Organic Systems and Clans

Burns and Stalker (1961) studied firms in England and noticed two types of management style -- mechanistic and organic. Mechanistic styles were found in more stable environments -- managers broke down tasks into specialisms with precise job descriptions and hierarchical interaction with management. Organic systems were used in unstable systems -- in this situation workers had to perform their job in "light of their knowledge of the tasks of the firm as a whole". Job roles are redefined continuously through interaction with co-workers. Communication occurs laterally than through hierarchical structures.

Ouichi (1981) defines this as a clan system. Paralleling Williamson's transaction cost explanation that organizations form when transaction costs are too high, clans replace hierarchies when transactions reach levels of extreme complexity and uncertainty. The clans are not necessarily kinship based but created with commmon internalized goals and strong feelings of solidarity.

The clan system emphasizes long-term employment, which allows for a different type of control system. The employee links their career prospects with the success of the company (like in Japanese companies). These are conditions for the development of elaborate internal labor markets.