The relationship between Lean Six Sigma and organizational performance: an empirical investigation

Abstract

The practices of organizing and managing operations has experienced an increased application of universal, systematic patterns of Lean Six Sigma joint implementation in many corporations currently (Shah et al., 2008). Despite this the relationship between firm performance improvement outcomes and Lean Six Sigma is not yet well researched or understood. Though much anecdotal evidence suggests a strong positive association of Lean Six Sigma with firm performance, a closer inspection of the literature reveals there has been no empirical research that confirms this relationship. Regardless, the current belief in the field that Lean Six Sigma can be associated with improved organizational performance is popular and widely accepted. Given the motivation to fill a perceived gap in our knowledge, as well as the need to meet the existing demand for greater insights into Lean Six Sigma from practitioners, the aim of the research is to develop insights into the relationship between Lean Six Sigma implementation and its organizational performance improvement outcomes. The value of this research is that it is the first survey-based research on this relationship. This is also the first attempt to compare the levels of performance outcomes between a Lean standalone model and a combined Lean Six Sigma program. Utilizing a survey research methodology, an instrument has been developed to survey and interview multiple manufacturing firms in the New Zealand context which have been identified as implementing Lean and/or a Six Sigma program. An excellent response rate of 75% was achieved and the study has received strong interest and support from businesses and consultancies in the New Zealand market. Multivariate data analysis technique, specifically, an independent sample t-test is used to investigate the differences in organizational performance between the two groups of firms; the Lean implementer group and the combined Lean Six Sigma implementer group. The research suggests that for SMEs Lean is a better choice than Lean Six Sigma as implementing Lean by itself is likely to lead to better business performance than implementing Lean Six Sigma.