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Annals of Business Administrative Science
Vol. 14 (2015) No. 1 p. 1-14

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http://doi.org/10.7880/abas.14.1


“Iron cage” appears to be mistranslated from Weber's “Gehäuse” by Parsons. Correctly speaking, it has been noted that the word should be translated as “shell,” which presents an extremely promising possibility in management studies: what appears to be a talisman on the front has rigid persons clinging onto the other side. If a shell has a competitive advantage, this would excuse the rigidity. However, if the shell is losing, or has already lost, its competitive advantage, clinging onto it becomes a problem. For example, Ford and IBM grew rapidly by clinging onto their shells―the Model T Ford in the case of Ford and the System/360 for IBM. However, these companies gradually went into decline later as their product design fossilized. Apart from product designs, it is easy to find examples of shells in companies that have experienced periods of growth and maturity, for example, retail networks, parent company sales power, real estate, patents, and franchise. Both managers and employees are fully aware that they can no longer expect growth as long as they cling onto their shell. Even so, the shell remains a source of rent. Hence, they are clinging onto it and are being driven to their ruin by inches.

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