The impacts of technology and work organization innovations on the automotive industry’s spatial structure: empirical evidence from Volkswagen

Abstract

During its history, automotive production developed from craft production into a globally organized industry with an international production and distribution network. During the past 140 years, since Nikolaus August Otto’s patent of the four-stroke internal combustion engine, it became obvious that innovations in technology and work organization play key roles in the sector’s structural transformation and that decisions about them determine their vertical integration. Such innovations also include the distribution of competencies affecting the vertical and horizontal resource allocation.

This study analyses this structural transformation, describes in detail its most important stages and highlights their impact on the spatial production patterns. As a part of this, it examines the relationship between Fordist mass production and the evolution of international production, considered to be an early phase of globalization in the automotive industry. However, the greatest impact on the industry’s worldwide organization and geographical distribution was not mass production but rather lean production methods originating from Japan before the Second World War. Nevertheless, the global adaptation of these changes emphasizing the corporate organizational system and in-company relations had to wait until the 1980s. This also changed the relationship between the parent company and its subsidiaries and, in turn, the spatial pattern of automotive production. The study analyses the technology outsourcing and modularization processes and the work organization innovations introduced during the period, explaining their consequences for geographical production patterns.

In addition to the historical overview, the above insights are also confirmed via the investigation of Volkswagen’s development between 1960 and 2010. The firm’s internationalization process during this period work organization and technological innovations had a significant impact on the company’s spatial organization. Through the expansion of opportunities (i.e., developments in technology and labor organization, information technology and communication developments), the geographic structure of Volkswagen’s operation underwent significant change. Finally, the geographical transformations also modified the global automotive industry’s value chain configurations resulting in its current shape.