Working Smarter the Japanese Way: The X-Efficiency of Theory Z Management

  • John F. Tomer


A number of recent organizational behavior studies (see, for example, Ouchi, 1981; Pascale and Athos, 1981) agree that the important differences between Japanese management and American management explain in large part why Japan, and not just its auto industry, has been able to achieve rates of growth in productivity much higher than the U.S. since the 1950s. These studies suggest that a critical dimension of Japanese management is the nature of their employer-employee relationship which motivate organization members to work “smarter” than their counterparts in th U.S. In other words, Japanese firms are simply more X-efficient i.e., their productivity is closer to potential, than American ones. If so, why? The purpose of this article is to adapt economic theory (notably X-efficiency theory and transaction cost economics1) to the task of explaining why one would expect organizations managed Japanese style to be more effective in achieving both labor productivity closer to potential (for given technology and capital inputs) and growth in productivity.2


Transaction Cost Japanese Management Work Effort Japanese Firm Implicit Contract 
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Copyright information

© Plenum Press, New York 1985

Authors and Affiliations

  • John F. Tomer
    • 1
  1. 1.Department of Economics and FinanceManhattan CollegeRiverdaleUSA

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