International Journal of Production Economics 203 (2018) 301–310

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International Journal of Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Lean product development and lean manufacturing: Testing moderation T

effects
Giuliano Marodina,∗, Alejandro Germán Frankb, Guilherme Luz Tortorellac, Torbjørn Netlandd
a
University of South Carolina, 1014 Greene Street, 405L, Columbia, SC, United States
b
Universidade Federal do Rio Grande do Sul, Av. Osvaldo Aranha 99 - Sala LOPP 508 - 5º andar, Porto Alegre, RS, Brazil
c
Universidade Federal de Santa Catarina, Campus Trindade, Mailbox 476, Florianópolis, Brazil
d
ETH Zurich, Weinbergstrasse 56/58, 8092, Zurich, Switzerland

A R T I C LE I N FO A B S T R A C T

Keywords: Many companies allocate significant resources to implementing lean on the manufacturing shop floor, but fewer
Lean product development resources to implementing lean in the product development processes. Despite a rich literature on Lean
Lean manufacturing Manufacturing (LM) and a growing literature on lean product development (LPD), there is limited research on
Operational performance the relation between these two streams and their interaction effects on operational performance. This paper
draws on configurational theory to investigate the moderating role of LPD on the effects of LM on quality and
inventory performance. We used a survey instrument to collect responses from firms implementing lean across
their enterprises. We tested our hypotheses using ordinary least squares regression models with moderation tests.
We find that LPD practices positively moderate the effects of LM on quality performance. Although our research
concerning the same moderating effect on inventory turnover is inconclusive, we find that the implementation of
LPD has a direct and positive association with improvements in inventory turnover. Overall, our research
suggests that companies can get more out of their lean implementations if they pursue a systematic im-
plementation of both LPD and LM, rather than following the more common isolated approach.

1. Introduction
Firms that implement lean manufacturing seek to improve both
effectiveness and efficiency (Womack et al., 1990). They get more ef-
fective by increasing product quality and value from the perspective of
the customer. They get more efficient by minimizing internal and ex-
ternal variability and reducing all forms of waste in their information
and production flows. Although succeeding with lean requires an en-
terprise-wide perspective (Jones and Womack, 2017), lean im-
plementations are often conducted in a piecemeal manner without
sufficient integration across functional areas (Marodin and Saurin,
2013). In this paper, we investigate the effects on operational perfor-
mance improvement of implementing lean in two functional areas at
the same time. Specifically, we are interested in the moderating effect
of implementing both lean product development (LPD) practices and lean
manufacturing (LM) practices.
Most lean implementations begin with the application of lean
practices at the core value-adding processes (Marodin and Saurin,
2013). In manufacturing industries, for example, most of the value is
added on the factory shop floor, where inputs are transformed into
outputs according to market demand (Womack et al., 1990). LM prac-
tices enable the production of a larger variety of products at a lower
cost and higher quality while using fewer resources compared to tra-
ditional mass production practices.
Several studies have highlighted the positive association between
LM and measures of operational performance, such as quality improve-
ment (e.g. Dahlgaard and Dahlgaard-Park, 2006; Karim et al., 2008;
Netland and Sanchez, 2014; Negrão et al., 2017) and inventory turnover
(Demeter and Matyusz, 2011; Yang et al., 2011). However, although
LM practices on average lead to better operational performance, im-
plementing LM in isolation is not sufficient if firms seek the break-
through improvements characterizing a true lean enterprise (Jones and
Womack, 2017). To capture the full potential and value of lean, it is
critical to disseminate lean principles also to other organizational areas.
One way to increase value for the customer is to design better
products, and do so faster and in a more cost-efficient way (Clark and
Fugimoto, 1989). This is possible through the implementation of lean
principles in product development processes (Leon and Farris, 2011;

∗
Corresponding author.
E-mail addresses: gmarodin@moore.sc.edu (G. Marodin), frank@producao.ufrgs.br (A.G. Frank), gtortorella@bol.com.br (G.L. Tortorella),
tnetland@ethz.ch (T. Netland).

https://doi.org/10.1016/j.ijpe.2018.07.009
Received 20 March 2018; Received in revised form 22 June 2018; Accepted 5 July 2018
Available online 06 July 2018
0925-5273/ Published by Elsevier B.V.
G. Marodin et al.
Liker and Morgan, 2006; Rossi et al., 2017). Additionally, im-
plementing lean principles at the “design” stage of a product can help
reduce systemic problems within an organization that could otherwise
generate substantial waste during later stages (Browning, 2000; Rossi
et al., 2012). LPD considers the customer's perception of value in order
to create new and profitable value streams within the different orga-
nizational areas (Kennedy, 2013; Kumar et al., 2015).
Womack et al. (1990) advocated that companies should implement
lean principles across their enterprises. Yet, there is a lack of empirical
evidence concerning the effects of a cross-functional approach. Whereas
some authors suggest a positive association between LPD and opera-
tional performance, there is not much empirical evidence in the lit-
erature (c.f., Gautam and Singh, 2008; Leon and Farris, 2011; Tortorella
et al., 2016; Vinodh and Kumar, 2015). To the best of our knowledge,
there is no literature that empirically test the relationship between LM
and LPD and operational performance. Thus, in this paper, we em-
pirically investigate the moderating effect of LPD on the impact of LM on
quality performance and inventory turnover.
We draw on configurational theory to hypothesize that, when
companies use lean practices in both product development activities
and on the shop floor, LPD practices positively moderate the effect of
the LM practices on operational performance. We use regression ana-
lysis techniques to analyze survey data from 110 Brazilian firms that are
implementing lean in both manufacturing and product development.
Our findings show that the relationship between LM and quality is
positively moderated by LPD and that LPD has a direct positive effect on
inventory turnover. Overall, our results suggest that practitioners
should take advantage of a systemic lean implementation across func-
tional areas. Since lean implementation usually starts (and, un-
fortunately, also often ends) in a corner of the manufacturing shop
floor, many companies never realize the full potential of lean (Netland
and Ferdows, 2014).
This paper is organized as follows. In Section 2, we clarify the
conceptual background. In Section 3 we draw on configurational theory
to develop our hypotheses. Section 4 describes how we performed the
research by surveying firms implementing lean in Brazil and testing our
two hypotheses using an ordinary least squares regression. We present
the results of our research in Section 5 and discuss them in Section 6.
Finally, we conclude in Section 7.
2. Conceptual background
2.1. Lean manufacturing
Selecting appropriate practices to improve shop floor processes is a
major responsibility for production managers (Herron and Braiden,
2006). Bhasin and Burcher (2006) state that companies often begin
improvement activities by trying to implement a limited number of LM
practices throughout their organizations. These companies typically
realize that this approach leads neither to significant, nor to sustained,
improvements. Research on different LM practices has found that the
simultaneous application of practices provides the highest return on
investment (Cua et al., 2001; Shah and Ward, 2003, 2007). Hence, a
better and more consistent approach is to implement bundles of LM
practices concurrently (Shah and Ward, 2003).
In a literature review of 102 peer-reviewed articles, Marodin and
Saurin (2013) found that nearly every paper proposed a new or adapted
list of lean practices. For example, Shah and Ward (2003) proposed that
lean practices can be covered by four bundles: Just-in-Time (JIT), Total
Productive Maintenance (TPM), Total Quality Management (TQM), and
Human Resources Management (HRM). A few years later, the same
authors proposed ten operational constructs of lean practices, of which
three were supplier-related practices (“supplier feedback,” “JIT delivery
by suppliers,” and “supplier development”), one was a customer-related
practice (“customer involvement”), and six were internal practices
(“pull,” “flow,” “short setup times,” “productive maintenance,”
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International Journal of Production Economics 203 (2018) 301–310
“controlled processes,” and “employee involvement”) (Shah and Ward,
2007). Although there is no consensus concerning the list of LM prac-
tices, different proposals have a high level of overlap (Marodin and
Saurin, 2013). Whereas some studies take a supply chain perspective on
lean, we limit this study to internal LM practices, or lean shop floor
practices. Internal LM practices aim to reduce non-value added activ-
ities in the manufacturing operations of the company (Chavez et al.,
2015a; b).
LM practices are widely recognized as a means to improve compa-
nies’ operational performance (Shah and Ward, 2003). Nevertheless,
many studies report barriers for achieving effective implementations in
the long term (e.g. Bortolotti et al., 2015; Netland, 2016). A key chal-
lenge is that many companies still limit their lean implementation so-
lely to the factory floor, ultimately reducing the potential benefits of LM
implementation.
2.2. Lean product development
Companies that have succeeded in improving their manufacturing
shop floor processes often find that product design becomes a new bot-
tleneck (Letens et al., 2011; Reinertsen, 2009). Traditional approaches
to product development usually lead to a number of common problems,
such as project cost overruns and difficulty retrieving knowledge from
previous projects (Haque, 2003; Liker, 2004; Oppenheim, 2011). When
applied to product development, the lean approach leads to increased
flexibility, dynamism, and interaction between teams, as well as shorter
development lead times (Rossi et al., 2017; Wang et al., 2012). How-
ever, studies at Toyota have shown that implementing individual
techniques from the LPD toolbox will not transform a company's pro-
duct development processes (Thomke and Fujimoto, 2000). Further-
more, reported cases of successful LPD adoption—apart from Toyota
(e.g., Liker and Morgan, 2011; Lander and Liker, 2007; Sobek et al.,
1999; Sobek and Liker, 1998; Ward et al., 1999)—are still limited.
Although LPD gives organizations the capability to develop high-
quality products faster and more efficiently, many companies have yet
to recognize LPD as a potential source of competitive advantage (Jasti
and Kodali, 2015; Kreafle, 2011; Leon and Farris, 2011).
Leon and Farris (2011) performed an extensive literature review of
LPD. They found three major research areas in the LPD literature. The
first and most common area looks at how certain LPD practices affect
product development performance. Typical LPD practices include
“concurrent engineering,” “modularization,” “customer/supplier in-
volvement,” and “design for manufacturability.” When applied, these
practices can improve the product development process itself, strategies
for managing product/project portfolio, and the integration of suppliers
or customers (e.g. Doolen and Hacker, 2005; Hines et al., 2006;
Karlsson and Ahlstrom, 1996; Liker and Morgan, 2011; Oppenheim,
2011; Reinertsen, 2009; Sobek et al., 1998). A second area uses lean
principles to define performance measures for LPD; examples include
“development lead-time,” “engineering hours,” “project costs,” and
“ratio of developed products” (Krishnan and Ulrich, 2001). A third and
less common area focuses on LPD's contributions to the organization's
ability to learn from good and bad experiences of product development
and product launch. The research done in this domain emphasizes
knowledge creation and organizational learning in the long-term (e.g.
Nonaka and Takeuchi, 1995).
We contribute to the literature on LPD as a “best practice” (the first
area suggested by Leon and Farris, 2011). Specifically, we build on
Bartezzaghi et al. (1992), Karlsson and Ahlstrom (1996), Doolen and
Hacker (2005), and Cua et al. (2001) to propose practices commonly
associated with LPD. These are: (i) concurrent engineering; (ii); mod-
ularization and parts standardization; (iii) design for manufacturability;
and (iv) customer involvement in product development. Table 1 pre-
sents a definition of each LPD practices.
G. Marodin et al. International Journal of Production Economics 203 (2018) 301–310

Table 1
LPD practices, definitions, and exemplar references.
LPD practices Definition Exemplar references

Concurrent Engineering A systematic approach to the integrated and synchronal design of products. Sobek et al. (1999); Ha and Porteus (1995)
Product modularization and standardization A design process of the product structure in a set of assembled modules that can Takeishi and Fujimoto (2003)
be standardized and used across different product lines.
Design for Manufacturability Designing products in such a way that they are easy to manufacture, often Youssef (1994)
accomplished by a simplification of the product structure.
Customer involvement in product development Aligning product specifications to the customers' need, for example using Quality Cristiano et al. (2000); Akao and Mazur (2003)
Function Deployment or other methods where the customer provide feedback
during the product development process.

3. Hypothesis development
Configurational theory posits that organizational features — such as
processes, departments and structures — are interrelated and inter-
dependent (Miller, 1986). As such, configurational theory can be
helpful for understanding how cross-functional processes reinforce each
other and work effectively together. Previous literature has used con-
figurational theory to understand relationships between elements of
lean systems (e.g. De Treville and Antonakis, 2006; Shah and Ward,
2007) and supply chain integration (Flynn et al., 2010). According to
Miller (1992), configurational theory explores how fit in internal
complementarities can generate an integrated competitive advantage.
In this paper, we look at LM and LPD as interrelated processes
within the organization that can reinforce each other's effect on op-
erational performance. Configuration is defined as the alignment and
orchestration of processes into specific goals (Miller, 1996). Pursuing
both LM and LPD practices aligns the objectives of those two functional
areas into a shared objective of developing a more effective and effi-
cient organization (Womack et al., 1990).
3.1. Effects of LM and LPD on quality performance
materials used or bad tolerance limits. In such cases, LPD enables firms
to identify and tackle the root causes of these product development-
related issues. Hence, in line with configurational theory arguments,
LPD is likely to both preventively and correctively moderate and enhance
the effects of LM practices (Gautam and Singh, 2008).
In a preventive way, LPD tools (e.g. concurrent engineering, design
for manufacturability, and customer involvement) can limit assembly
and processing flaws on the shop floor even before a product goes to
production for the first time. This allows the shop floor to use LM
practices to concentrate on solving other problems that fall under its
domain and functional scope. In a corrective way, LPD practices can
facilitate solutions to product-related problems detected on the shop
floor. This way, LPD helps the product development activities be more
responsive in terms of making product changes. LPD speeds up the
product development process, reducing the lead-time from planning
and designing to production via prototyping. Considering the above
discussion in light of configurational theory, our first hypothesis is:
H1. : The positive effect of LM on quality performance improvement is
moderated by LPD, such that the positive effect is greater when LPD is
highly adopted.

In general, research shows that the adoption of LM practices is
positively associated with improvement in operational performance
(Marodin and Saurin, 2013). A common approach in the literature is to
measure operational performance broadly: including, for example,
quality, inventory turnover, delivery, productivity, and efficiency in
one performance construct (e.g. Shah and Ward, 2003; Demeter and
Matyusz, 2011; Chavez at al., 2015a, b; Marodin et al., 2016). Other
studies provide empirical evidence of the association between LM
practices and single performance dimensions, such as quality (e.g. Cua
et al., 2001; Netland and Sanchez, 2014). Because quality is a funda-
mental competitive capability (Ferdows and De Meyer, 1990), it is ar-
guably an essential measure of operational performance.
The objective of LM is to continuously improve manufacturing
processes. Unlike traditional approaches, LM encourages employees to
solve their own workplace problems and empowers them to stop pro-
cesses whenever they detect defects or abnormalities (Sim and Rogers,
2008; Vinodh and Kumar, 2015). LM practices facilitate the efficient
identification of problems, root-cause analysis, and problem solving
and prevention. Effective problem solving processes, in turn, are ex-
pected to increase quality.
Some problems, however, do not originate in shop floor manu-
facturing processes, but stem from ineffective product design process.
Hence, solving certain problems on the shop floor may require the
participation of people responsible for product development. LPD
practices would make it possible to solve these problems quicker. More
importantly, product development activities that operate according to
the four principles of LPD (see Section 2.2) may be able to avoid such
problems in the first place. For instance, poor product development
processes can sometimes result in product designs that cause assembly
difficulties or even high defect rates on the shop floor due to the
3.2. Effects of LM and LPD on inventory turnover
Inventory is a primary source of tied-up capital in industrial com-
panies; therefore, firms frequently try to reduce inventory. Inventory
itself is a main type of waste, but, more importantly, it also effectively
hides other types of wastes and inefficiencies (Liker, 2004).
Empirical evidence shows that the implementation of LM practices
can reduce inventory levels. Demeter and Matyusz (2011) found that
LM implementation is positively associated with reductions in raw
materials, work-in-process (WIP), and finished goods inventories. In-
deed, inventory reduction is advocated to be one of the most common
benefits of the implementation of LM practices (Schonberger, 2008).
For instance, the JIT principle (“pull production”) directly connects the
demand and supply of any two production processes and reduces their
shared inventory levels (Liker, 2004). Similarly, cellular manu-
facturing, which supports a seamless one-piece flow of materials,
eliminates inventories between process steps (Saurin et al., 2011).
Usually, investigations of the benefits associated with the use of LPD
tools are measured by product development metrics, such as product
development lead-time, project success, market performance, manu-
facturing flexibility, or product innovation (e.g. Koufteros et al., 2001;
Leon and Farris, 2011). Those metrics are all associated with a firm's
agility in changing its products to respond to customers' expectations.
As an alternative, Tortorella et al. (2016) empirically tested the effect of
LPD practices on the number of product development problems. How-
ever, there is still a lack of empirical evidence concerning the direct
association between LPD practices and operational performance me-
trics, such as inventory turnover.
Modularization and standardization play important roles in LPD by
reducing product complexities and variations (Fujimoto and Takeishi,

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G. Marodin et al.
2001). Reducing the number of components in a product directly affects
inventory by decreasing raw material inventory levels. Indirectly, these
LPD practices reduce variability on the shop floor, which reduces WIP
and finished goods inventories (i.e. reducing the bullwhip effect). Re-
duced variability also allows the shop floor to solve more problems,
which could further reduce inventory levels (Liker, 2004; Liker and
Morgan, 2011). The reduction of inventory realized through JIT man-
ufacturing is only possible when processes are stable (Liker, 2004). For
instance, a lower number of variants (due to the modularization of
products) facilitates the implementation of quick changeovers, since
there are fewer tools and combinations of changeover sequences to
standardize. This, in turn, allows firms to produce smaller batches,
which ultimately decreases throughput times and inventory levels.
Furthermore, better supplier integration supports more frequent de-
liveries and, hence, lower levels of raw materials inventories. Taken
together and following the reasoning of configurational theory, we
hypothesize:
H2. : The positive effect of LM on inventory turnover improvement is
moderated by LPD, such that the positive effect is greater when LPD is
highly adopted.
4. Research method
4.1. Sample selection and description
To test our hypotheses, we needed to collect data from companies
with different levels of experience with both LM and LPD. We collected
data from industrial participants of the 2014 IV Conference of Lean
Systems in Porto Alegre, Brazil. This conference is an annual event held
in Southern Brazil, one of the most industrialized regions of the
country. We targeted this sample because it constitutes a cross-industry
professional network of practitioners with different degrees of experi-
ence with both LM and LPD. We distributed a survey to the 470 at-
tendees of this conference through on-site questionnaires and e-mails
four weeks after the conference, with sub-sequent follow-ups.
In order to ensure face and content validity, we pre-tested the
survey instrument with three academics and three operations managers
who were implementing lean in their firms. The instrument was im-
proved according to their feedback and suggestions. We obtained 110
usable responses for the variables considered in this paper (an effective
response rate of 23.4%). Table 2 shows the composition of the sample.
4.2. Variable constructs
We have four main variables: LM implementation, LPD im-
plementation, quality improvement, and inventory turnover. All details
about the constructs are given in Appendix A. We measured LM prac-
tices by adapting Shah and Ward's (2007) six internally related dimen-
sions of a LM system (though one of these—LM6—was later excluded;
see Section 4.4). We reduced the constructs to single item questions,
following the same procedure of Azadegan et al. (2013), in order to
Table 2
Sample composition of survey responses (N = 110).
Industrial sector Automotive 25 23%
Metallurgical 16 15%
Food & Beverage 10 9%
Furniture 8 7%
Agroindustry 8 7%
Electronic 7 6%
Petrochemical 5 5%
Military weapons 4 4%
Industrial equipment 2 2%
Transportation systems 2 2%
Others 23 21%
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International Journal of Production Economics 203 (2018) 301–310
have one multi-item construct for LM implementation.
To measure LPD, we build on a multi-item scale construct for LPD
used by Doolen and Hacker (2005). The construct consists of three
items; concurrent engineering, modularization and part standardiza-
tion, and design for manufacturability. We supplement this scale with a
fourth common LPD item suggested in the literature: customer in-
volvement in product development. Hence, the latent construct of LPD
consists of four of the most common LPD practices.
The items related to LM and LPD practices were measured by asking
each respondent about the degree of adoption of each practice at the
respondent's plant on a five-point Likert scale (not adopted = 1, par-
tially adopted = 3, fully adopted = 5). For example, for “concurrent
engineering” (one of the LPD practices), we asked: “What is the degree
of adoption of concurrent engineering in your product development
process?”
Our construct for quality performance covered two performance
metrics used by Shah and Ward (2003); quality at the source (first time
through) and scrap and rework. Both of these metrics are considered
major sources of waste by the LM literature (Netland and Sanchez,
2014). Finally, since inventory turnover is a straightforward perfor-
mance metric, we simply measure it as “inventory turnover per year.”
The dependent variables, quality and inventory turnover, were also
measured using a five-point Likert scale. Specifically, we asked re-
spondents about the variation of each performance metric over the last
five years (worsened significantly = 1, no change = 3, improved sig-
nificantly = 5), following previous research testing the impact of LM on
operational performance (e.g. Shah and Ward, 2003).
We control for confounding effects of firm size, as it has been found
in some studies to influence the degree of adoption of lean practices and
operational performance (e.g. Cua et al., 2001; White et al., 1999; Shah
and Ward, 2003).
4.3. Sample and common method variance bias
To test for non-response bias, we used the extrapolation technique,
which is based on the assumption that late respondents are most similar
to non-respondents (Armstrong and Overton, 1977; Wagner and
Kemmerling, 2010). Following this approach, we tested for non-re-
sponse bias using Levene's test for equality of variances and a t-test for
the equality of means between early respondents (respondents at the
conference, n1 = 70) and late respondents (respondents of the e-mails
and follow-ups, n2 = 39). We applied this test for all variables (ques-
tionnaire items) comprising the different constructs of our model (see
Appendix A). The results indicated no differences (p > 0.01) in means
or variations between the two groups. Thus, we found no statistical
reason to believe that our sample is significantly different from the rest
of the population.
Single respondents can be another important source of common
method bias, particularly when the same person provides both the de-
pendent and independent variables with psychometric scales that re-
present their opinions, and not actual data (Podsakoff et al., 2003).
Thus, we follow several techniques suggested by Podsakoff et al. (2003)
Respondent's profile Operations Director 12 11%
Operations Manager 20 18%
Operations Supervisor 10 9%
Manufacturing engineer 32 29%
Other operational function 36 33%
Company's size Small (< 100 employees) 48 43%
Medium (100–500 emp.) 41 38%
Large (> 500 employees) 21 19%
G. Marodin et al.
Table 3
Correlation, mean, and standard deviation of LM, LPD and performance me-
trics.
Mean S.D. LM LPD Quality Inventory
LM 3.10 0.908 – To assess discriminant validity, we first followed a procedure re-
LPD 2.84 0.914 0.605** –
Quality 3.77 0.693 0.286** 0.144 –
Inventory 3.16 1.041 0.502** 0.514** 0.142 – AVE for each construct should be greater than the squared root of the
Cronbach's alpha 0.815 0.794 N.A. N.A.
**p < 0.01; N.A.: not applicable.
as remedies for common method bias. Regarding question formulation,
we positioned the questions addressing the dependent variables first in
the questionnaire and physically far from those addressing independent
variables. We included midpoint labels in the scales. A statement as-
suring the respondents’ anonymity and emphasizing that there were no
right or wrong answers was included at the beginning of the ques-
tionnaire. In addition, the respondents were appropriate key informants
for the collected data, since all of them were directly involved in lean
implementations in their organizations.
We applied Harman's single-factor test with an exploratory factor
analysis, which is one of the most widely used exploratory methods to
check for common method bias (Podsakoff et al., 2003). A Harman's test
with all independent and dependent variables resulted in a first factor
that included 26% of the variance. Since we found no single factor
accounting for the majority of the variance in the model, Harman's test
suggests that common method variance might not be a problem. Ad-
ditionally, we followed the Single-method-factor approach procedure as
suggested by Podsakoff et al. (2003, 2012), when the source of bias is
not identified a priori. That consist in including a single common
method variance factor and evaluating the changes of the coefficients of
each item in the model. We performed a confirmatory factor analysis
(CFA) of the two constructs (LM and LPD) and their respective items
with and without the inclusion of the single common factor. The dif-
ference between the two models was below the 0.2 threshold for the
coefficient differences, as suggested by Doluca et al. (2018). The pro-
cedural and statistical remedies indicate that common method variance
is not a concern in our research.
4.4. Construct validity and reliability
For the multi-item constructs (LPD and LM), we first used confi-
rmatory factor analysis (CFA) to confirm unidimensionality of the
constructs. Because of the sample size constraints, we estimated two
separate CFA models, as suggested by Bentler and Chou (1987): one for
each single construct and the other for the complete model of exo-
genous/moderator constructs (LM and LPD). As fit indicators, we used
the root mean square error of approximation (RMSEA), the comparative
fit index (CFI), and the Tucker-Lewis index (TLI). The results indicated
that all models fit adequately regarding the respective threshold values
proposed by Hair et al. (2009) (RMSEA ≤ 0.08, CFI ≥ 0.9 and
TLI ≥ 0.9); although the chi-square test was non-significant, which is
expected for samples with less than a dozen variables (Hair et al.,
2009). For the single construct analysis, the CFA showed the following
parameters: LM (χ2/df = 5.9, χ2 p-value = 0.207; RMSEA = 0.066;
CFI = 0.991; TLI = 0.976); LPD (χ2/df = 10.69, χ2 p-value = 0.298;
RMSEA = 0.014; CFI = 0.998; TLI = 0.999). The single construct
model for the independent variables showed the following parameters:
LPD and LM (χ2/df = 36.02, χ2 p-value = 0.07; RMSEA = 0.063;
CFI = 0.971; TLI = 0.958). In both analyses, only one item was ex-
cluded from the LM construct (see Appendix A, LM6) because it pre-
sented a factor loading below the minimum threshold (factor
loading > 0.5, p-value < 0.01) at the CFA.
Convergent validity was also tested using the Fornell and Larcker's
(1981) criteria, which considers the average variance extracted (AVE)
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International Journal of Production Economics 203 (2018) 301–310
and composite reliability (CR). All constructs exceeded the re-
commended values for good convergent validity (i.e. AVE > 0.5 and
CR > 0.7) (Hair et al., 2009); LM (AVE = 0.870; CR = 0.970) and LPD
(AVE = 0.883; CR = 0.968). Both constructs' reliabilities exceeded the
acceptable Cronbach's alpha level of 0.7.
commended by Fornell and Larcker's (1981). According to them, the
bivariate correlations between the two constructs. We indeed found
that the square root of the AVE for each construct was greater than the
correlation between LM and LPD, thus confirming the discriminant
validity of the constructs. Second, the bi-variate correlation between
LM and LPD is also lower than Cronbach's alpha for each construct,
which also indicates discriminant validity, according to Crocker and
Algina (1986). The correlation matrix for all four constructs (LM, LPD,
quality, and inventory turnover), including their respective means,
standard deviations, and Cronbach's alphas, is shown in Table 3. The
full questionnaire items and their factor loadings are shown in
Appendix A.
5. Results
We performed a set of OLS hierarchical linear regression models to
test the theoretical models for the two proposed dependent variables. In
the regression models, we used the composite scores (means of items)
for each variable. Moreover, before calculating the interaction term
(LM x LPD) to represent the moderator variable in the regression
equation, we used standardized values for the focal predictor and
moderator to address multicollinearity (Aiken and West, 1996). Our
results report the unstandardized coefficients, since the scales were
standardized before the analysis (meaning that the unstandardized
coefficients represent a standardized effect) (Goldsby et al., 2013). We
also verified that the data meet the requirements for normality, line-
arity, and homoscedasticity for the regression analysis (Hair et al.,
2009). Normality was analyzed by means of residuals. For linearity, we
plotted partial regressions for the independent and moderating vari-
ables and conducted a visual verification. Similarly, homoscedasticity
was examined visually in plots of standardized residuals against pre-
dicted value. All three criteria fulfil the required conditions for an OLS
regression.
The regression results are shown in Table 4. In the hierarchical
process, we first analyzed only the effects of the control variables on
each dependent variable (quality and inventory turnover). Then, we
added the direct effects of LM and LPD on the independent variables.
Finally, we added LPD as a moderator effect (interaction term). The
variance inflation factors (VIFs) in the regressions models were all
lower than 2.0, suggesting that multicollinearity was not a concern.
As shown in Table 4, for the first dependent variable—quality per-
formance—the additions of the independent variables (Model 2) and
the interaction term (Model 3) produced incremental improvements in
the model (i.e. the change in R2 was significant in both stages). As a
result, the full model for quality was significant (F-value = 4.136,
p < 0.01) and explained 10.4% of the variance. This model shows that
LM has a significant positive influence on quality performance
(b = 0.204; p < 0.01) and that this relationship is positively moder-
ated by the adoption of LPD practices (b = 0.162; p < 0.05).
This interaction effect is illustrated in the slope of Fig. 1, where low
and high LPD implementation were defined based on the middle point
of the five-point Likert scale used for the item measurements. The re-
gression for low level of LPD of the slope (Fig. 1) was significant
(F = 15.631, p < 0.001), explaining 21.6% of the variance in the
predicted value; while its association to the predicted value of quality
performance showed a standardized significant coefficient (b = 0.481)
at p < 0.001. On the other hand, the regression for high level of LPD of
the slope (Fig. 1) was strongly significant (F = 177.128, p < 0.001),
explaining 76.5% of the variance in the quality performance predicted
G. Marodin et al. International Journal of Production Economics 203 (2018) 301–310

Table 4
Results of hierarchical regression analysis a.
Quality Inventory turnover

Model 1 Model 2 Model 3 Model 1 Model 2 Model 3

Company size (Control) −0.218 −0.312 −0.404** −0.167 −0.313* −0.286

LM 0.336*** 0.292*** 0.324*** 0.337***
LPD −0.049 −0.020 0.328*** 0.320***
LM × LPD interaction 0.162** −0.048
F-value 1.113 4.044*** 4.136*** 0.649 18.262*** 13.746***
R2 0.010 0.104 0.137 0.006 0.343 0.346
Adj. R2 0.001 0.078 0.104 −0.003 0.324 0.321
Change in R2 0.093*** 0.034** 0.337*** 0.003

n = 110.
*p < 0.1.; **p < 0.05; ***p < 0.001.
a
Unstandardized regression coefficients are reported.

value (b = 0.877, p < 0.001). In conclusion, the results support Hy-
pothesis 1, suggesting that LM practices are positively associated with
quality improvement and that relationship grows stronger when the
firm also implements LPD practices.
Regarding our second dependent variable—inventory turnover—we
found no significant evidence of a moderating effect of LPD on LM.
Though the addition of the independent variables (Model 2) produced
incremental improvements in the model (i.e. the change in R2 was
significant in both stages), the addition of the interaction term (Model
3) produced no significant changes. Therefore, the final model adopted
was Model 2 (F-value = 18.262, p < 0.01), which explained 32.4% of
the variance. This model shows that both LM and LPD are in-
dependently and significantly positively associated with inventory
turnover improvement (b = 0.337; p < 0.01 and b = 0.342;
p < 0.01, respectively). However, both LM and LPD have only direct
effects on inventory turnover improvement; we found no evidence of a
moderation effect between them. Although our hypothesis H2 could not
be supported, the evidence that LPD is positively associated with
inventory turnover is an interesting finding on its own, which indicates
direct or potential mediating effects.
We verified the possibility of LPD mediating effects of LM on
Inventory on a post hoc analysis, which was not planned a priori in our
theoretical model. We followed the 3-steps Baron and Kenney's (1986)
and found evidences of a partial mediating effect. The first step shows a
significant OLS regression model when using LM as an independent
variable and LPD as a dependent variable (F-value = 30.643,
p < 0.01, R-square = 0.366, and Adjusted R-square = 0.354), with a
significant beta for LM (b = 0.607, p < 0.01). The second step was to
run another OLS regression model with Inventory as the dependent
variable and the LM as independent variable, adding control variable
for company size, which resulted also in a significant regression model
(b = 0.523, F-value = 20.061, p < 0.01, R-square = 0.275, and Ad-
justed R-square = 0.261). When comparing the former model with the
Model 2 on Table 4, the beta coefficient of LM is reduced from 0.523 to
0.324 when including LPD as a third independent variable. By fol-
lowing Baron and Kenney's (1986) recommendation to test for

Fig. 1. LPD positively moderates the effect of LM on quality performance.

306
G. Marodin et al.
mediating effects, we concluded that LPD partially mediates the effect
of LM on Inventory turnover.
6. Discussion
We have investigated the moderating effect of LPD practices on the
impact of LM on performance improvements in quality and inventory
turnover. LM practices are popular and widely disseminated as a way to
improve operational performance by reducing inventory and increasing
quality levels. Although the adoption of LM practices usually increases
operational performance (e.g. Negrão et al., 2017; Shah and Ward,
2003), breakthrough improvements that characterize a true lean en-
terprise are rare. To address systemic problems within an organization,
it is essential to disseminate and adapt lean principles and practices in
other areas, such as product development (Browning, 2000; Rossi et al.,
2012). This perspective finds theoretical support in configurational
theory (e.g. Miller, 1986, 1992, 1996). By analyzing a data set of 110
firms located in Southern Brazil, we explored the moderating effect of
LPD on the impact of LM practices on improvements in quality (H1) and
inventory turnover (H2).
Our results confirmed H1, indicating that LPD positively moderates
the effect of LM practices on quality improvement. In other words, LM
practices have a stronger impact on quality performance in firms that
are also adopting LPD practices than in firms that are not using LPD
practices. Furthermore, LM practices alone have a positive impact on
quality improvement, as shown in several previous studies (e.g., Negrão
et al., 2017; Netland and Sanchez, 2014). It is worth noting that the
direct association between LPD and quality was not significant. A
possible explanation for that is that LPD does not improve quality
without the implementation of LM practices. Indeed, LM reduces pro-
cess variability by standardizing work methods to ensure the avail-
ability of equipment, materials and trained workers (De Treville and
Antonakis, 2006; Shah and Ward, 2007). Without such stability, it
would be more difficult to find root causes and improvement oppor-
tunities for quality problems that can be solved during product devel-
opment and product improvement processes. This possible explanation
is aligned with arguments from configurational theory and our previous
suggestions about how LPD positively moderates the effect of LM
practices on quality improvement both preventively and correctively.
Our results do not support the second hypothesis (that LPD mod-
erates the effect of LM on inventory turnover improvement). However,
we found that LPD has a direct positive association with improvements
in inventory turnover. Our results suggest that practices like design for
manufacturability, modularization, and concurrent engineering help
reduce inventory levels. Since most of the literature on LPD focuses on
assessing the impact of LPD practices on product development metrics,
evidence of a direct effect of these practices on inventory turnover is a
new contribution to the LPD literature. We speculate that firms that use
LPD practices experience fewer problems at the product launch phase,
which may allow them to implement smaller inventory buffers (to ac-
count for potential problems). The implementation of LPD practices
may reduce the complexity of components and process steps, which
may—in turn—lower inventory levels.
A possible explanation for not finding empirical evidences to sup-
port our second hypothesis could be the existence of a mediating effect
of LPD on the impact of LM on Inventory, and not a moderation effect,
as assumed a priori. It is possible that companies that implement LM
become more aware of the problems hidden by high levels of inventory
(Liker, 2004), while they may also recognize that some root causes of
higher inventory levels actually originate at early product development
stages and can be solved by implementing LPD practices. For example,
the need for close involvement with a customer or for the standardi-
zation of a part may stem from the shop floor's need to reduce inventory
by reducing the variety of components in stock. Firms often begin im-
plementing LM on the shop floor, then increase the depth and spread of
the use of lean practices to other areas (Netland and Ferdows, 2016),
307
International Journal of Production Economics 203 (2018) 301–310
such as product development.
To delve deeper, we performed a post hoc tests that showed that LPD
partially mediates the effect of LM on Inventory. These results show
that LM may have a direct effect on both LPD and Inventory, and that
LM has an indirect effect on Inventory, mediated by LPD. This means
that, instead of LPD facilitating the association between LM and in-
ventory turnover, it may work as an enabler for both. In other words,
LPD may not be a boundary condition, as we hypothesized, but possibly
boost the reduction of inventories. It is worth noting that it can also be
that there are both mediation and moderation effects occurring si-
multaneously, and that the moderation effect was not strong enough to
be captured in our data. Thus, we suggest that future research in-
vestigate and theorize if and why LPD can mediate the effect of LM on
inventory turnover.
A further possible explanation could be that the moderation effect of
LPD on LM for inventory reduction only occurs when companies
achieve a higher maturity of implementation of both LPD and LM (and
that this effect is different from quality performance). Indeed, Brazilian
companies have on average lower levels of lean implementation com-
pared with companies from many developing countries (such as United
States, Japan and Germany) (Marodin et al., 2016). In addition, there is
a time lag (hysteresis) between implementing LM and LPD and realizing
improvements in operational performance. A minimum of 2–3 years is
suggested as the time required for realizing a significant impact of LM
on operational performance (e.g., Netland and Ferdows, 2016; Marodin
et al., 2016). In addition, one should expect that several product de-
velopment cycles are needed for the moderation effect of LPD on LM's
effect on operational performance to materialize. This may of course
take several years.
It is worth noting that both Model 3 for Quality and Model 2 for
Inventory showed a significant and negative impact for the control
variable “firm size” on operational performance (Table 4). These results
find some support in the literature. For example, Shah and Ward (2003)
also found a significant and negative impact of firm size on operational
performance. A likely explanation is that smaller firms are able to more
quickly translate LM and LPD implementation into improved perfor-
mance.
To summarize, our results show that LM practices have the potential
to improve both inventory turnover and quality performance, and that
LPD practices positively moderate the impact of LM on quality perfor-
mance, as well as improve inventory turnover directly.
7. Conclusions
This paper has investigated the moderating effect of LPD on the
relationship between LM practices and operational performance. We
found that LPD practices positively moderate the effect of LM practices
on quality performance improvement. The findings concerning the
same moderating effect on inventory turnover were inconclusive;
however, we found that the implementation of LPD has a direct and
positive association with improvements in inventory turnover, with a
possible moderating effect of LM on LPD implementation. Overall, in
line with configurational theory, our research suggests that lean im-
plementation will have a greater effect on operational performance
improvement if the implementation spans across both manufacturing
and product development areas.
7.1. Limitations
This research is subject to the usual limitations of single-respondent
survey research. First, although we took measures to reduce concerns of
common method bias, our data set remains limited. We therefore en-
courage future empirical research to test the effects of cross-functional
lean implementation with larger datasets. Second, opinion-based sur-
veys face limitations related to data subjectivity. Therefore, testing the
identified relationships with real operational performance data is
G. Marodin et al. International Journal of Production Economics 203 (2018) 301–310

another promising path for future research. Third, we developed the
LPD multi-item construct based on an extensive literature review, but
we acknowledge that multi-layer and more complete measurement in-
struments for LPD would be better. Additionally, we limited our models
to testing the impacts of LPD and LM on the operational performance
metrics of inventory and quality. Thus, future studies could investigate
whether similar relationships occur when other performance metrics,
such as unit cost or productivity, are used.
It is worth noting that there is potential for a mediating effect be-
tween LPD, LM, and operational performance. However, since the lit-
erature and assumptions used to develop our hypotheses suggested a
moderating effect, we did not focus our study on concurrent models,
although our post hoc analysis demonstrated it. Our additional tests
suggest that the effect of LM on inventory reduction could be partially
mediated by LPD. This deserves further investigation in future works,
especially due to the fact that many companies only implement LM
without using practices of LPD.
7.2. Implications for research and practice
Our findings have implications for both research and practice. From
a theoretical perspective, the results emphasize the need to understand
the systemic relationships among lean implementations in all aspects of
a business, not only on the factory floor (Jones and Womack, 2017;
Karlsson and Ahlstrom, 1996). For this purpose, configurational theory
can serve as useful theoretical perspective. Whereas prior research has
found support for relationships among different LM practices and
bundles (e.g. Saurin et al., 2011; Shah and Ward, 2003), this research
focused on the under-investigated relationships between LM practices
and other aspects of the business (in our case, LPD).
For practitioners, a first implication is that the joint implementation
of LPD and LM yields a better effect on quality improvement than the
implementation of LM alone. Hence, we advise managers to follow a
cross-functional approach to lean implementation. Lean should not be
exclusively used at the manufacturing shop floor. Focusing all of their
resources on the LM is not the most efficient way to improve opera-
tional performance. Instead, managers should align initatives to im-
plement both LM and LPD.
Second, our study shows that LPD has direct effects on operational
performance metrics, such as inventory levels, and not just on product
development metrics, which have been the focus of the majority of
previous research on product development. Although we found strong
direct effects of both LPD and LM on inventory reduction (c.f. beta
values in Inventory Model 2, Table 4), further investigation revealed
that LPD partially mediates the effect of LM on inventory. Perhaps there
are two implications of this mediation effect: Firstly, an increase of the
depth of LM implementation on the shop floor is likely to spread lean
principles to other parts of the organization, such as product develop-
ment. Secondly, an increase in LPD implementation can help reduce
inventory levels, partly due to LPD implementation itself and partly due
to interaction effects with LM on the shop floor.

Appendix A. Questionnaire items

1. Questionnaire items used to assess the level of implementation of LM practices: Implementation level on a five-point Likert scale: 1 – not adopted
to 5 – fully adopted. Construct validity: RMSEA (0.066), CFI (0.991), TLI (0.976), Cronbach's alpha (0.815).

Lean production shop floor practices (Adapted from Shah and Ward, 2007) Factor loadings
CFA

Pull Production - Facilitate JIT production including kanban cards which serves as a signal to start and stop production 0.544
Quick Setup - Reduce process downtime between products changeovers 0.789
Total Productive Maintenance - Address equipment downtime through total productive maintenance and thus achieve a 0.729
high level of equipment availability
Production Flow - Establish mechanisms that enable an continuous flow of products 0.535
Employees Involvement - Employees' role in problem solving, and their cross functional character 0.728
Controlled Processes - Ensure each process will supply defect free units to subsequent process [Excluded]

2. Questionnaire items used to assess the level of implementation of LPD practices: Implementation level on a five-point
Likert scale: 1 – not adopted to 5 – fully adopted. Construct validity: RMSEA (0.014), CFI (0.998), TLI (0.999), Cronbach's alpha
(0.794).

Lean product development practices (Adapted from Doolen and Hacker, 2005) Factor loadings
CFA

Customers are involved in product development 0.670

Concurrent engineering 0.703
Modularization and parts standardization 0.710
Design for manufacturability 0.747

3. Questionnaire items used to assess the performance level of quality: Performance

level on a five-point Likert scale: 1 – very low to 5 – very high.

Performance metric (Shah and Ward, 2003) Factor loadings

CFA

Scrap and rework N.A.

Quality at the source (first-time-through) N.A.

308
G. Marodin et al.
4. Questionnaire item to assess the performance level of inventory turn-
over: Performance level on a five-point Likert scale: 1 – very low to 5 – very high.
Performance Metric (Kaynak, 2003)
Inventory turnover per year
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