The declining growth rate in productivity in the United States is of great concern. Thus, Americans increasingly examine Japanese management, rightly or wrongly, to find answer to this productivity crisis.
Two characteristics of Japanese management are lifetime employment and consensus decision making. But there are other characteristics that distinguish Japanese from American management practices; these are summarized. A word of caution must be added regarding interpretation. It is obvious that not all American firms are managed the same way; this is also true of Japanese firms. In additions, few empirical studies exist on the subject, and most of the available literature is descriptive. Therefore, the contrasting managerial approaches are suggestive and need to be substantial by additional research.
In Theory Z, selected Japanese managerial practices are adapted to the environment of the United States. It is practiced by companies such as IBM, Hewlett Packard, and the diversified retail company Dayton-Hudson.
One of the characteristics of Type Z organization is an emphasis on the interpersonal skills that are needed for group interaction. Yet, despite the emphasis on group decision making, responsibility remains with the individual (which is quite different from the Japanese practice, which emphasizes collective responsibility). There is also an emphasis on informal and democratic relationships based on trust. Yet the hierarchical structure still remains intact, as illustrated by IBM, in which not only goals but also authority rules and disciplines guide corporate behavior.
Participative management facilitates the free flow of information needed to reach consensus. Formal planning and objectives are important, but numerical measures are not overly emphasized.
Instead a corporate philosophy and corporate values guide managerial actions. People are seen as whole human beings, not simply as factors in production. However, the Japanese practice of very infrequent performance evaluation and promotions is not emphasized by Theory Z-type companies. In short, these companies selectively use some Japanese managerial practices but make adjustments for the environment prevailing in the United States.