Safety in Numbers: Downsizing and the Deinstitutionalization of Permanent Employment in Japan
Ahmadjian, Christina L., Robinson, Patricia, Administrative Science Quarterly
While population-level change has long been a central concern of organizational theory, most theory and research focuses on the adoption and diffusion of new practices, with few studies examining how organizational practices are eliminated across an organizational population. In particular, there is a paucity of literature on deinstitutionalization, the process by which deeply entrenched practices give way to new innovations (exceptions include Davis, Diekmann, and Tinsley, 1994; Greve, 1995; Kraatz and Zajac, 1996). Neoinstitutionalist theory tends to concentrate on the process by which new practices become widely disseminated and persist regardless of the economic rationale for them (DiMaggio and Powell, 1983; Scott, 1995). Research on institutionalization often "implies that institutionalization is a once-and-for-all process" (Davis, Diekmann, and Tinsley, 1994: 550). Yet processes of both institutionalization and deinstitutionalization drive change: often, new practices cannot be adopted unless the old on es are left behind. A more complete understanding of organizational and economic change requires us to understand how institutionalized practices erode and make way for the new.
Theory and empirical research have begun to illuminate the process by which organizational practices and structures are transformed through deinstitutionalization and the closely related processes of abandoning existing practices and adopting new, illegitimate ones. Recent research highlights the economic, technical, political, and social antecedents of deinstitutionalization and provides evidence that institutionalized practices and structures are far from stable (Oliver, 1992). Technical and economic pressures, for example, lead organizations to adopt practices diametrically opposed to long-held organizational values, as Kraatz and Zajac (1996) found in their study of the adoption of professional programs by U.S. liberal arts colleges. A changing regulatory environment and the shifting dynamics of power and resources can transform even the most thoroughly entrenched notions of the corporation and its appropriate form, as evidenced by the wholesale breakup of U.S. business conglomerates through takeover, lev eraged buyouts, and investor pressure (Davis, Diekmann, and Tinsley, 1994). Social processes further hasten deinstitutionalization, as organizations seek information from those around them on the costs and benefits of abandoning existing practices and adopting new ones (Greve, 1995; Kraatz, 1998). While existing research has begun to address factors that trigger deinstitutionalization, researchers have paid less attention to the specific economic, social, and institutional forces that impede and promote it or to how the influence of these forces changes as deinstitutionalization gains momentum over time. Given that a practice is institutionalized when it spreads and persists as a result of social factors, above and beyond its technical or economic efficacy (Meyer and Rowan, 1977; DiMaggio and Powell, 1983), deinstitutionalization implies that these social factors somehow lose their grip. But what causes these factors to fall away, and by what route does deinstitutionalization spread through an organizational field? The fate of permanent employment during the sluggish Japanese economy of the 1990s provides an excellent case in which to examine this question.
During more than five decades of economic growth, permanent employment became one of the cornerstones of the postwar Japanese economic system and came to be viewed as a distinctly Japanese way of organizing employment (Abegglen, 1958; Dore, 1973; Aoki, 1988). Yet recession in the 1990s led many executives to believe that permanent employment was incompatible with the goals of efficiency and long-term corporate survival, and downsizing among Japanese firms rose to unprecedented levels. Announcements of risutora (the Japanese transliteration of "restructuring" and a euphemism for downsizing) in the Nihon Keizal Shimbun, Japan's leading business daily, increased from 505 in 1990 to 5,324 in 1994. …