting a supplier for green supply chain management (GSCM). To present the useful application of our findings, we conducted an empirical study by taking the automobile industry of an emerging market as the case. The major contribution of the study is the application of variant D-ANP in identifying the important dimensions of supplier selection.
•Green supply chain management is captivating attention of the scholars and practitioners around the globe.•Development of Green Strategic Sourcing (GSS) criteria is essential for GSCM.•The environmental management system and technology are the two influential aspects of green supplier selection.•The findings highlight the role of supplier’s quality and delivery time in improving green supply chain management.•Firms in the automobile sector should give greater attention to the environmental management system for GSCM.
This work focuses on corporate social responsibility (CSR) disclosure practices of multinational corporations. Based on a longitudinal study of CSR reports of companies operating in the automotive ...industry, the paper offers a detailed study of how disclosure practices are changing and which principles and approaches influence and drive the development of such disclosure. Based on a four-year report-based study, the findings enable us to identify three main trends in the CSR disclosure strategy of automotive firms. First, in line with the mainstream CSR literature, the present study confirms the trend towards the increasing environmental and social accountability. Second, it adds evidence to the emerging debate regarding the harmonization and standardization of reporting and discusses this aspect by mentioning the standards as exerting some normative pressures within the sector. Finally, it provides evidence on specific links emerging between issues and actors. The implications of this evidence contribute to opening up the debate on CSR disclosure to the possibility of combining the institutional lens with a strategic approach that captures the materiality considerations of CSR disclosure.
This paper examines factors shaping the reconfiguration capacity of regional innovation systems (RISs). 'System selectivity' is introduced as a concept to understand how factors such as regional ...imaginaries, power relations and directionality shape how RIS reconfiguration plays out. A comparative case study illustrates the conceptual arguments, investigating industrial change in two Swedish regions (the automotive industry in West Sweden and the digital games industry in Scania). The findings exemplify the influence of system selectivity on agents' strategy formulation for RIS reconfiguration and highlight the importance of considering structure-agency dynamics to move beyond a stylized view of enabling or constraining RISs.
Abstract Human geographers are increasingly concerned with how ‘futures’ are imagined and rendered governable, yet mostly their methods lack the sensitivity to explore the functioning of complex ...relations between heterogeneous actors across places. The world's electric vehicle (EV) sector is booming, presaging a widely expected decarbonised future, associated with a restructuring of the automobile industry as anticipated by proactive players. This paper interrogates the spatiality and politics of the EV future‐making through disentangling the translocal practices involved in realising Tesla's Gigafactory in Shanghai (TGS) as assemblage. Informed by interviews with industrial insiders and opensource information in Chinese and English, the article finds that, first, TGS's imagined future embodies a multiplicity of interdependent but divergent expectations, the coherence of which underlies the formation and operation of the TGS assemblage by virtue of the concerted actions of its member‐actors. Second, such coherence is conditional as designed by TGS's central planners—namely, Tesla and Chinese government agencies at central and local levels—for their differentiated but overlapping interests. The TGS's imagined future is rendered actionable, enrolling other agents at certain moments, through anticipatory practices of regulatory changes, strategic arrangements interweaving land and financing, firm acquisition and intra‐firm reorganisation linking up places in and outside China, as well as the selection of key suppliers and technological use of critical raw materials. Concluding after a sketch on the TGS's ‘possible futures’ and broader implications, the paper contributes an assemblage‐informed approach to disentangle futuremaking practices and generates timely insights into the ‘future‐oriented’ restructuring of the automobile industry.
We examine how environmental violations affect the stock returns of the violating firm and how these financial implications then spread to industry peers. Volkswagen's diesel emissions scandal ...(Dieselgate) and the German automotive industry serve as a seminal case for the examination. Research often limits examinations of corporate environmental scandals to the primary event announcement. Yet the Dieselgate scandal exhibits a processual character that requires the examination of multiple events over time. We identify 10 Dieselgate events and employ event study methodology to detect abnormal stock reactions. Based on agency and signaling theory, the results indicate that Dieselgate has harmed the stock returns of Volkswagen and its industry peers substantially. Surprisingly, Volkswagen suffered financial damage only upon the initial event of Dieselgate. Subsequent events had significant effects only on industry peers. These findings contribute comprehensively to the research of environmental misconduct and provide valuable implications for practitioners.
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