Does Lean Inventory Lead to Firm Performance? An International Comparison between the US and Japanese Manufacturers

Inventory can take up as much as 50% of investment capital for companies in manufacturing and retail industries and thus has always been of interest of scholars and practitioners. A number of studies have centered on the optimal level of inventory management. However, the strategic effect of inventory on the firm performance is still questionable because of its uni-dimensional proxy measure of optimal level of inventory leanness and performance implication, particularly across countries with different business characteristics and focuses. This study attempts to investigate the relationship between inventory management and firm performance using a multi-dimensional aspect of inventory management with respect to lean management practices across countries. The major finding of this study is that there exists some complementarities between the scope and implication of inventory management for lean strategy across countries, particularly in U.S. and Japanese firms.