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The History of Progress Functions as a Managerial Technology

  • John M. Dutton (a1), Annie Thomas (a2) and John E. Butler (a3)
Abstract

In this article, Professors Dutton, Thomas, and Butler trace the sixty-year history of a major managerial technology—the progress function—from its discovery in post-World War I airplane manufacture to its post-World War II popularity among management consultants. By statistically analyzing the large number of progress function studies, they demonstrate that its investigation has become balkanized by academic discipline, and that applied researchers have frequently ignored the contingencies stressed in the leading theoretical studies. Their article is thus a revealing example of how social scientific concepts get translated into business practice.

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1 Dutton John M. and Starbuck William H., “Diffusion of an Intellectual Technology,” in Communication and Control in Society, ed., Krippendorf Klaus (New York, 1979), 491511; Kimberly John R., “Managerial Innovation,” in Handbook of Organizational Design, ed. Nystrom Paul C. and Starbuck William H. (New York, 1981), 1: 84104.

2 Uselding Paul, “Business History and the History of Technology,” Business History Review 54 (Winter 1980): 443–52.

3 Alchian Armen, “Reliability of Progress Curves in Airframe Production,” Econometrica 31 (October 1963): 679–93 (see also, Rand Report 260–1, 1950); Asher Harold, Cost-Quantity Relationships in the Airframe Industry, Rand Report 291 (Santa Monica, 1956); Conway R. W. and Schultz A., “The Manufacturing Progress Function,” Journal of Industrial Engineering 10 (January-February 1959): 3954; Hirsch Werner Z., “Manufacturing Progress Functions,” Review of Economics and Statistics 34 (May 1952): 143–55.

4 John M. Dutton and Annie Thomas, “Progress Functions and Production Dynamics,” working paper, Graduate School of Business Administration, New York University (1982).

5 Boston Consulting Group, Perspectives on Experience (Boston, 1970).

6 Alchian, “Reliability of Progress Curves,” 679–93; Conway and Schultz, “Manufacturing Progress Function,” 39–54; Nadler J.G. and Smith W.D., “Manufacturing Progress Functions for Types of Processes,” International Journal of Production Research 12 (June 1963): 115–35.

7 Arrow Kenneth J., “The Economic Implications of Learning by Doing,” Review of Economics and Statistics 29 (June 1962): 115–73; Hirsch, “Manufacturing Progress Functions,” 143–55; Wright Theodore P., “Factors Affecting the Cost of Airplanes,” Journal of Aeronautical Science 3 (February 1936): 122–28.

8 Marshall Alfred, Principles of Economics (London, 1922); Hicks J.R., Value and Capital (Oxford, 1946).

9 Litterer John A., “Systematic Management: The Search for Order and Integration,” Business History Review 35 (Winter 1961): 461–76; Nelson Daniel, “Scientific Management, Systematic Management and Labor, 1880–1915,” Business History Review 48 (Winter 1974): 479500; Taylor Frederick W., Principles and Methods of Scientific Management (New York, 1911).

10 Abramovitz Moses, “Resource and Output Trends in the United States Since 1870,” American Economic Review 46 (May 1956): 762–82; Arrow, “Economic Implications,” 155–73; Chenery H.B. and Clark P.G., Interindustry Economics (New York, 1959).

11 Boston Consulting Group, Perspectives, Cheney William F., “Strategic Implications of the Experience Curve Effect for Avionics Acquisitions by the Department of Defense” (Ph.D. diss., Purdue University, 1977).

12 Chandler Alfred D., Strategy and Structure (Cambridge, Mass., 1962); Jelinek Mariann, “Toward Systematic Management: Alexander Hamilton Church,” Business History Review 54 (Spring 1980): 6379; Litterer, “Systematic Management,” 461–76; Nelson, “Scientific Management,” 479–500.

13 Johnson H. Thomas, “Management Accounting in an Early Multidivisional Organization: General Motors in the 1920s,” Business History Review 52 (Winter 1978): 490517.

14 Gantt Henry L., Work, Wages and Profit (New York, 1910); Gilbreth Frank, Primer of Scientific Management (New York, 1912); Jelinek, “Toward Systematic Management,” 63–79; Nelson, “Scientific Management,” 479–500; Taylor Frederick, Principles and Methods of Scientific Management (New York, 1911); Turner Wayne C., Mize Joe H., and Cuse Kenneth, Introduction to Industrial and System Engineering (Englewood Cliffs, N.J., 1978).

15 Uselding, “Business History,” 443–52.

16 Sloan Alfred, My Years With General Motors (New York, 1965). A biography of T.P. Wright can be found in The National Cyclopedia of American Biography, 4:297–98; for a biography of D.R. Berlin see Walter H. Waggoner, “Don R. Berlin, 83, a Designer of Aircraft for World War II,” New York Times, 8 June 1982, p. 131, D20.

17 Mowery David C. and Rosenberg Nathan, “Technical Change in the Commercial Aircraft Industry, 1925–1975,” Technological Forecasting and Social Change 20 (1981): 347–58.

18 Freudenthal Elizabeth E., The Aviation Business (New York, 1940).

19 Ibid., 32–34.

20 Wright, “Factors Affecting the Cost of Airplanes,” 122–28.

21 Ibid., 122–28.

22 Such simultaneity was the case, for instance, with oxygen, the incandescent electric light bulb, and computer simulation of highway traffic. See Broad William J., “Rival Centennial Casts New Light on Edison,” Science 204 (6 April 1979): 3236; Dutton and Starbuck, “Diffusion,” 491–511; Hounshell David A., “Two Paths to the Telephone,” Scientific American 244 (June 1981): 157–63; Sahal Devendra, “The Nature and Significance of Technological Cycles,” International Journal of System Science 2 (1980): 9851000.

23 Cheney, Strategic Implications, 48.

24 Rohrbach Adolph, “Economical Production of All-Metal Airplanes and Sea Planes,” Journal of the Society of Automotive Engineers 20 (1927): 5766.

25 Asher, Cost-Quantity Relationships, 1–14; Cheney, Strategic Implications 44–88; Wooley Kenneth M., “Experience Curves and Their Use in Planning” (Ph.D. diss., Stanford University, 1972), 2935.

26 Brief descriptions of the career of Wright are in The National Cyclopedia of American Biography, 4:297–98, and Current Biography (New York, 1965), 694–96.

27 New York Times, 22 August 1970, 23.

28 Uselding, “Business History,” 445.

29 Cleveland Reginald M. and Graham Frank P., “Aviation Manufacturing Today in America,” in The History of the American Aircraft Industry, ed., Simonson G. R. (Cambridge, Mass., 1968), 142–59.

30 Source Book of World War II Basic Data (Wright Field, Dayton, Ohio, 1947).

31 Asher, Cost-Quantity Relationships; Searle A.D. and Goody C., “Productivity Changes in Selected Wartime Shipbuilding Programs,” Monthly Labor Review 61 (December 1945): 1132–47.

32 Guibert P., Le Plan de Fabrication Aeronautique (Paris, 1945).

33 Baloff Nicholas, “Startups in Machine-Intensive Production Systems,” Journal of Industrial Engineering 27 (January 1966): 2532; Baloff Nicholas, “Extensions of the Learning Curve—Some Empirical Results,” Operational Research Quarterly 22 (December 1971): 329–40; Conway and Schultz, “The Manufacturing Progress Function,” 39–54; Hirsch, “Manufacturing Progress Functions,” 143–55; Nadler and Smith, “Manufacturing Progress Functions,” 115–35; Preston L.E. and Keachie E.C., “Cost Functions and Progress Functions: An Integration,” American Economic Review 54 (March 1966): 100107.

34 Alchian Annen, “Costs and Outputs,” The Allocation of Economic Resources: Essays in Honor of B.F. Haley, ed., Abramovitz M., (California, 1959), 2340; Arrow, “Economic Implications,” 166–70; Hirschleifer Jack, “The Firm's Cost Function: A Successful Reconstruction?Journal of Business 35 (July 1962): 235–55.

35 Black J., “The Technical Progress Function and the Production Function,” Economica 29 (1962): 166–70; Preston and Keachie, “Cost Functions and Progress Functions,” 100–107; Oi Walter Y., “The Neoclassical Foundations of Progress Functions,” Economics Journal 78 (September 1967): 579–94; Rapping Leonard, “Learning and World War II Production Functions,” Review of Economics and Statistics 48 (1957): 8186; Rosen Sherwin, “Learning by Experience as Joint Production,” Quarterly Journal of Economics 86 (August 1972): 366–82; Sheshinski Eytan, “Tests of the ‘Learning By Doing’ Hypothesis,” Review of Economics and Statistics 49 (November 1967): 568–78; Spence A.M., “The Learning Curve and Competition,” Bell Journal of Economics 12 (Spring 1981): 4970.

36 See, for example, Andress Frank J., “The Learning Curve as a Production Tool,” Harvard Business Review 32 (January-February 1954): 8791; Boston Consulting Group, Perspectives; Clark Stuart, “Applying Learning Curves to the Maintenance Force,” Plant Engineering 21 (1967): 126–27; Greenberg Leo, “The Measurement of Work-Accident Experience in the American Petroleum Industry,” ASSE Journal 15 (1970): 1113; Hirschmann Winfred B., “Profit from the Learning Curve,” Harvard Business Review 42 (January-February 1964): 125–39; Howell Sidney D., “Learning Curves for New Products,” Industrial Marketing Management 9 (1980): 9799; Imhoff Eugene A., “The Learning Curve and its Applications,” Management Accounting 59 (February 1978): 4446; Rapp William V., “Strategy Formulation and International Competition,” Columbia Journal of World Business (Summer 1973): 98112; Rice James W., “Throw Prices a Curve!Purchasing Magazine 69 (1970): 4749; Yelle Louis E., “Estimating Learning Curves for Potential Products,” Industrial Marketing Management 5 (1976): 147–54.

37 See, for example, Conley Patrick, “Experience Curves as a Planning Tool,” IEEE Spectrum 7 (June 1970): 6368; Hirschmann, “Profit from the Learning Curve.”

38 Boston Consulting Group, Perspectives.

39 Nichols B., Saidman S., and Saypoff J., “Management Consulting— A.T. Kearny, Growth Dynamics and The Boston Consulting Group,” unpublished thesis project. Graduate School of Business Administration, New York University (1983).

40 Air Force Guide for Pricing (18 September 1962), ASP 70–1–3.

41 Alchian, “Reliability of Progress Curves,” 679–93; Billon S.A., “Industrial Learning Curves and Forecasting,” Management International Review 6 (1966): 6596.

42 See pages 223–29 for more complete definitions of the content of these two types of studies.

43 Nelson, “Scientific Management and Labor,” 479–500.

44 Baloff, “Startups in Machine-Intensive Production Systems,” 25–32; Hirsch, “Manufacturing Progress Functions,” 143–55; Hirsch Werner Z., “Firm Progress Ratios,” Econometrica 24 (April 1956): 136–43.

45 Guibert, Le Plan de Fabrication Aeronautique; Wheelon O.A., “Design of Aircraft Structures for Mass Production,” SAE Quarterly Transactions 3 (July 1949): 480–89.

46 Baloff Nicholas, “The Learning Curve—Some Controversial Issues,” Journal of Industrial Economics 14 (July 1966): 275–82.

47 Andress, “The Learning Curve,” 87–97; Hartley K., “The Learning Curve and Its Applications to the Aircraft Industry,” Journal of Industrial Economics 13 (1965): 122–28; Hirschmann, “Profit from the Learning Curve,” 125–39.

48 Berghell A.B., Production Engineering in the Aircraft Industry (New York, 1944).

49 Alchian, “Reliability of Progress Curves,” 679–93; Crawford J.R. and Strauss E., Crawford-Strauss Study (Dayton, Ohio, 1947); Middleton Kenneth A., “Wartime Productivity Changes in the Airframe Industry,” Monthly Labor Review 61 (August 1945): 215–25.

50 This sample consists of firm-level (process, product, plant, or firm) cost and cumulative-quantity, progress-function data, taken from field studies. Such empirical studies constitute a small fraction of all progress-function studies, many of which use smaller (individual or worker-group learning) or larger (aggregated industry-level) units of analysis.

51 Alchian, “Reliability of Progress Curves,” 679–93; Billon, “Industrial Learning Curves, “65–79; Conway and Schultz, “The Manufacturing Progress Function,” 39–54.

52 See, for example, Abell D.F. and Hammond J.S., Strategic Market Planning (Englewood Cliffs, N.J., 1979), Andress, “The Learning Curve,” 88; Brenneck Ronald, “B-E Charts Reflecting Learning,” NAA Bulletin 40 (June 1959); 34; Conley Patrick, “Experience Curves as a Planning Tool,” IEEE Spectrum 7 (June 1970): 6368; Hartley K., “The Learning Curve and its Applications to the Aircraft Industry,” Journal of Industrial Economics 13 (1965): 122–28.

53 Alchian, “Reliability of Progress Curves,” 679–93; Asher, Cost-Quantity Rehtionships, 1–14; Crawford and Strauss, Crawford-Strauss Study; Middleton, “Wartime Productivity Changes,” 215–25.

54 Conway and Schultz, “The Manufacturing Progress Function,” 41.

55 Ibid., 39–54.

56 Baloff, “The Learning Curve,” 275.

57 Asher, Cost-Quantity Relationships.

58 Hofstadter Douglas R., “Mathematical Themas,” Scientific American 248 (January 1983): 1422.

59 Dunbar Roger L.M., “Toward An Applied Administrative Science,” Administrative Science Quarterly 27 (March 1983): 129–44.

60 Dutton and Thomas, Progress Functions and Production Dynamics.

61 Kiechel Walter III, “The Decline of the Experience Curve,” Fortune (5 October 1981): 139–46.

62 Snow C.P., The Two Cultures and the Scientific Revolution (New York, 1959); Uselding, “Business History,” 443–52.

63 Leslie Stuart W., “Thomas Midley and the Politics of Industrial Research,” Business History Review 54 (Winter 1980): 480503.

64 Kiechel, “The Decline of the Experience Curve,” 139–46; Young S. L., “Misapplications of the Learning Curve Concept,” Journal of Industrial Engineering 17 (August 1966): 410–15.

65 Bruce D. Henderson, “Cross Sectional Experience Curves,” Boston Consulting Group (1978); Abell and Hammond, Strategic Market Planning, Kiechel, “The Decline of the Experience Curve,” 139–46.

66 Dutton and Thomas, Progress Functions and Production Dynamics.

67 Gruber W.H. and Marquis D.G., eds., Factors in the Transfer of Technology (Cambridge, Mass., 1969).

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Business History Review
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