continues to work in an efficient manner in a contemporary market. In particular, this study begins with the observation that the mis-understanding of modern bureaucracy underlies new management techniques aimed at renovating obsolete managerial practices and sheds a new light onto the essence of modern bureaucracy by opting for perspectives from Max Weber and Fredrick Taylor. Moreover,it suggests that bureaucracy is a modern production mode distinct from the market and that for the very reason, the modernity of a contemporary society will be sustainable to the extent that the two distinct modes of modern production, i.e., the market and the firm, co-exist and thus co-evolve.
The critics of the Weber-Taylorian bureaucracy (WT bureaucracy henceforth) have been proposing so-called new management techniques to the corporate world, which chases constantly after ever-growing profits in the name of competitive advantage and value creation. They do so either by disregarding the bureaucracy as a pre-modern mode of organizing exchange (Jensen & Meckling,1976; Williamson, 1985), by lamenting it as the root of a pathological modernity (Roethlisberger & Dickson, 1939; Schumacher, 1979), or by diagnosing it as the inefficient execution of modern production (Hammer & Champy, 1993; Huselid, 1995). Despite the subtleties of their corrective measures, these new management techniques as presented so far have one thing in common: the enlarged autonomy of the individual as the modern self. Managerial practices that draw on theories such as self-determination theory (Ryan & Deci, 2000) or positive psychology in general demonstrate this tendency clearly.
Of course, communitarian approach, one of the widely accepted new management techniques,objects arguably the concept of independent, self-governed individuals that are detached from their society (Adler & Heckscher, 2006; MacIntyre, 1981). Yet, it is equally true that even the communitarian self, well situated in social and cultural accumulation of past economic practices,is the modern self that seeks to reconcile his or her liberty of choice to the living world of cumulative social practices, namely, the history of a community. Whether new techniques endorse libertarianism or communitarianism, they all invite the concept of the modern self to their solutions and presume that the WT bureaucracy is a place reserved for Leviathan to exercise his power without consent and that it is not sufficiently modernized.
This study however suggests otherwise. The reasons are as follows.
First, as Mintzberg (1983) clearly illustrates, the WT bureaucracy has nothing to do with the centralization of decision rights, as opposed to a mistaken view of a one-man ruling company,which is commonly found in economic writings such as transaction cost economics and organizational economics (Aghion & Tirole, 1997; Alchian & Demsetz, 1972; Hart, 1990) and which Weber (1968) himself characterized as charismatic authority, distinct from rational authority or bureaucratic control. You may have a bureaucracy with a decentralized or centralized decision-making process.
Rather, the essence of the WT bureaucracy is the standardization of behavior through the design of formal documents that codify the best possible working knowledge for a task in question as chosen and evaluated by a specialist, i.e., a manager. This standardization of the process (and in some cases the input as is found in collegial bureaucracy) sets the ground for the division of labor between employees and the management, leaving the room for the gains of specialization,another source of the economic efficiency of the firm over the market contract.
Second, unlike the criticism that the WT bureaucracy is too slow to adapt to contemporary,fast-changing modern economy, the WT bureaucracy remains to be effective and efficient even in the course of new product developments, whose high task and demand uncertainties are thought to favor an organic or self-autonomous work groups, not rigid formal hierarchy. As is already well detected by Schumpeterian scholars (Bae & Koo, 2009; Schumpeter, 1942) and organization theories such as Cyert and March (1963) and Stichcombe (1990), the routinization of such complex and uncertainty ridden tasks is critical to the efficient operation of the firm, without which a stable cooperation as well as the long-term and large-scaled investment of capital to such cooperation is hard to obtain and sustain.
One related issue that remains is the supposedly impossibility of ex ante intervention. As is commonly observed and heard of, the critics of the WT bureaucracy tend to point to the red tapes, i.e., the inflexible application of rules to changing task environments, further suggesting that it is practically impossible to design rules to regulate decisions under all the possible contingencies so that the inefficiency of the bureaucracy is inevitable. However, this claim of the impossible ex ante intervention contributes to unveiling the very advantage of the bureaucracy over the market or market contracts.
The reasons are twofold. First, the impossibility of ex ante intervention is equally applicable to the market, which underlies the presence of transaction costs associated with any economic exchange (e.g., Coase, 1937; Williamson, 1975, 1985). The very reason why some of transactions are completed through the firm or hierarchy, not through the market is that it is difficult, or more precisely, virtually impossible to draft and design a market contract or contingency claims in a way that shields parties to an exchange against actions in future unforeseen conditions that are not specified and not agreeable by either of the parties involved. This suggests that neither the bureaucratic control nor the market contract is free from the impossibility of ex ante intervention.
Transaction cost economists further observe that the bureaucratic control would be more efficient than the market contract or voluntary negotiation when the frequency of the exchange between two parties is high, the uncertain contingencies of the exchange is high, and two parties make asset-specific investments into the exchange (Williamson, 1985).
Second, as is well illustrated by Arrow (1951), the goal or objective of a group cannot be derived rationally from the simple aggregation of individual goals or preferences, which are by nature intransitive and incompatible, i.e., goal incongruence in an Ouchi’s (1980) sense. Naturally,individuals struggle to impose their own interests into the goal of a group that they belong to.
When you have only bilateral interdependence to consider, the resolution of such a struggle requires at best a voluntary negotiation between parties to an exchange, a case that is depicted by Coase (1937). However, the firm consists of multiple contracts among multiple individuals so that not bilateral but multilateral dependence constitutes and complicates the process of negotiation in the firm. When these multiple parties of incompatible preferences are involved in joint production activities, a market-like negotiation may lead to ceaseless rounds of debates and conflicts: when a resolution of bilateral dependence between two parties may pose a problem to dependence between the other parties, whose resolution in turn nullifies a previous resolution of dependence between the focal two parties (e.g., Miller, 1992). The WT bureaucracy could serve as providing an effective resolution to these circular conflicts by letting the choices of the organization members to get bounded by common rules, i.e., bureaucratic rules (e.g., Adler, Goldoftas, & Levine, 1999).
These rules work as insulating the firm and its members from uncontrollable feedbacks that arise internally from political activities at the workplace as well as from external market competition.
That is, everybody faces the same or standardized constraints, with which he or she simplifies possible actions from the other parties and thus develop a better capacity to reconcile their interests with others. Indeed, James March documented the firm as a collection of competing political coalitions, illuminating successfully that the rule-based bargaining process inside the firm help stabilize cooperation among coalition members of apparently conflicting preferences, which is essential for the long-term and large-scaled capital investment, a condition for evolutionary efficiency of any economic institutions (e.g., Cyert & March, 1963).
In short, this study opts for a liberal equalitarianism perspective (e.g., Rawls, 1971) and seeks to re-examine the basis of the WT bureaucracy. In doing so, it shows that the bureaucratic rules are the bearers of long-term cooperation at large scale; that these rules or the design of tasks serves as alleviating unchosen inequality among workers such as the variations in natural talents or innate productivities; and that the competitive advantage of the firm, or organizational efficiency,may increase insofar as the organizing principle of the firm becomes remote from the market contract and remains closer to the original nature of the WT bureaucracy.
일-가정 상호작용과 참살이(well-being)와의관계: 긍정의 역할
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