Organizational Routine and Coordinated Imitation

Abstract

IntroductionThe concept of organizational routine has been used in the management science domain to explain the source of actions of firms and organizations (Becker, 2004; Feldman, 2000; Feldman & Pentland, 2003, etc.). Although the origin of the concept is unclear, the study of Nelson and Winter (1982) made this a well-known concept in the management science domain (Becker, 2004, 2005; Becker, Lazaric, Nelson & Winter, 2005).1 In business management studies, Nelson and Winter (1982) are almost always cited when discussing the concept of organizational routine, and the concept of organizational routine is considered to be synonymous with the concept of production functions.2However, this study notes the following differences in the concept of organizational routine between the evolutionary economics studied by Nelson and Winter (1982) and the management science domain that frequently cites their study.When the concept of organizational routine is used in evolutionary economics, it is understood that (a) one organizational routine as a whole is retained as one organization, and (b) change occurs stochastically. However, the management science domain uses the term differently. For example (a) components of an organizational routine are considered to be divided among the members of the organization, who are thus responsible for that portion, and (b) changes to an organizational routine are considered intentional.This study first reviews the studies on organizational routine and subsequently analyzes the case of Company A that implements a production method used by Toyota. Thereafter, this paper asserts that (c) coordination is necessary when changing or transplanting an organizational routine and that such a perspective of coordination is the key to identify the relation between organizational change and business performance in management science.Concept of Organizational Routine in Evolutionary EconomicsIn An Evolutionary Theory of Economic Change, Nelson and Winter (1982) presented the concept of organizational routine based on their review of numerous behavioral science studies, such as the Carnegie School's Simon, March, and Cyert.3Organizational routine-as used by Nelson and Winter-decides the production functions of a firm4 and mostly has the same meaning as production function (Wakabayashi, Higuma, & Okamoto, 2010). Each industry does not have just one production function, as assumed in neoclassical economics; rather, production functions differ across firms. Each firms (i.e., organization)5 will have only one organizational routine to determine its production function. Nelson and Winter (1982) used the concept of organizational routine to explain that each company in an industry has a different production function and asserted that organizational routines undergo a process of natural selection within industries (rather than corporations). Because corporate organizations with relatively superior production functions win out over other firms, the losing firms choose either to imitate the superior organizational routine or to exit the market. Nelson and Winter (1982) claimed that this theory explained the source of Schumpeter-type innovation,6 which improves the overall average production function of an industry (or of a country's economy, which is the aggregate of multiple industries) (Nelson, 1991).7Variations in organizational routines in the study by Nelson and Winter (1982) are determined by random variables ranging between 0 and 1, and the discovery of superior routines through a search routine is also a random variable. In other words, change in an organizational routine occurs randomly (spontaneously).Concept of Organizational Routine in Organizational ScienceIn contrast, researchers of management science and those of organizational science differ in their view of organizational routine on several points. For example, Stene (1940), a political scientist and researcher of organizational theory, defined organizational routine as follows: Organization routine is that part of any organization's activities which has become habitual because of repetition and which is followed regularly without specific directions or detailed supervision by any member of the organization (Stene, 1940, p. …