No.173 Impacts of Kaizen Management on Workers: Evidence from Central America and the Caribbean Region

In recent years, there has been renewed interest in the productivity movement, and in particular the diffusion of Kaizen management as an approach to industrial development in developing countries. While a number of previous studies have evaluated the impact of the introduction of Kaizen on management practices and business performance, few studies have assessed its impacts on working conditions, wages, and employment, especially in the long term.

By collecting firm-level data, we were able to conduct a retrospective study on the impacts of the Kaizen project - a project implemented in eight countries in the Central America and the Caribbean Region by the Japan International Cooperation Agency. Ninety-four firms were selected to take part in the project based on their willingness to adopt Kaizen management practices. Using the same criteria, we selected 182 comparable firms in the same industries and countries to make up the comparison group.

Employing propensity score matching methods, this study found that the introduction of Kaizen improved working conditions and strengthened the social capital of workers. The willingness of managers to pay for Kaizen training increased after the training was completed, which suggests that it had a positive effect´ on the firm’s performance. We also found that managers and workers perceive the usefulness of Kaizen differently, which may lead to suggestions on ways to improve the design of future training programs.

Keywords: Management training, Impact evaluation, Willingness to pay, Small and medium enterprises, Central America and the Caribbean Region