Management Theory of William Ouchi Key Terms

Understand the terminology of Ouchi's theory of management so you can apply its concepts

William Ouchi’s management theory has its basis in his extensive study of the differences between American and Japanese business practices, which he first articulated in his 1981 landmark book "Theory Z: How American Management Can Meet the Japanese Challenge." In this book, he declared that the success of Japanese corporations was rooted in a corporate culture and management style that American companies could successfully apply. Understanding the terminology of Ouchi’s ideas about management can help you get a firm grasp of Theory Z and its implications.

Japanese management style

Theory Z, based in an understanding of Japanese management style, states that Japanese corporations have long served as models for successful business practices. Japanese management style has much to do with this success. This style emphasizes a basic respect for workers, which in turn, leads to a high degree of company loyalty.

Deming's 14 points

Theory Z builds on a long tradition of applying Japanese management style to U.S. companies. W. Edwards Deming, a statistician who spent years working in post-war Japan, created a set of Japanese-inspired 14 points that he believed would revolutionize U.S. industry. You can see the influence of Deming's 14 points in Theory Z.

Theory X and Theory Y

Ouchi's model uses Theory X and Theory Y as a starting point. Douglas McGregor created Theory X and Theory Y in the late 1960s to explain two major models of management. Theory X defines a style in which the major assumption is that people don't like to work and perform better under a rigid management style with clearly defined rules and roles. Theory Y defines a style in which the major assumption is that people embrace work and perform better in a creative environment with a participatory management style.

Theory Z

Theory Z, Ouchi's management theory, takes Theory X and Theory Y into account, and proposes a new model based on a combination of American and Japanese styles. This theory encourages creating company loyalty in the employee by providing long term employment and focusing on employee well-being both in and out of the office.

Type Z organization

In his theory, Ouchi distinguishes among Type J (Japanese), Type A (American) and Type Z (modified American) organizations. Basically, the Type Z organization takes American values, such as individuality, and combines them with Japanese values, such as an organization's concern for the employee's family. Ouchi claims this type of organization has the most success, and he outlines ways for organizations to move from Type A to Type Z.
University of St. Francis, you can review the differences among the types of organizations. You can also find specific strategies on becoming a Type Z organization.

Participative management model

Theory Z is part of the family of participative management models. This style of management fully involves employees, making them more invested in their jobs and in the company as a whole.