Information Technology and Organizational Architecture in Japanese Businesses

No.025
March 1998
Research Fellow Satoshi Hamaya

1. There is much discussion about the effects of e-mail, groupware, and other forms of IT on corporate structures. "E-mail will create flat corporate structures," for example, is one oft-made assertion. However, the question of what effect IT will have on corporate structure is not so important by itself for business managers-rather, the question that should be asked is, "How can IT be used effectively to realize desired corporate structures?" Put differently, "Is the implementation of IT in alignment with the corporate strategy or organizational structure?" The answers to these questions hold the key to unlocking successful management reform.
2. For many American companies that succeeded in management reform through such strategies as reengineering, aggressively investing in IT while simultaneously stressing new forms of organizational architecture-such as a focus on teamwork-have had the synergistic effect of increased productivity in corporate activities. Recent research has quantitatively underpinned these results.
3. As a result of changes in the management environment, such as the shift to a matured economy and intensifying international competition, Japanese companies are finding themselves compelled to modify their "Japanese-style of management and employment" practices, such as the seniority system, and other forms of heretofore-trademark organizational architecture. This report adopts the same approach to data collection and analysis as used in American research in order to explicate the connection between Japanese corporations' organizational architecture and IT. The results show a correlation between the level of job discretion and IT, but demonstrate a gap on the systemic side, where budgets and salaries haven't caught up with the sophistication of operations as a result of IT.
4. As shown in the case study of Fujitsu, there are some Japanese companies conscientiously pursuing personnel system reform-such as performance-based pay and annual salary systems-along with IT introduction. In order to boost the productivity of Japanese corporations, active investment in IT and learning from the success of American companies must go hand in hand with the effective use of IT and the creation of a new organizational architecture.

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