Tolerance of executive failure in American and Japanese organisations

Abstract

The attainment of organisational goals requires that organisations “manage” the kinds and frequency of executives' failures. Although a number of economic, sociological, and organisational theories offer guidance in explaining tolerance of executive failure and its impact on performance, little empirical work has been done exploring the dynamics of the phenomenon. This lack of research becomes especially bothersome because the careful management of failure may be a major difference between Japanese and American management styles. The present study was undertaken to begin the systematic examination of executive failure in Japan and the United States. In a study of American and Japanese executives, only economic theory and convergence theory were supported. Japanese and American executives enjoy equal tolerance of their failures, but tolerance varies in terms of economic conditions and the degree of the failure. Japanese organisations appear to manage low level failures well and serious failures poorly. Americans are better at managing serious executive failures, but are poor at handling low level failures.