The primary objective of this paper is to research and test how control forms function and perform in a Lean organization. In the present quantitative case study, we provide statistical support that Lean is a set of multiple control forms (output, behavioral, and social controls) that complement each other to enhance performance, i.e., it is a control package. Therefore, performance is increased if the average level of control forms is increased, and performance is further increased if the control forms are balanced at the same level representing a complementary effect between them. Moreover, we provide a refinement to the statistical approach in testing systems fit models like ours by supplementing the Euclidian distance with the city-block distance. In this way, we are able to show that the control forms in Lean have a balanced complementary effect on performance, which is distinct from a solely additive effect or no effect. The refined understanding of complementary effect between control forms, the notion of balance, in a Lean organization can be utilized in understanding and testing more general control package theory in other contexts. Our data are archival data spanning multiple years in a dedicated Lean organization. This Scandinavian organization has around 2,000 employees and produces small electronic components that are sold to business customers.

The paper accounts for an Activity Based Costing (ABC) analysis performed in a case company -Martin Group A/S -where the object was to support decision-making concerning product modularity. ABC was chosen because it is a costing method that in principle takes a total cost perspective which as it is argued in the paper is a necessary perspective when evaluating modularity. The ABC-analysis is structured in such a way that it shows how much higher the materials cost of the over-specified modularised component can be compared to the average materials cost for the product-unique components that it substitutes. This procedure provides case-specific insights to the designers. Moreover, it provides the platform for stating three general rules of the cost efficiency of modularization, which in combination points to the highest profit potential of product modularisation to be where (i) commonality between otherwise product-unique modules are high, and where (ii) volume and (iii) difference between unit-level cost of otherwise unique modules are low. The cost analysis presented makes use of the activity and cost object hierarchies of ABC. Two problems applying these are identified and discussed: (i) theory provides only vague recommendations concerning the placement of the initial design costs in the ABC model, and (ii) the product-profitability hierarchies resulting from extended modular structures are more complex than described in literature.

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