An Analysis of the Organizational Mechanism to Generate Structural Inertia in Failing Companies:

Identification of Population Vulnerable to Environmental Changes

Abstract

This study analyzes the organizational mechanism which generates structural inertia in Japanese companies from a cross-industry perspective. It summarizes the case studies of four failing Japanese companies in different sectors. The study indicates a possible common mechanism at work in these companies: all organizational members act rationally in their given situations, resulting in unexpected structural inertia. Based on a literature about organizational decline, which mainly focuses on top management and its decision-making, in this study, additional attention is given to the organizational behavior of the middle management that plays a key role in Japanese companies.