Organizational Change Theory and - 明治大学...Organizational Change Theory and Case Studies in...

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BUSDTESS　REVIEWVol．60，　No．4

March，2013

Organizational　Change　Theory　and

　　　　　　　　　Case　Studies　in　Japan

且iroko　SUETAKE　　Mei’i　Universめ・

Abstract

　　　　　　This　study　acknowledges　that　organizations　exist　in　ever－changing，　turbulent

environments　and　are　perpetually　confronted　by　uncertainty．　Organizational　change　is

necessary．　However，　the　followi19　problems　still　remain：

　　　　　　1．An　organization　is　incessantly　forced　to　change　in　order　to　deal　with

enVirOnmental　UnCertainty．

　　　　　　2．An　organization，　which　may　attempt　to　change　in　order　to　survive，　cannot

necessarily　always　continue．

　　　　　　This　study　explores　the　backgroしmd　of　organiza1ゴonal　change廿しeory，　Contingency

theory，　the　Thompson　model，　and　the　evolutionary　approach．　Additionally，　it　point　out　the

llmits　of　these　three　theories，　In　addition，　this　paper　provides　two　cases　of　organizational

change　in　the　Japanese　context，　one　successful－and　one　unsuccessfU1．

KeyWords：Organizational　change，　Environmental　uncertainty

226 BUSINESS　REVIEW

lntroduction

1．Background　and　Purpose　of　Study

　　　　　　　The　necessity　of　organizational　change　is　widely　argued，　but　questions　such　as

“why　must　organizations　change？”and“why　not－maintain　the　status　quo？”have　not　been

satisfactorily　addressed．　Environmellts　change　rapidly　and　organizations　constantly　face

uncertainty．　An　organization’s　primary　purpose　is　to　continue　as　a“going　concem，”making

change　a　requirement　for　survival．　However，　while　it　is　said　that　organizations　must

constantly　change　in　order　to　deal　with　uncertainty，　and　that　they　will　endure　through

adaptation　and　change，　the　ability　to　change　does　not血itself　guarantee　survival．

　　　　　　　But　if　an　organization　fails　to　change，　what　are　the　consequences？Why　does

it　become　difficult　for　an　organization　to　continue　in　its　current　form？By　taking　these

ques廿ons　hlto　account，　this　article　considers　the　precise　nature　of　orgarゴzational　change．

2．Framework　of　Study

　　　　　　　When　discussing　the　term‘‘organizational　change，”it　is　important　to更mderstand　the

background　of　organizat三〇nal　change　theory．　In　this　arUcle，　section　l　exaτ血es　the　history

of　organizational　theory　and　then　discusses　contingency　theory　in　terms　of　the　relationship

between　an　organization　and　the　environment－the　so－called　environmental　conformity

theory．　Next，　we　deta且Thompson’s（1987）rational　model，　which　considers“envirollmental

uncertainty”alongside“rationality”：“rationality”reduces　an　organization’s　uncertainty．　We

then　take　up　the‘‘evolutionary　apProach，”considering　the　process　of　organizational　evolu廿on

as　proposed　by　Aldrich（1979）．

　　　　　　　Section　2　gives　a　critical　analysis　of　contingency　theory，　the　Thompson　model，　and

the　evolutionary　apProach．

　　　　　　　Section　3　examines　two　Japanese　companies．　One　is　a　company　that　has　been

“successful　in　organizational　challge”，　Nissan　Motor　Co．，　Ltd．　The　other　is　a　corporation　that

went“bankrupt，”∫apan　Airlines．　From　the　viewpoint　of“organizational　change，”there　are

questions　as　to　whether　Nissan　has　reany　changed　and　why　JAL　has　been　unable　to　change．

ln　conclusion　it　w皿be　noted　how　environmentS　change　constantly　and，　so　organizations　are

forced　to　change　in　response．　Therefore，　organizational　change　is　a　necessity．　However，　it

Organizational　Change　Theory　and　Case　Studies　in　Japan 227

is　nevertheless　uncertain　whether　the　ability　to　change　actually　means　that　an　organization

wil1　be　able　to　survive；whether　change　is　a　guarantee　of　success．

1．Background　of　Organizational　Change　Theory

1．Pre－Contingency　Theory

　　　　　　　Why　is　an　explanation　of　contingency　theory　needed？When　discussing

“organizational　change，”it　is　important　to　recognize　that　an　organization　has　a　relationship

with　its　environment；contingency　theory　is　also　referred　to　as　the“environmental

conformity　theory．”Because　an　organization’s　relationship　with　the　environment　is　so

important　in　todaゾs　world，　we　must　examine　the　characteristics　of　contingency　theory．　As

astarting　po血t，　we　will　look　at　organizational　research　leading　up　to　contingency　theory

and　how　this　research　discussed　the　relationship　with　the　environment．　Organizational

research　began　in　the　early　20th　century，　with，　for　example，　Max　Weber　in　Germany，　who

clarified　the　utihty　of　hierarchy　in　an　organizational　model　through　the　theoretical　study　of　a

bureaucratic　organization．　In　addition，　Henri　Fayol　in　France　clari丘ed　the　difference　between

management　and　administration．　He　said　that　the　order　of　the　organization　is　maintained

through　division　of　labor，　authority　and　responsibility；rules；ullity　of　command，　and　the

principles　of　management．　Furthermore，　in　the　U．S．，　Frederick　Taylor　developed　the　theory

of　scienti且c　management，　which　introduced　the　concept　of　task　management　He　insisted　on

the　establishment　of　a　planning　department　devoted　to　the　planning　and　division　of　tasks，

and　proposed　indicators　of　efficiency．　The　theory　of　scienti丘c　management　was　originally

aimed　at　rational　administration　in　factories，　but　it　showed　that　organizational　studies　could

help　to　systematize　work　in　general．

　　　　　　　Human　relations　studies　in　the　1930s，　which　dealt　directly　with　organizational

theory，　clarified　the　existence　of　the　informal　organization（and　the　Hawthorne　effect，

whereby　subjects　improve　or　modify　an　aspect　of　their　behavior　simply　in　response　to　the

fact　that　they　are　being　studied）．　The　recognition　of　this　organizational　phenomenon　had　a

marked　influence　on　the　development　of　organizational　research．

　　　　　　　Chester　Barnard　subsequently　attempted　to　construct　an　epoch－making

organizational　model　called　modern　organization　theory，　which　combine　the　rationality　of　the

scientific　management　model　and　an　understanding　of　human　nature　from　a　human　relations


perspective．　This　also　contributed　greatly　to　the　subsequent　development　of　organizational

research．　Barnard　consolidated　the　logic　of　organizational　rationality　and　the　logic　of　human

nature　to　propose　a　mechanism　for　an　organization’s　continuation　that　took　into　account　both

extemal　and　intemal　balance，　developing　this　as　the　inducements－contributions　theory．

　　　　　　　In　this　theory，　for　the　continuation　of　an　organization，　each　member　receives　an

organizational　goal，　thus　making　it　necessary　to　continue　contributing　to　organizational

activity．　To　ensure　the　member’s　contribution　to　the　organization，　a　signi且cant　motivation

must　be　offered，　such　a　special　cause　motivation（reward，　promotion，　better　work

enviro㎜ent），　which　is庫ven　speci五c田ly　to㎝舳vidu記，　or　one　of　two　general　mo廿va廿ons

（good　human　relations，　commitment）．　However，　based　on　the　ideas　of　Henri　Fayol，　A．　Brown

may　said　to　have　developed　the　main　principles　of　organization　theory．　Brown　defhled　the

principle“responsibility”and“authority”in　organizatゴon．　Bamard’s　work　il　turn　influenced

Herbert　Simon，　whose　theoretical　development　led　to　modem　organization　theory．

　　　　　　　Simon’s　work　developed　organization　theory　through　scienti且c　analysis，　while　the

principles　of　organization　theory　were　retained　as　a　rule　of　thumb．　However，　in　the　1960s，

research　started　to　focus　on　the　problem　of　an　i皿certain　environment．　It　was　from血s　that

cont血gency　theory　was　bom（Otsuki　and　Takahashi，2003，　pp．6－7）．

2．Contingency　Theory

　　　　　　　Contingency　theory　is　also　known　as“environmental　conformity　theory！’

Contingency　theory　insists　that　the　best　method　of“organizing”is　not　possible　for　all

organizations．　The　method　of“organizing”depends　on　environment　and　situation．　We　wil

examine　contingency　theory’s　origins　alld　character．　The　term“contingency　theory”came

into　beillg　with　Lawrence　and　Lorsch’s（1967）study．　Drawing　from　an　examination　of　the

achievements　of　contingency　theory，　they　proposed　four　points　to　which　organizational

research　should　adhere：

　　　　　　　　（1）The　study　of　organizations　should　be　based　on　systematic　collection　of

　　　　　　　　　　　experien廿al　data

　　　　　　　　（2）Research　should　be　multivariate．

　　　　　　　　（3）Contingency　should　be　exarn血ed　in　order　to　understand　the　factors　in且uenc血9

　　　　　　　　　　　how　an　organiza廿on　functions　under　different　conditions．

　　　　　　　　（4）Research　should　not　be　restricted　by　a　single　investigation　method，　study


domain，　or　conceptual　framework　as　far　as　the　focus　on　organizations　is

concerned，

　　　　　　　Of　these，　point（4）highlights　the　openness　or　flexibility　of　contingency　theory　rather

than　the　strict　imposition　of　conditions．　Points（1）and（2）correspond　to　almost　all　of　the

empirical　analyses　of　organizations．　As　for　point（3），　when　a　peculiar　condition　exists，　we

shoUld　look　for　characteristics　of　the　organization’s　situa廿on　that　are‘‘conditiona1！’

　　　　　　　According　to　Lawrence　and　Lorsch，　contingency　theory　is　a　conditional　theory

compared　with　the　theory　of　universalism．　From　this　perspective，廿1e　method　adopted　by　an

organization　is　effective　if　a　unique　condition　is　e茄cacious　by　virtue　of　be血g　different（Kagono，

1979，pp．8－9）．

　　　　　　　This“condition”is　identified　as　a　limitation　of　contingency　theory　in　the　following

section．

　　　　　　　Burns　and　Stalker’s（1961）study　of　contingency　theory　had　perhaps　the　greatest

influence　on　later　studies．　Their　study　analyzed　the　process　of　change　in　organizational

structures　based　on　detailed　observational　and　interview　data　for　around　20　British　business

organizations．　Companies　that　tried　to　enter　the　electronics　industry　as　part　of　the　change　in

their　market　structure　became　the　main　objects　of　investigation．　The　investigation　of　these

companies　led　to　the　following　conclusions：

　　　　　　　（1）The　adm血istrative　stmcture　of　an　organization　can　be　shown　as　haVing　two　ideal

patterns：“a　mechanica1（mechanistic）management　system”and“an　organic　management

system”These　two　systems　can　be　placed　on　poles．　A　mechanistic　management　system

is　structured　like　governmental　bureaucracy，　characterized　by　high　subdivision　of　duties，

ahigh　level　of　clari且cation　of　authority　and　responsibility，　and　a　vertically　ordered　system

with　hierarchical　rules．　An　organic　management　system　has　a　non－bureaucratic　structure，

characterized　by　nexibility　of　duties，　authority，　and　responsibility；the　decentralization　of

decision－making　power；and　interactive　stabihty．

　　　　　　　（2）Of　these　two　ideal　systems，　one　is　not　more　universally　effective　than　the　other．

　　　　　　　In　the　words　of　Bums　and　Stalker，“a　method　of　effective　organization　of　industrial

resources．．．［is］not　to　move　closer　to　just　one　ideal　pattern　of　management．”Effective

organizing　can　change　or　adapt　to　accommodate　changes　in　external　factors．　The　external

factors　Burns　and　Stalker　describe　are　market　circumstances　and　technical　environmenta1


change．　According　to　their　study，　when　the　electronics　industry　was　in　its　early　stages，

market　and　business　organization　tended　to　generally　adopt　an　organic　system．　The

mechanistic　management　system，　which　is　bureaucratic，　tends　to　be　adopted　in　an

environment　that　reqUires　more　stability，　such　as　a　rayon　factory，　In　ad曲n，　companies血

stable　industries　that　failed　in　their　attempts　to　enter　the　more　dynamic　electronics　industry

were　those　unable　to　switch　from　a　mechanistic　management　system　to　an　organic　one．

The　mechanistic　management　system　is　suitably　efficient　in　regular　environments　but　is

rlot　suitable　for　inllovation．　Since　there　is　no　one　effective　organizational　method　miversal

to　every　environment，　it　can　be　concluded　that　effective　organizing　does　not　exist，　and

the　function　or　dysfunction　of　an　organization　simply　depends　on　whether　its　method　of

organization　harmonizes　with　its　environment　lt　is　a　general　conclusion．

　　　　　　　（3）Two　factors　prescribe　an　organization’s　ability　to　produce　a　functional

administrative　structure　adapted　to　its　environment．　The　first　is　the　ability　of　the

orgar亘zation’s　leadership　to　de丘ne　the　purpose　of　the　organセation　and　the　personal　hlterest

（commitment）of　its　members．

　　　　　　　　The　second　is　the　strength　of　the　political　interest　of　the　organization’s　members．

　　　　　　　The　first　factor　promotes　the　adoption　of　an　administrative　structure　whose　order

is　functional，　and　the　second　points　to　an　organization　that　leans　more　towards　a　more

dysfunctional　direction．

　　　　　　　　Thus，　the　comparative　analysis　of　the　organizations　that　succeeded　alld　failed

㎞ga㎞㎞g　entry　to　the　electronics血dustry　gives　us　clues　about　the　pathology　beh血d　the

change　process　of　an　organization．　However，　this　third　point　does　not　have　a　big　impact　on

later　contingency　theory．　Study　of　the　change　process　of　an　organization　remains　one　of　the

weakest　domains　in　contingency　theory．

　　　　　　　（4）An　organization’s　management　system　has　various　e丘ects　on　its　members，　and　an

effective　management　system　may　not　always　be　desirable　for　the　members．　For　example，　in

an　organic　management　system，　members　may　sense　the　instabiHty　and　suffer　considerable

stress　as　a　result．

　　　　　　　Bums　and　Stalker’s（1961）study　revealed　three　interesting　points　in　this　regard．

　　　　　　　　F辻st　by　payjhg　attenUon　to　the　characteris廿cs　of　the　organizadonal　structure，止ey

were　able　to　make　a　distinction　between　an　organic　management　system　and　a　mechanistic

management　system　and　to　see　how　such　organizational　structures　are　brought　about．

Organizational　Change　Theory　and　Case　Studies㎞Japan 231

　　　　　　　Second，　the　structure　of　an　organizatioll　reveals　how　the　organizational　structure　is

decided　with　respect　to　conformity　or　non－confor㎡ty　wi止the　environment．

　　　　　　　Third，　the　study　refuted　the　assumption　of　harmony　between　organizational

e丘ectiveness　and　satisfaction　of　its　members，　alld　pointed　out　the　possibility　that　it　is，　in　fact，

constant　antagonism　that　produces　both　the　organization　and　its　members（Kagono，1979，　pp．

10－13）．

3．Thompson’s　Rational　Model

　　　　　　　When　an　organization　revolutionizes　itself，　the　pursuit　of“rationality”is　necessary．

　　　　　　　Illogical　action　must　be　removed　for　the　achievement　of　goals．　Thompson（1987）

stated　that　we　observe　complex　organizations　as　an　open　system，　namely，　a　thing　that　is

indefinite　and　faces　uncertainty．　However，　there　is　a　tendency　to　think　of　a　standard　object

of　rationahty　as　a　thing　demanding　determinacy　and　certainty　at　the　same　time（Thompson，

1987，p．12）．

　　　　　　　Organizations　always　interact　wi止the　external　environment　and　maintain　an　open

system，　whereas　a　closed　system　has　a　predictable　structure　that　neither　interacts　with

nor　is　affected　by　the　outside　world．　The　closed　system　searches　for　certainty　by　let血g　a

variable　fbllow　a　single　control　network．　The　open　system　moves　members’interest　from

task　accomplishment　to　continuation　and　looks　for　uncertainty　by　studying　the　environment

and　mutual　relations　between　organizations．

　　　　　　　However，　rationahty　can　cause　an　organization　to　demand　certainty　even　though　it

is　an　open　system　that　faces　uncertainty（Thompson，1987，　pp．15－16）．

　　　　　　　In　trying　to　understand　complex　organizations　as　an　open　system　based　on　the

standard　of　rationality，　let　us　consider　some　dynamic　characteristics　of　the　organization．

As　we　have　already　suggested，　a　closed　system　in　pursuit　of　complete　techrゴcal　rationality

removes　uncertainty．　Since　the　possibility　of　uncertainty　increases　with　the　number　of

variables，　anything　that　identi丘es　an　uncertainty　and　removes　it　wiH　be　advantageous　to　an

organization　with　a　technical　core，　as　this　wil　decrease　the　variables　acting　on　it．　If　resources

are　allocated　such　that　problems　are　removed　from　the　technical　core（the　technology　used

to　achieve　the　orga血zation’s　purpose），　and　the　problems　of　the　disposal　of　production　are

controlled　partially　by　environmental　factors，　it　is　thought　that　an　organization’s　rationality

wiU　illcrease（Thompson，1987，　p．14）．


　　　　　　　The　main　problem　for　a　complex　organization　is　the　problem　of　handling　uncertainty．

To　handle　mcertainty，　at五rst，　an　organiza廿on　iden面ed　the　department　or　section　which

deals　with　uncertainty　technically，　and　it　specializes　other　departments　or　sections　which

work　under　certainty　or　similar　certainty　situations．　As　a　result，　the　organization　wll　be　able

to　better　deal　with　uncertainty．

　　　　　　　In　this　case，　the　joining　of　specialized　departments　become　important（Thompson，

1987，p．16）．

　　　　　　　The　core　technology　in　all　goal－oriented　organizations　consists　of　one　or　more

technologies．　However，　this　technical　core（a　system　consisting　of　one　or　more　technologies

to　achieve　the　objective）imperfectly　indicates　what　organizations　should　do　to　get　desirable

results．　Technical　rationality　is　a　necessary　component　but　is　not　enough　to　bring　about

organized　rationality　by　itsel五〇rganizational　rationality　requires　input　from　technology

and　output　beyond　the　core　technology、　Organized　rationality　includes　at　least　three　main

ac1ゴvi廿es：（1）input，（2）technological　ac廿vity，　and（3）output，　Because　of　the　interdependence

of　these　ac廿vi廿es，　to　achieve　organized　rationality，　it　is　necessary　for　these　activi廿es　to　be

adequately　performed　in　relation　to　each　other．

　　　　　　　　An　organization’s　repertoire　must　include　a　technological　input（Thompson，1987，　p，

24）．

　　　　　　　Uncertainty　is　regarded　as　a　basic　problem　for　complex　organizations；to　deal　with

uncertainty　is　the　essence　of　the　management　process．

　　　　　　　Complete　certainty　is　a　product　of　the　imagination．　However，　the　stricter　the

standard　of　rationahty，　the　more　energy　an　organization　spends　aspir血g　to　certahlty．　For

complex　organizations，　uncertainty　arises　from　three　sources．　The　first　two，　below，　exist

outside　of　the　organization；the　third　is　inside　the　organization．　Below　are　the　sources　that

exist　outside　of　the　organization：

　　　　　　　（1）Generalized　uncerta血ty　or　lack　of　understanding　about　cultural　cause　and　effect

　　　　　　　（2）Contingency，　or　the　result　of　acts　of　the　orgarizatゴon，　is　controUed　partia皿y　by

enVirOnmental　elementS．

　　　　　　　On　the　other　hand，　the　uncerta血ty　arising　from　within　the　organization　is　related　to

organizational　components（Thompson，1987，　p．205）．

　　　　　　　In　Thompson’s　mode1，　the　phrase“organizational　change”is　vague．　As　described

above，　the　organization　requires　the　pursuit　of　ratゴonality　and　the　reduction　of　uncertainty。


It　assumes　that　the　reduction　of　uncertainty　in　the　environment　can　be　accomplished　by

ensuring　rationality　through　technology　and　by　discussing　open　versus　closed　systems．　Next，

we　discuss－the　evolutiorlary　approach，

4．Evolutionary　ApProach

　　　　　　　Within　organization　theory　of　the　1970s，　and　contingency　theory　in　particular，　the

relationship　between　an　organization　and　the　environrnent　was　explained　by　the　concept　of

“adaptation．”In　other　words，　as　long　as　the　company　changed　its　organizational　structure

and　actions　in　accordance　with　the　environment，　it　was　thought　that　the　company　would

fit　the　environment．　In　contrast，　Hannan　and　Freeman（1977）proposed　the　analysis　of　an

ecological　or　evolutionary　model　from　the　viewpoint　of　environmenta1“selection．”This

approach　came　to　be　called　population　ecology　or　organizational　ecology　in　the　context　of

organization　theory．　Aldhch（1979）explahled　the　evolutionary　approach　based　on　population

ecology，　Firstly，　Aldrich（1979）identified　four　organizational　processes　in　the　general

population．　Secondly，　Aldrich　stressed　the　importance　of　indeterminacy　in　the　evolu廿onary

analysis．「 shirdly，　Aldrich　asked，　where　is　a　choice　made　in　the　evolution　process？

　　　　　　　The　evolution　process　is　caused　by　four　factors：（1）“variation，”（2）“selection，”（3）

“retention，”alld（4）“struggle”（Aldrich，2007，　p．28），　The　evolutionary　approach　explains　how

an　organization’s　unique　form　exists　in　a　speci丘c　environment　through　these　four　factors．

Variation，　selection，　retention，　and　struggle　happen　simultaneously．　In　actual　deployment，

many　processes　are　connected　with　continuous　feedback．　Variation　generates　material　to　be

chosen　according　to　the　environment　and　internal　standards．　And　retention　maintains　the

chosen　variations，　However，　retention　may　also　limit　the　variation．

　　　　　　　Competitive　struggles　change　the　criteria　for　selection．　As　March　pointed　it　out，　this

process　has　not　histohcally　been　effective（Aldrich，2007，　pp．46－47）．

　　　　　　　The　evolutionary　approach　is　used　in　the　analysis　of　many　entities，　such　as　a　group，

an　organization，　an　organizatiorゴs　populatiol1，　and　an　organization’s　community．

　　　　　　　Variation，　selecdon，　reter1廿on，　alld　struggle　occur血every　social　unit　and　across　all

standards　of　analysis．　For　example，　jn　the　various　organiza廿onal　popula廿ons，　each　individual

organization　has　both　retained　and　replaced　variations，　and　environment　conditions　can

supPort　such　an　organization．　In　that　case，　the　organizational　population　is　reproduced．

Individual　organizations　are　reproduced　at　the　same　time，　and　whether　an　individual　member


contributes　to　reproduction　or　adaptation　affects　the　organization　as　a　whole（Aldrich，2007，

pp．57－58）．

　　　　　　　Aldrich　defines　transformation　as　a　substantive　change　in　the　organization（Aldrich，

2007，p．245）．

ll．　Limitations　of　Organizational　Change　Theory

1。Problems　with　Contingency　Theory

　　　　　　　We　examined　problems　with　contingency　theory　in　the　previous　chapter．

Generally，　the　limitations　of　contingency　theory　are　as　follows：First，　it　overemphasizes

status　differences．　Second，　it　basically　ignores　the　importance　of　variables　or　the　choices

of　management　in　favor　of　the　deterministic　nature　of　the　organization．　The　concept　that

“circumstances　are　different”is　far　from　theoretical　and　would　be　a　better　premise　than

the　universal　viewpoint　that　al　situa廿ons　are　the　same．　The　reason　why　empirical　research

has　revealed　a　pattern　of　conformity　between　environment　and　organizqtion，　which　is

inconsistent　with　discollnected　variables　and　relations．　In　addition，　the　two　following

limitations　emerge丘om　an　exa血iation　of　environmentalism：

　　　　　　　First，　the　deterministic　viewpoint　focuses　on　the　complex　relations　between　the

environment，　an　organization，　and　technical　variables．　The　correlative　data　seem　to　offer

ascientific　explanation，　but　even　diachronic　studies　fail　to　explain　the　basic　process　of

organization　and　management

　　　　　　　Second，　the　hypothesis　that　an　organizational　system　depends　on　context　ignores

the　influence　of　management　actions　and　predicts　changes　in　the　organizational　system．

However，　on　the　contrary，　the　correspondence　of　the　organization　diversifies　in　the　same

environmental　status（Otsuki　et　al．，2001，　p．58）．

　　　　　　　Furthermore，　contingency　theory　cannot　explain　the　process　of　change　when

organization　meets　environment．　In　addition，　if　an　organizational　change　is　realized，　an

organization　is　expected　to　meet止e　demands　of　the　environment　and　maintain　petformance．

2．Limitations　of　the　Rational　Model

　　　　　　　According　to　Thompson（1967），　the　problem　of　rationality　in　the　organization　is

mamly　a　problem　of　rationality　on　the　technica1　level．

Organizational　Change　Theory　and　Case　Studies　in［Japan 235

　　　　　　　For　example，　in　the　case　of　mass　production　in　the　manufacturing　indust］呼，　the

organization　develops　an　original　system　for　each　process．　Technique　is　a　means　for

accomplishment　And　technical　rationality　is　understood　in　terms　of“expected　result”and

‘‘

b?撃奄??@about　causahty　for　an　expected　result”（Otsuki，2005，　P．53）．

　　　　　　　The　organization　has　no　relation　to　the　environment　and　must　deal　with　both

Hmiting　environmental　factors　and　unpredictable　contingency　factors　to　bring　about　change．

　　　　　　　Therefore，　the　rationality　of　the　organiza廿on　requires　synthesizing　three　factors：

（1）limitirlg　factor，（2）contingency　factor，　and（3）manageable　variables．　In　other　words，

the　rationality　of　the　organization　depends　on　both　task　environment　and　technology．

Thompson　asserted　that　rationality　influences　aU　organization　phenomena．　The　organization

cannot　escape　the　restrictions　of　rationality，　but　the　rationality　principle　is　di丘erent血the

organization’s　core　and　periphery．　However，　although　Thompson’s　argument　reveals　the

rationality　component　of　organizations，　the　definition　of　rationality　is　insu伍cient　in　relation

to　the　environment．　The　theory　of　environmental　decision－making　is　built　as　a　model　to

show　how　organizations　meet　situational　demands，　Additionally，　conformity　depends　on

environrnental　uncertainty：how　should　an　organization　shoUld　deal　with　uncertainty？This　is

amajor　problem　for　organizations（Otsuki，2005，　pp．55－56）．

　　　　　　　In　any　case，　environmental　change　brings　uncertainty，　and　it　is　a　fact　that　an

organization　takes　adaptive　action　in　response　to　umcertainty．　The　organization　acts　to　deal

with　tmcertainty　regar（11ess　of　the　source．

　　　　　　　Thus，　rational　adaptive　action　is　regarded　as　restricted　rationality　logic，　Many

arguments　have　been　made　for　rational　decision－making　on　the　personal　level，　but　it　is

possible　to　argue　at　the　level　of　the　impersonal　organization．　This　was　made　clear　by

Thompson’s　analysis　of　organizational　rationaHty．　But　the　problem　remains　as　to　whether

an　argument　made　on　the　personal　level　applies　to　the　organizational　level．　When　rationaI

decision－making　takes　place　at　a　personal　level，　does　an　organization　t母ke　rational　action

（Otsuki，2005，　p．59）？An　activity　may　not　be　rational　for　the　organization，　even　if　it　is

personally　rational．

　　　　　　　Pondy　and　Mitroff（1979）stated　that　the　Thompson　model　was　very　precise　and

systematic　in　terms　of　the　traditional　open　system．　The　limitations　of　this　model　are　as

follows（Otsuki＆Takahashi，2003，　p．167）：

　　　　　　　First，“environmental　understanding”is　insufficient．　To　continue　the　organization


as　an　open　system，　the　organization　must　not　necessarily　reduce　ellvironmental　diversity

but　rather　perceive　the　necessity　of　environmental　diversity　and　focus　on　the　process　of

enactment．　Thomson　said　that　the　reduction　of　the　uncertainty　is　essential　to　controlling　an

organization．　However，　when　the　organization　faces　a　completely　stable　environment，　it　does

not　develop　the　abiHty　to　detect　environmental　change．

　　　　　　　Second，　the　understanding　of　dysfunction　at　the　macro　level　is　insufficient．　For

example，　Thompson’s　model　does　not　adequately　deal　with　absenteeism，　personal　confiict，

or　resistance　to　organizational　change．　Problems　occur　in　real　organizations　that　complicate

matters（e．g．，　past　conventions，　alignment　with　the　group）．　These　things　cannot　be　solved　by

logic　alone．

　　　　　　　Third，　Thompson’s　model　neglects　higher　human　abilities：self－awareness，　the　use　of

language，　creative　growth，　and　learning　from　experiences．　Pondy　and　Mitroぜpointed　out　that

sense－making　is　retrospective　and　meaning　is　created　socially．　In　particular，　they　emphasized

the　importance　of“the　role　of　language　in　organizational　behavior．”Fourth，　Thompson’s

model　ignores　the　issue　of　organizational　self－replication．　Pondy　and　Mitro丘pointed　out　that

Thompson’s　analysis　is　based　on　the　growth　process　of　mature　organizations　and　does　not

mention　the　generation　and　reproduction　of　the　organization。　For　example，　as　the　technical

core　matures，　this　forces　the　organization　to　dramatically　change　or“reproduce．”This

requires　a　new　idea　and　the　mood　for　change．　However，　it　is　di伍cult　to　seek　such　elements

止rough　the　reduction　of　uncertainty（Otsuki＆Takahashi，2003，　pp．167－168）．

3．Problems　with　the　Evolutionary　ModeI

　　　　　　　The　organizational　evolution　model　seeks　a　di丘erent　logic　for　organizational　change．

The　evolutionary　model　considers　completely　different　factors　than　contingellcy　theory

（environmentalism）and　strategic　choice　theory（theory　of　the　subject）．　However，　on　the

organizational　analysis　level，　the　evolutionary　model　expands　from　the　level　of　population　to

the　community　level、　Additionally，　in　terms　of　the　evolution　process，　this　model　draws　on　the

natural　selection　process　or　the　intermittent　equihbrium　process　in　many　ways．　Thus，　it　does

not　reac舳e　level　of画e血tegra廿on　mode1，　which　advocates　a　common　unders励ng（0舳，

2005，pp．215－216）．

　　　　　　　Accordhlg　to　the　whole　organization　evolution　model，　the　theory　of　evolution　at　the

micro　level　is　more　than　an　element　of　macro－level　evolution　theory．　However，　the　theory　of

Organizational　Change　Theory　and　Case　Studies血Japan 237

evolution　is　based　on　the　fUndamental　concept　of　selection　by　environment．　Its　characteris廿cs

include：（a）emphasis　on　organizational　routine，（b）the　limitations　of　organizational　adaptatiol1，

（c）the　possibihty　of　appHcation　for　diverse　purposes，　and（d）the　importance　of　selection　by

enVironment．　In　con廿ast，　advocates　of　organizational　evolu廿on　a紬e　macro　level止ink　that

many　changes　are　only　superficia1，　because　the　organization’s　basic　structure　and　character

were且xed　soon　after　the　organizaUon　was　bom．

　　　　　　　Continuous　activity　makes　the　organization　rigid，　and　it　becomes　dif丘cult　to　make

strategic　decisions．　Such　activity　leads　to　sunk　costs，　symbohzed　by　investments　in　factories，

facilities，　and　professional　development．　Therefore，　the　power　of　the　decision－maker　is　hmited

（Otsuki，2005，　pp．217－218）．

　　　　　　　On　the　other　hand，　the　organizational　evolution　model　at　the　macro　level　has

developed　mainly　on　the　basis　of　ecology．　Many　experimental　studies　have　been　conducted

at　the　population　level，　but　criticism　increases　with　the　development　of　the　organizational

evolution　model　at　the　micro　leve1．　For　example，　ecology　advocates　are　not　interested　in

how廿1e　organization　is　formed，　which　is　at　the　core　of　the　populatioll　model．　In　addition，

the　process　does　not　address　the　organizational　change　pattern　in　the　case　of　structural

inenia　in　the　organization．　And　the　relationship　between　the　history　of　the　organization，　the

rela廿ve　impact　of　strategic　choice　on　organizing，　and　organizational　inertia　is　not　su魚ciently

discussed．　Furthermore，　it　is　argued　that　when　inertia　a丘ects　the　orgarゴzation，　the　ecology

theory　does　not　allow　for　changes　to　strategy　and　structure　in　order　to　accommodate

environmental　uncertainty．　Therefore，　organizational　evolution　is　determined　at　the　birth

of　the　orga血zation　arld　the　population．　Is　this　true？It　is　impossible　to　start　organizational

change　when廿1ere　is　organizational　inertia．　But　the　organization　ecology廿1eory　ignores　the

value　of　human　decision－making．　It　basically　denies　that　strategy　is　a　continuous　adaption

process，　and　it　is　strange　that　the　organization　ecology　theory　identifies　both　a　specialist

strategy　and　a　generalist　strategy（Otsuki　et　al．，2001，　pp．113－114）．

Ill．　Case　Studies

1．Nissan　Motor　Co．，　Ltd．

　　　　　　　In∫apan，　Nissan　Motor　Co．，　Ltd．，　led　by　Carlos　Ghosn，　is　represerltative　of　successful

organizational　change．　Ghosn　came　frorn　Renault　and　was　famous　for　his　stance　as　a“cost


cutter”．　In　the　1980s，　Nissan　aimed　to　be　the　top　company　in　technology　all　over　the　world

by　the　1990s，　ilcluding　engines，　chassis，　and　suspension　design　goals，　focusing　on　the　criteria

for　handling　ill　a　driving　test．　This　movement，　dubbed　the“901　movement，”contributed

greatly　to　the　technical　improvement　of　Japanese　cars．　During　the　bubble　economy，　Nissan

released　the　Pike，　the　Cima　luxury　car，　and　the　sophisticated　Silvia　S1．　These　models

became　very　popular．　However，　from　1991　to　1994，　core　models　including　the　U　134door

sedan，　Bluebird　SSS－EEX，　Y32　Leopard　J　Ferry，　C34　Laurel，　R33　Sky血1e，　Silvia　S14，　and　B　14

failed血such　areas　as　design　and　merchandising　strategies，　Nissan　was　weak　in　the　area

of　product　plarming　and　marketing　strategy，　following　deteriorating　financial　conditions．

The　901　movement　incurred　high　costs　and　mainly　restructured　only　the　design　division．

In　1998，　Nissan　feH　into且nancial　crisis．　The　company’s　share　of　sales　temporarily　fen　from

second　to　third　position，　behind　another　Japanese　firm，　Honda．　Because　of　its　con血uing　sales

slump，　Nissan　was　on　the　verge　of　bankruptcy　in　March　1999，　at　which　time　it　joined　with

Renaulしill　France，　to　promote　rehabihtation．　Many　experts，　analysts，　and　other　compe廿tors

feared　disintegration　due　to　cultural　differences，　an　overlapP血91血eup，　the　siZe　of　the　debL

and　Nissan’s　resistance　to　labor　unions．　Nissan　President　Hanawa　Yoshikazu　was　dismjssed

that　same　year，　and　Rellault’s　Chairman　and　CEO（PDG）Louis　Schweitzer　appo血ted　Carlos

Ghosn　as　the　new　chief　executive　officer．　Ghosn　formed　the　Nissan　Revival　Plal1（NRP），

announced　in　October　2003，　and　commenced　restructuring．　Both　the　Murayama　plant　in

Musashimurayam，　Tokyo，　and　the　Nissan　car　frame　plant　in　Uji，　Kyoto，　closed，　resulting　in

sales　of　assets－and　personnel　reduction．　NRP　called　for　integration　of　subsidiaries　or　．business

partners　and　review　of　raw　materials．　There　were　cost　reductions．　Ghosn　organized　lineups

and　introduced　new　models　aggressively．　As　a　result，　sales　increased，　and　Nissan　recaptured

the　second　position血Japanese　car　sales．　By　June　2003，　Nissan　had　paid　off　the　debt．

　　　　　　　（Source：http：／／）’awikipedia．org／wiki／Nissan＿Motors）

　　　　　　　Finally，　Mr．　Ghosn　is　highly　praised　as　a　god　of　reconstruction　in　Japanese　media．

　　　　　　　The　following　are　possible　reasons　for　Nissan’s　difficulties，　and　represent　an

attempt　to　explain　why　Nissan　could　not　change　until　2003：（1）Loss　of　brand　identity，（2）

organizational　culture，（3）elitism　and　bureaucratic　organizational　structure，（4）sectionalism

（Uesugi，2001，　p．39，　p．46，　p，56，　p．66），

　　　　　　　However，　these　issues　hold　true　fbr　most　compallies，　and　many　have　resolved　these

problems　without　experiencing　the　problems　faced　by　Nissan．


　　　　　　　　Mr，　GhosnPs　achievements　through　NRP　include：（1）reduction　in　the　number　of

assembly　plants，（2）reduction　ill　production　capacity，（3）reduction　in　the　number　of　parts

plants，（4）reduction　in　the　number　of　personnel，（5）reduction　of　debt，（6）review　of　and

reduction　in　the　number　of　partners，（7）cutting　purchasing　costs，　and（8）putting　Nissan　h

the　black．

　　　　　　　Mr．　Ghosn　annαmced　a　settlement　on　May　17，2001．　He　said　proudly：

　　　　　　　　　　Istated　a　simple　fact　when　I　amounced　NRP　in　Oct　18，1999，19　months　ago．

　　　　　　　　　　Nissan　was　in　a　bad　condition．　At出at　time　Nissan　remained　in　a　dark　tunnel

　　　　　　　　　　and　could　not　see　the　bright　light　of　the　exit．　But　I　believed　that　the　bright　light

　　　　　　　　　　was　out　there　somewhere．　And，　actually，　I　found　that　the　bright　light　exists

　　　　　　　　　　in　Nissan’s　colleagues’eyes，　mind，　and　spirits．　After　we　implemented　NRP　19

　　　　　　　　　　months　ago，　we　could　not　get　the　best　results　unti1　we　got　to　know　the　history

　　　　　　　　　　of　our　company．　Nissan　has　now　revived．

　　　　　　　Since　the　above　announcement，　Mr．　Ghosn　has　beell　praised　in　TV，　newspapers，　arld

magazines　for“reviving”Nissan　from　critical　condition　in　or旺y　one　year．　He　has　been　caled

“the　new　god　of　management”in　Japanese　mass　media（Yasuda，2002，　p．18）．

　　　　　　　The　above　results　are　all　reductions　or　cuts．　Everyone　knows　that　cost　or　asset

reductions　result丘1　better　firlancial　condition．

　　　　　　　At　that　time，　Nissan’s　management　was　unable　to　do　anything．　It　was　fortunate

that　Mr．　Ghosn　came　into　the　picture，　as　Japanese　management　is　not　suitable．　Is　Mr．　Ghosn

really　a　god　of　management？Is　organizational　reconstruction　the　same　as　organizational

change？He　improved　financial　conditions；however，　Nissan　is　a　car　company　and　the　target

is　to　increase　car　sales．　As　of　Oct　4，2001，　sales　growth　had　not　significantly　improved（Yasuda

2002，p。115）．　It　is　questionable　whether　this　was　really　an　example　of　organizational　change．

2．Japan　Airlines

　　　　　　　ln　August　1951，　Japan　Airline　Co．，　Ltd．σAL）was　established　as　a　semi－governmental

organiza廿on．　JAL　was　the且rst　intemational　airline　in　Japan　after　World　War　H，　flying　from

Haneda　Airport　Honolulu－San　Francisco．　In　August　1960，　the　Douglas　DC－81ine　was

introduced　into　the　Paci且c　Ocean　32　aircraft，　and　the　route　was　restored　across　the　Pacific

Ocean．　In　January　1965，　due　to　the　term血ation　of　restrictions　on　overseas　travel　in　1964，　JAL


血troduced　Japan’s鉦st　package　tour　abroad：JALPACK．　In　the　1980s，　the　value　of　the　yen

increased，　buoyed　by　a　strong　economy，　accompanied　by　increased　intemational　competition

and　a　drop　in　airfares．　November　1987　saw　a　progressive　divers面cation　of　business，　signaled

by　privatization，　new　education　projects，　the　growth　of　the　IT　and　hotel　businesses，　and　the

establishlnent　of　subsidiaries血the　pubhshing　and　restaurant　businesses．　Subsequent　events

included　a　conflict　between　former　employees　of　Japan　Airlines　and　Japall　Air　System

after　the　merger，　poor　maintenance　of　aircraft，　repeated　scandals，　and　the　leak　of　internal

circumstances．　These　events，　along　with　high　cost　of　the　JAS　merger，　low－e伍ciency　systems，

soaring　jet　fuel　prices　in　Iraq　after　February　2003，　and　SARS，　led　to　rapid　deterioration　in

performance．

　　　　　　　After　a　temporary　improvement　in　the　financial　situation，　the　global　recession

and　high　oil　prices　occurred　in　late　2007，　followed　by　the　onset　of　pandemic　in且uenza　and

unimproved　personnel　costs；by　2008，　business　conditions　had　deteriorated　again．　On　the

advice　of　the　govemment，　JAL　tried　to　restructure　and　cut　costs．　This　process　included　the

reduction　of　corporate　pensions　for　retirement，　integration　with　Nippon　Cargo　Airhnes，　the

consolidation　of　unprofitable　routes，　a　reduction　in　the　number　of　cabin　crew，　and　salary

reductions．

　　　　　　　（Source：http：／／jawndpediaorg／wiki／％E6％97％A5％E6％9C％AC％E8％88％AA％E7％

A9％BA％E3％81％AE％E6％AD％B4％E5％8F％B2）

　　　　　　　Management　of　JAL　was　rlot且exible，　and　the　organizational　structure　did　not　allow

for　changes　i　l　management　circumstances．　The　downturn　was　not　externally　imposed　upon

the　management　team，　but　was　rather　an　intemal　factor　that　the　organizational　structure

could　not　change．

　　　　　　　Air　service　has　strong　national　and　pohtical　associations．　In　particular，　JAL　had　the

role　of　a　semi－governmental　organization　and　was　much　inlluenced　by　national　policy　and

lawmakers．　When　the　company　was　in　trouble，　the　nation　helped．　An　organiza廿on　backed血

such　a　way　has　no　consciousness，　management　responsibihty，　or　self－effortS（Yayama，2010，　p．

91）．

　　　　　　　JAL’s　international　monopoly　ended　in　1985，　and　by　1987　JAL　had　been　privatized

and　faced　a　major　shift　in　management、　Rival　company　ANA（AH　Nippon　Airway）expanded

into　the　interllational　arena　and　JAL　was　no　longer　able　to　follow　its　management　plan．

Mallagement　issues　including　expansion　of　domestic　sales，　cost　reduction，　and　improved

Organiza廿onal　Change　Theory　and　Case　Studies血Japan 241

pro且tability　were　constant　challenges。　With　a　rapid　increase　in　internationa1　dights　from　1960

to　1970，　JAL　was　among　the　top　airlines　in　the　world，　but　it　had　a　high　cost　structure　at　the

same　time．　With　a　high　cost　structure　and　poor　pro且tab血ty，　the　intematibnal魚ght　division

carried　too　much　weight，　and　changing　enVironmental　factors　undermined　the　management

（Sugiura，2007，　pp．59？60）．

　　　　　　　JAL　did　not　recognize　the　changing　times　and　leaned　on　past　glories．　This

contributed　to　the　negative　impact（Sugiura，2007，　p，155）．

　　　　　　　JAL　has　httle　cost－consciousness．　In　1987，　JAL　became　a　private　company；however，

its　members　had　no　feeling　of　belonging　to　a　private　company．　They　still　felt　like　members　of

asemi－governmental　organization，

　　　　　　　JAL　had　many　troubles　related　to　flight　security　in　2006．　The　advisory　group

assessed　the　organizational　culture　in　terms　of　safety．　One　of　the　issues　was　the　spread　of

disease　within　the　company．　The　organization’s　headquarters　were　rigid，　and　there　was

no　sense　of　unity　between　management　and　practice．　The　group　pointed　out　the　lack　of

cooperation　and　empathy　between　headquarters，　communication　delay，　and　the　sense　of

stoppage（Sugiura，2007，　p．171）．

　　　　　　　At　this　time　we　will　discuss廿1e　issues　of　labor血ons　in　JAL，　Currently，　JAL　has

eight　unions．　Historicaily，　upper　management　has　struggled　against　unions．　The　unions　have

ahistory　of　interver血g　in　corporate　management　and　influencing　each　other．

　　　　　　　After　the　JAS　merger，　the　number　of　unions　increased　and　the　issue　was

complicated．　Reconstruction　of　JAL　requires　cooperation　with　unions，　but　there　is　no　sign　of

compromlse．

　　　　　　　Why　did　JAL　go　bankrupt？As　we　have　seen　so　far，　the　management　structure　is

government・oriented，　inward－oriented，　and　characterized　by　procrastination，　Bureaucracy

is　a　functiollal　system　when　the　environmental　condition　is　stable．　Actually，　JAL　had　a

good　achievement　record　under　this　systern．　I　identified　issues　that　JAL　could　not　change．

The　management　tried　to　change　the　organization－why　did　they　fai1？Was　it　simply

enVironrnental　change　that　brought　about　the　bankruptcy？What　are出e　forces　at　work？

IV．　Conclusion

This　paper　summarized　the　contingency　theory，　the　problems　with　the　contingency


theory，　and　Japanese　case　studies，　contrasting　so－called　successfUl　changing　orgarゴzations

and　bankrupt　companies　that　were　unable　to　change．　My　conclusions　are：

　　　　　　　1．An　organization　always　changes　to　deal　with　uncertainty，　but　when　conditions

are　introduced，　as　represented　by　cont血gency　theory，　the　fUnctional　organization　can　adapt．

Environment　always　changes血reality．

　　　　　　　2．The　organization　may　thrive　by　revolutionizing　itseif．　However，　the　environment

always　changes，　and　an　orgarゴzation　must　recognize　those　changes．　In　addition，　there　is　no

guarantee　of　survival　even　if　the　organization　revolu廿onizes　itself，　and　there　is　a　chance　thaし

by　changing，　the　organization　may　fail．

　　　　　　　3．Isuggested　that　an　orgal1量zation　may　survive　even　if　it　does　not　change．　The　two

Japanese　case　studies　suggest　that　the　organization　must　change　to　survive．　However，　both

companies　are　private　UAL　was　a　semi－governmental　organization　originally）．　Why　is　one

successful，　while　another　is　bankrupt？It　contains　the　leadership　and　the　media　manipulation

of　dichotomy，　Nissan　and　JAL．

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