The preceding chapters have shown that an isomorphic structural pattern occurs at various levels of Japanese organizations: the workshop, as composed of the J-firm, the production department, and R&D department, and the government bureaucracy. In contrast to the hierarchical coordination prevalent in Western organizations, this structural pattern features relatively autonomous operating units connected horizontally without hierarchical control. In the normal course of affairs, the role of leadership here is to facilitate horizontal communication among operating units and to make strategic decisions in a constituent-based manner. We have seen that such a structural pattern is very effective in allowing an organization to adapt its operations to a continually changing environment in a time-efficient manner.

One problem with this structure is that radical organizational innovation and strategic reorientation requiring some constituent groups to make a sacrifice are not likely to occur endogenously unless they are brought on by a significant external shock such as would affect organizational viability. The Japanese organization may thus exhibit a tendency toward “progressive conservatism.” It is progressive in that it is capable of adapting itself to continually changing environments in a Nash-improving (consensual-building) manner, and it is conservative in that it is resistant to radical reorientation involving non-Pareto-improving change. Radical organizational innovation and strategic reorientation that forces some constituent groups to make a sacrifice would in general occur as a matter of organizational survival in response to drastic environmental shocks.