Management of paradox: a comparative study of managerial practices in Korean and Japanese firms

Abstract

Numerous scholars are recognizing that paradoxes are indigenous to organizational functioning. Managers too are being challenged to do more and spend less, and delegate and know the details. As a corporate objective, neither efficiency nor innovation can be sacrificed. In this paper, we have attempted to capture this emerging trend empirically. Defining management of paradox as ‘managerial practices that realize the simultaneous accomplishment of multiple strategic objectives that are seemingly or actually incompatible,’ this paper explores how organizational capabilities of effectively dealing with paradox can be acquired. Specifically, the paper attempts to address two organizational mechanisms: decision-making structure and human resource practices (HRPs). Propositions deduced from the existing literature were tested with the data collected from 103 Korean firms and 136 Japanese firms. The data indicated that firms have to be multi-talented. It was found that firms that successfully accomplished innovation and efficiency objectives simultaneously were those that were able to mix paradoxical organizational practices: decentralization and control on the one hand and the three HRPs on the other. It was also found that the Japanese corporations were more apt in deploying paradoxical managerial practices than the Korean counterparts. The paper concludes by discussing a few theoretical implications.

Keywords:

• ambidexterity
• decentralization
• human resource practices
• paradox

Notes

1. A very knowledgeable Japanese researcher, who provided support at the various stages of the survey, informed that 15% response rate is typical in Japan.

2. Although these authors admit that subjective measures of organizational performance can be problematic, the literature generally indicates that subjective performance measures were highly correlated with various objective measures of performance (e.g. Dess and Robinson 1984; Pearce, Robbins, and Robinson 1987; Covin, Slevin and Schultz 1994; Hart and Banbury 1994). Furthermore, given the institutional and socio-economic differences between Japan and Korea with regard to accounting practices, taxation, etc. using subjective measures of performance was deemed justifiable.

3. These reliabilities were calculated by using a pooled data set that included both Korean and Japanese firms.

4. Since the ‘antagonistic labor-management relations’ item is a reversed scale, the value 1.72 should be taken as 4.28.